Frasers slams ‘nonsense rumours’ over Harvey Nichols bid
The boss of Frasers has hit back at “nonsense rumours” that retail brands are reluctant to work with the group, which is known for making aggressive plays to take control of rival companies.
The group, which owns Sports Direct and Flannels, gatecrashed the auction to buy luxury department store Harvey Nichols last week, despite some of its brand partners reportedly being reluctant to engage with Frasers.
But Michael Murray, Frasers’ chief executive, has hit back at these claims. He told City PM: “I just think that’s nonsense. It’s absolute nonsense. It’s just people making up rumours.
“We’ve got very strong brand relationships. We pay all of our bills on time. We invest in our proposition. We invest in expansion and growth.”
Murray accused rival firms of attempting to sabotage Frasers. “I see that as being a nonsense comment from someone who’s trying to create rumours,” he said.
Harvey Nichols, which is headquartered at its flagship Knightsbridge store, entered talks over a potential sale late last month after losing pace in its bid to keep up with rivals Selfridges and Harrods.
Frasers Group, which was founded by billionaire Mike Ashley, has garnered a reputation for making aggressive plays for control over retailers like Boohoo and bagmaker Mulberry.
The firm launched a €2bn bid for Hugo Boss last month and on Thursday cited uncertainty around this takeover approach for its decision not to provide investors with a profit forecast.
High streets in ‘death spiral’
Announcing its full-year results, the group said it paid £260m in business rates, corporation tax and employer’s national insurance contributions (NICs) in the year to April – £20m more than last year.
Murray told City PM that recent hikes to NICs, minimum wages and business rates have sent the UK’s high streets into a “death spiral”.
He said: “You can walk round some of the northern town centers now, and they’re unrecognizable. Empty shops everywhere. There’s no life.
“Then, because the big retailers close, all of the smaller retailers […] close [too] because there’s no footfall being driven into the town centers, so it is really a death spiral.”
As Andy Burnham prepares to become Prime Minister, with home secretary Shabana Mahmood as his likely chancellor, Murray called on the new government to reform the “archaic” business rates system.
Retailers have piled pressure on Burnham in recent days to overhaul the tax, which is based on property value rather than the profitability of businesses.
The tax unfairly disadvantages high street firms against online shopping giants, retailers claim.
Murray also called on the new chancellor to “give young people more of a chance to get into retail”. Retailers have criticised the government’s hikes to NICs and minimum wages, which they say is fuelling youth unemployment.
Frasers Group saw revenue jump by eight per cent to £5.3bn in the year to the end of April, as pre-tax profit grew by 39 per cent to £528m.
Its shares slipped three per cent on Thursday to 736p. The stock has gained 10 per cent in the year to date.