Billionaire Ashley leads race to clinch takeover of Harvey Nichols

The billionaire retail tycoon Mike Ashley is closing in on a takeover of Harvey Nichols, one of Britain's best-known department store chains, in a deal which is expected to see the business briefly placed into administration.

Sky News can reveal that Frasers Group, the London-listed retailer which is controlled by Mr Ashley, is the frontrunner to buy Harvey Nichols.

A transaction is expected to be completed early next week.

If confirmed, it would underline Mr Ashley's track record as the most prolific buyer of famous retail brands in Britain, having overseen earlier deals to buy businesses such as House of Fraser, Jack Wills and Gieves & Hawkes, the Savile Row tailor.

It remained possible on Friday afternoon that Next, which has been vying with Frasers to buy Harvey Nichols for weeks, could yet sweeten its bid and trump Mr Ashley.

Sources said that scenario was unlikely, however, with a final decision expected imminently.

A deal will bring the curtain down on 35 years of Harvey Nichols' ownership by Sir Dickson Poon, the Asian businessman.

Sir Dickson instructed advisers at FTI Consulting to sell the Knightsbridge-based business several weeks ago, with Sky News disclosing that Frasers had initially been frozen out of the auction.

Harvey Nichols subsequently informed brand suppliers that it had been "obliged to allow Frasers Group to participate in the process alongside the other interested parties".

The reference to an "obligation" pointed towards a transaction being implemented by way of a pre-pack administration process, with the appointment of FTI Consulting as the insolvency practitioner expected to take place in the early part of next week.

Among the hundreds of brands sold at Harvey Nichols are Armani Beauty, Balmain, Cartier, Juicy Couture, Lancome, Max Mara, Nike, Polo Ralph Lauren and Spanx.

A number of suppliers have raised concerns about Frasers being the new owner of Harvey Nichols following their experience of the company when it briefly owned the online premium fashion retailer Matchesfashion.

Several international parties also expressed an interest in buying Harvey Nichols, as did a number of specialist retail turnaround investors.

In the past few days, however, the process narrowed to focus solely on discussions with Frasers and Next, according to insiders.

Mr Ashley told the Financial Times this week that Harvey Nichols was "in a death spiral" and claimed he would be able to pay more than Next to acquire the retailer.

"I don't think I'll be writing a huge cheque, because you've got to think about the future losses," he was quoted as saying.

"If it was a little bit tough before, it is in a death spiral now."

His comments will raise concerns among Harvey Nichols' roughly 1,200 staff, as well as the future of its UK store portfolio, which also includes sites in Edinburgh and Leeds.

Harvey Nichols has told prospective buyers that they will need to commit up to £60m of investment to fund the ongoing transformation of the department store group - although some retail executives believe that number will be much higher if it is to be preserved in its current state.

Mr Ashley told the FT that he expected the business to be sold for less than £40m.

Harvey Nichols has recorded five successive years of losses, although a major investment in its flagship store in London is understood to have produced an improvement in its performance.

Sir Dickson's family, who bought the chain in 1991, have been working with FTI Consulting on a sale of the business for several weeks.

Popularised by its frequent references in the 1990s BBC sitcom Absolutely Fabulous, Harvey Nichols also operates London's famous OXO Tower Restaurant on the South Bank, while internationally it has stores in Hong Kong, Dubai, Riyadh, Kuwait, and Doha.

Harvey Nichols traces its roots back to 1831, and had a spell as a public company, having floated on the London Stock Exchange in 1996.

It was taken private again a few years later.

In the most recent financial year for which financial results are available, revenue fell 5% to £204.8m in the 12 months to 31 March 2024, while losses before tax rose to £34m.

Harvey Nichols declined to comment, while Frasers has been contacted for comment.

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