In a plot twist that no one saw coming - except everyone who's been watching the retail apocalypse - luxury department store Harvey Nichols has been acquired by Frasers Group, the company behind Sports Direct. The new owner has already warned that a 'significant restructuring' is needed to ensure the 200-year-old business remains sustainable. Because nothing says 'luxury' like a Sports Direct mug and a Harvey Nicks carrier bag.
The store, immortalized in the BBC sitcom Absolutely Fabulous, had been struggling for a while. Administrators were appointed in June, and the firm had warned it would need to 'cease trading' within a year if it didn't find a new owner. Enter Mike Ashley's Frasers Group, which will take control of all Harvey Nichols stores, including the flagship in Knightsbridge, as well as the international franchise and the online business.
Michael Murray, Frasers' chief executive and Ashley's son-in-law, described the store as a 'British institution with significant potential' but admitted that 'clear meaningful change is needed.' He added, 'The turnaround will require tough choices and we are prepared to make those decisions, even if that means a smaller business in the near term, to create a stronger and more sustainable Harvey Nichols for the long-term.' Translation: expect some sales and possibly a few less champagne bars.
Harvey Nichols carries more than 800 premium and luxury brands and has over 1,000 employees. Its other stores are in Manchester, Birmingham, Bristol, Leeds, and Edinburgh. Shops will continue to operate under their existing licensing, so at least the name stays.
Frasers Group beat out rival retailer Next in an auction for the store. Harvey Nichols was bought in 1991 by Hong Kong-based businessman Sir Dickson Poon, who put it up for sale earlier this year.
Retail expert Catherine Shuttleworth of Savvy Marketing had some choice words about the store's current state: 'If you go into a Harvey Nicks store - and I did last week - they look terrible, they look really tired and basically they've suffered from a lack of investment.' She described department stores as 'cash-hungry monsters' that need constant investment, especially if you're at the top of the luxury market.
Harvey Nichols chief executive Julia Goddard called the deal 'an important milestone' and said it 'provides a strong platform for the next phase of the business's evolution.' She claimed they've made 'significant progress in repositioning this iconic business' - which is one way to describe it.
Frasers Group has a history of buying up retailers, including Flannels, Gieves & Hawkes, Agent Provocateur, Jack Wills, and House of Fraser. Shuttleworth thinks Harvey Nichols could get the Flannels treatment, which is probably a good thing, as she noted Murray has 'his finger right on the pulse' of young shoppers.
The purchase is part of Frasers' strategy to boost its luxury presence. They recently made a takeover approach for German brand Hugo Boss, in which they already have a stake.
Lindsay Hallam of FTI Consulting, who advised on the sale, said she was 'pleased to have secured a buyer' and that the deal secures more than 1,000 jobs. She also noted the focus was on protecting 'the underlying value of the business' - which is a polite way of saying they didn't want it to go under.
One thing not included in the deal: Harvey Nichols' restaurant in the Oxo Tower, London, which is being sold off separately. So if you were hoping to sip a martini while overlooking the Thames and pondering the fall of luxury retail, you'll have to find a new spot.