Retail tycoon Ashley puts finishing touches to Harvey Nichols rescue deal

The retail billionaire Mike Ashley was on Wednesday putting the finishing touches to a rescue deal for Harvey Nichols, the department store chain.

Sky News has learnt that Mr Ashley's Frasers Group is hoping to announce the acquisition of Harvey Nichols through a pre-pack insolvency process on Thursday, after weeks of negotiations.

Industry sources said the tycoon's team had been engaged in detailed talks with FTI Consulting, the adviser to Harvey Nichols and its standby administrator, which could involve significant job preservation commitments.

One insider said that Frasers had been considering offering a year-long guarantee to retain Harvey Nichols' London head office, although it was unclear whether such a commitment would apply to all 1,200 UK-based staff at the group.

Frasers is also said to be prepared to commit to making outstanding payments to brand partners of the department store chain, following a controversy over its acquisition of Matchesfashion, an upmarket online clothing retailer, in 2024.

One source said on Wednesday that unlike rival Harvey Nichols suitor Next, Mr Ashley would take on all of its stores with the possible exception of its Dublin site.

Discussions are said to have been continuing on that issue as recently as the last couple of days.

If a deal is sanctioned by the courts on Thursday, it will bring the curtain down on 35 years of Sir Dickson Poon's ownership of Harvey Nichols.

Last week, Mr Ashley described Harvey Nichols as being in "a death spiral" and said he would be surprised if it fetched more than £40m from any buyer.

"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.

One source not directly involved in the negotiations said they expected Frasers to seek a further reduction in the price it was paying for the business in the hours before a deal is concluded.

A deal will cement Mr Ashley's reputation 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.

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.

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 becoming the new owner of Harvey Nichols, prompting the department store chain to seek to reassure them over recent weeks.

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.

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.

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.

The restaurant is also expected to be sold separately within days.

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.

FTI Consulting declined to comment, while Frasers has been contacted for comment.

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