Sports Direct billionaire Mike Ashley claims Harvey Nichols in 'death spiral' and would be 'huge challenge'

Mike Ashley, the billionaire founder of Sports Direct, has expressed his belief that Harvey Nichols is currently in a “death spiral” and warned that turning around the struggling luxury department store would be a “huge challenge.” The self-made tycoon, known for acquiring distressed retailers, has revealed his interest in purchasing Harvey Nichols, which is being sold after its current owner initiated a major restructuring that included significant job cuts at its head office. Harvey Nichols, a well-known name in British retail, operates multiple high-profile locations including its iconic flagship store in London’s Knightsbridge, as well as branches in Leeds, Birmingham, Edinburgh, Manchester, Dublin, and Bristol. The store has faced years of financial difficulties, with recent reports indicating a substantial decline in profitability. Two years ago, the company underwent a major operational overhaul, leading to the loss of numerous jobs at its central headquarters. Mr Ashley's company, Frasers Group, is among the potential buyers vying for control of Harvey Nichols, alongside fashion conglomerate Next. In an exclusive interview with the Financial Times, Mr Ashley outlined his expectations regarding the sale, stating that he anticipates the price to fall below £40 million. He emphasized that while he might be willing to pay a premium, the decision would depend on the long-term viability of the business. “We are more likely to overpay... It’s more of a natural fit so we can pay more,” he explained. Despite his confidence in the potential acquisition, Mr Ashley acknowledged the challenges ahead. “I wouldn’t be crying a river if Frasers loses the auction and I don’t think Next would be either,” he remarked. He further noted that he does not intend to write a large check unless the investment promises a sustainable return. “If it was a little bit tough before, it is in a death spiral now,” he added. Should Frasers Group secure the deal, Mr Ashley hinted at plans to retain the flagship store in Knightsbridge and the Edinburgh location under the Harvey Nichols brand. However, he suggested that some of the other stores could be rebranded under existing Frasers properties such as House of Fraser or Flannels. This strategy reflects a broader trend within his business portfolio, where he has historically sought to rejuvenate struggling brands through rebranding and strategic management. House of Fraser, once a prominent chain with approximately 60 stores, has been significantly reduced to just 20 since Mr Ashley acquired it for £90 million in 2018. His comments on the high costs associated with maintaining department store premises underscore his cautious approach to acquisitions. “These department store buildings are so expensive to maintain,” he stated. “If even John Lewis is struggling, it shows how tough it is. I don’t buy things to close them down. I don’t lose money for no reason.” In addition to his ventures in retail, Mr Ashley owns Lillywhites, a historic sports store located on London’s Piccadilly Circus, which he purchased for £11.5 million in 2002. This acquisition exemplifies his strategy of investing in established yet potentially revitalizable businesses. As the bidding process for Harvey Nichols continues, the outcome will likely have significant implications for the future of the luxury retail sector in the UK.