Frasers Group has acquired Harvey Nichols from administrators FTI Consulting, taking control of the 200-year-old luxury retailer and warning the planned turnaround will require "tough choices".

The deal includes Harvey Nichols’ six UK stores in Knightsbridge, Manchester, Birmingham, Bristol, Leeds and Edinburgh, its online business, existing inventory and more than 1,000 employees. International franchise agreements are also included, while the OXO restaurant in London has been sold separately.

Harvey Nichols, which stocks more than 800 premium and luxury brands including Gucci, Moncler, Burberry, Prada and Dior, has faced sustained trading and operational challenges. Frasers said it will review and potentially rationalise the store portfolio, organisational structure, operating model and cost base, with the possibility of creating a smaller business in the near term.

Frasers Group CEO Michael Murray said: "Harvey Nichols is an iconic British institution with significant potential, but it is clear meaningful change is needed. 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.

"By integrating Harvey Nichols into our existing luxury ecosystem, we believe Frasers Group can deliver the expertise, infrastructure and commitment needed to give the business the best chance of long-term success."

While this is another chapter in the long-running consolidation of UK retail, Mike Ashley's empire has repeatedly bought distressed or underperforming retailers. The acquisition follows a competitive process in which Frasers reportedly fought off retail rival Next to secure the business.

The transaction gives Frasers control of another high-profile UK retail brand. The purchase strengthens Frasers’ luxury portfolio, which includes Flannels, The Webster and Hulcan’s Mile, and gives it closer relationships with leading global luxury brands. The group said it would use its existing infrastructure and operational expertise to reshape Harvey Nichols and improve its commercial performance.

Frasers shares were up around 1.5%-2.3% in afternoon trading after the deal was announced.

Harvey Nichols CEO Julia Goddard said: "Over the past year, we have made significant progress in repositioning this iconic business, investing in our flagship store, broadening our customer proposition, and strengthening the brand DNA.

"I look forward to working closely with Frasers Group to build on the momentum already underway, driving sustainable growth through greater operational efficiency and enhanced infrastructure, and continued investment into customer experiences to ensure Harvey Nichols remains a distinct and relevant luxury destination for both our customers and brands."

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