Hong Kong billionaire Dickson Poon is reportedly exploring a sale of the luxury department store chain, Harvey Nichols. This comes after the retailer has faced three consecutive years of losses and a substantial drop in sales. The speculation around a potential sale follows similar moves by other luxury retailers, notably the Weston family's decision to put Selfridges up for sale. Poon, who acquired Harvey Nichols 30 years ago, is facing pressure to either continue funding the loss-making retailer or divest.
Honeywell made a profit when he listed Harvey Nichols in 1996, earning $74 million in share sales. The company expanded during its time on the public market, opening the Oxo Tower restaurant and establishing international franchise agreements. However, profitability began to decline after 2013, with pre-tax profits falling from $12.8 million to $5.4 million within two years. By March 2020, the company reported a $16.3 million loss on sales of $222.2 million, partly due to the early impact of the pandemic.
A significant financial burden for Harvey Nichols is its high rent for the Knightsbridge store. Poon sold the store for over $75 million to Cadogan Estates 21 years ago, and the annual rent is now estimated to be more than $5 million. This high rental cost, coupled with a lack of landlord support during the COVID-19 pandemic, has been identified as a crippling factor for the retailer. Despite the challenges, Poon has reportedly been reluctant to sell, with sources suggesting a desire to avoid his name being associated with failure.
The decline in international travel during the pandemic has severely impacted Harvey Nichols, which historically attracted wealthy visitors from the Middle East and China. While franchise stores in locations like Dubai, Hong Kong, and Doha helped offset some lost sales, the overall situation has been challenging. The departure of CEO Manju Malhotra in August 2023, following disagreements over strategy with Poon, further highlights the internal struggles at the company amid its financial difficulties.
