Next mulls luxury move with Harvey Nichols buy – report

We all know that Next is one of the most acquisition-hungry retail businesses in the UK, rivalling Frasers Group on that front. But its latest target could take it to a whole new level with a report suggesting it’s eyeing Harvey Nichols.

Coming at the same time as Frasers is waiting for an answer on its bid to take over Hugo Boss, it highlights how some of the UK’s — and world’s — most successful retailers are aiming to grow fast not just organically but by acquisition too.

So how credible is the report that Next is preparing to mount a takeover bid for Harvey Nichols? Well, it comes from Sky’s Mark Kleinman, who does have a very strong track record of breaking such stories. However, neither Next nor Harvey Nichols are saying anything at present.

The report said Next “is drawing up plans to make an offer for the luxury department store chain”. That follows news that owner Dickson Poon has put it up for sale after decades of ownership by the Hong Kong billionaire.

Next, which has a market value of over £17 billion based on its current share price, has been buying up businesses fast in recent years, as well as acquiring UK licenses for others such as Gap and Victoria’s Secret. Its most recent outright purchase was Russell & Bromley, before which it also bought control of FatFace, Joules, Cath Kidston and Reiss.

Early stage

Sky said the purported Harvey Nichols plan is “at a relatively early stage” but sources told it Next intends to have “a serious look” at the department store group, whose Knightsbridge, London flagship has been undergoing a major revamp.

Harvey Nichols also has regional stores in the UK and locations abroad, although last year it closed its Liverpool Beauty Bazaar location. Its other UK stores are in London, Leeds, Edinburgh, Manchester, Birmingham and Bristol. Internationally it has one in Dublin, plus Hong Kong, Dubai, Riyadh, Kuwait and Doha.

Sky said it was unclear whether Next might continue running all its stores or “consistent with other acquisitions” it has made, whether “its priority would be to utilise the brand and other intellectual property assets”.

That might mean a question mark over some of the stores’ futures. Harvey Nichols has been loss-making for several years so it would be no surprise if any new owner conducted a major review of the business and took some radical steps.

As mentioned, Next has become a major name in acquisitions in the UK of late, rivalling Frasers Group on that front. Interestingly, there have also been reports that Frasers (which is growing its Flannels and Frasers chains) had been in talks to buy Harvey Nichols’ regional stores. But it’s not believed to be looking at buying the business at present.

Next is one of the UK’s most successful fashion retailers having evolved from an own-brand stores and catalogue retailer to a giant multibrand omnichannel retailer and marketplace operator. Hoovering up brands has proved a strong strategy for it, although not all acquisition-driven strategies have proved as successful for big UK names. 

JD Sports, for instance, has faltered in recent periods and has struggled to achieve like-for-like growth (comparable sales declined in its last full year). Frasers Group has seen both ups and downs on the like-for-like sales front in its various divisions.

Next hasn’t faced quite the same challenges but it has’t been competing in the luxury sector up to this point. While its Reiss business is premium, as is its recent Russell & Bromley buy, Harvey Nichols would represent its first step in pure luxury. And it would be a very big step. But as we’ve said, none of the parties concerned are commenting for now so we’ll just have to watch and wait.