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British retailer NEXT is considering a bid for Harvey Nichols, the luxury department store chain put up for sale by its Hong Kong billionaire owner, Sir Dickson Poon, just last week.
Sources have told Sky News that the auction is still in its very early stages, but that NEXT plans to take a “serious look” at the business.
Harvey Nichols financials
The sale follows a long stretch of weakening performance. In its latest financial accounts, Harvey Nichols reported revenue of £204.8 million for the 12 months to 31 March 2024, down 5% from a year earlier. Pre-tax losses climbed to £34 million, making it a fifth straight year of losses.
The business has about 1,200 employees in the UK and runs seven stores in the UK and Ireland, with large-format sites in London, Edinburgh, Birmingham, Leeds and Manchester, plus smaller-format branches in Bristol and Dublin.
Internationally, it operates six large-format stores in Riyadh, Doha, Dubai, Hong Kong and Kuwait.
The softer luxury-goods market, together with the ending of VAT-free shopping for tourists after Brexit, has been pointed to as a major reason for the prolonged losses.
NEXT’s acquisition record
In recent years, NEXT, which reportedly has a market capitalisation of more than £17.5 billion, has taken over a series of well-known retail names, among them FatFace, Joules and Reiss. It has also built UK distribution deals with Gap and Victoria’s Secret.
In January, NEXT also acquired footwear brand Russell & Bromley in a pre-pack insolvency rescue deal that focused on its brand and assets. The retailer initially kept the leases of three of the brand’s key stores – in Chelsea, Mayfair and Bluewater, but later also re-opened its Richmond location. All remaining Russell & Bromley stores are now shut.
Harvey Nichols would bring this acquisition-led approach into premium department store retail for the first time.
Sky News reported that it is still not clear whether NEXT would carry on operating the network of regional stores after any takeover, or whether it would instead concentrate on the brand and other intellectual property assets, as it did with its Russel & Bromley deal.
Turnaround efforts already underway
Harvey Nichols has continued turnaround work during the ownership review. CEO Julia Goddard, who was appointed two years ago, has overseen a multimillion-pound refurbishment of the Knightsbridge flagship, including the installation of a new wellness destination on the fourth floor that combines fitness, beauty treatments, nutrition and athleisure retail in May.
At the time of opening, in May, Lucy McPhail, Beauty Director at Harvey Nichols, said: “The launch of the new fourth floor marks an important step in the continued evolution of our Knightsbridge flagship.”
Goddard has also led investment into the retailer’s digital operations, with internal key performance indicators said to be “moving in the right direction” following the initiatives.
Meanwhile, the retailer recently strengthened its senior leadership team with the appointment of Shaun Donnelly to Buying Director for Non Apparel & Menswear.
Investment has also gone into digital operations, with internal KPIs said to be “moving in the right direction,” according to Sky News.
Ownership history
Sir Dickson Poon’s Dickson Concepts International bought Harvey Nichols from Burton Group in 1991 for £53 million. The company listed on the London Stock Exchange in 1996 before being taken private again six years later.
Sir Dickson is no longer actively involved in running the group, having stepped down from the Harvey Nichols board and his other European directorships.
In June last year, TheIndustry.fashion took an in-depth look at Harvey Nichols’ transformation plans, featuring exclusive commentary on the challenges it faces and expert insights into how it might successfully navigate its transformation.
Potential other buyers
In addition to NEXT, likely buyers are expected to include wealthy individuals from Asia and the Middle East, sources told Sky News.
It has also been reported that Frasers Group had been in discussions to buy Harvey Nichols’ regional stores but is not currently thought to be part of the corporate sale process.
The business is expected to change hands in the coming months.