Will Flannels’ mega move into Leeds be the impetus to invest more in Harvey Nichols?

The Flannels tanks are on the lawn. When Harvey Nichols opened its Leeds store (main image) in 1996, it was the first premium fashion department store outside of London. A market leader, it started a regional revolution and the beginning of designer fashion’s march to the UK masses.

.Fast forward nearly 30 years, and, this month, Flannels, the designer fashion chain owned by Frasers Group, has opened a six-storey flagship in Leeds, which will directly compete with Harvey Nichols.

In the current luxury downturn, the fight is for market share and the industry wants to know how will Harvey Nichols react in one of its long-benchmarked cities. An underinvested brand, Harvey Nichols needs to act to stay relevant and attract today's modern luxury consumer. Will Flannels’ mega move be the impetus for Harvey Nichols’ owner Dickson Poon to invest further in the group?

One of the most highly-anticipated new retail openings in Leeds this year, and under renovation since late 2023, the new Flannels Leeds flagship is a huge upgrade from its previous store in the prosperous Yorkshire city and now directly competes as a fashion department store.

The former Leeds Debenhams store - ironically Harvey Nichols was part of the Debenhams chain until October 1991 when Dickson Poon of Dickson Concepts acquired Harvey Nichols from the Burton Group for £53.6 million - has been transformed into a six floored, 70,000 sq ft space housing womenswear, menswear, kidswear, homeware, personal shopping and beauty.

Joining Flannels’ 80 plus chain in the UK and Ireland including other flagships in London, Liverpool, Leicester, Sheffield and Newcastle, it is the first to directly compete with a Harvey Nichols. At 60,000 sq ft, over five floors, Harvey Nichols Leeds is smaller, and will have significant crossover with the brand mixes.

A relative designer department store minnow, Harvey Nichols' most recent financials announced an annual revenue of £216.6 million. In comparison, Flannels.com's estimated annual revenue is currently $392.8 million per year, while Selfridges has annual revenues of £834.9 million. However, Harvey Nichols has cut its operating losses from £25.7 million to £14.9 million in its latest financial statement.

Harvey Nichols currently has seven stores within the UK and Ireland, consisting of five large-format stores in London, Edinburgh, Birmingham, Leeds and Manchester, and two small-format stores in Bristol and Dublin. A beauty concept store, Beauty Bazaar, Harvey Nichols, opened in Liverpool in November 2012. In addition to this, there are six large-format stores overseas: one in Riyadh, one in Dubai, two in Hong Kong, one in Doha Festival City and one in Kuwait.

In 2023, the company announced it was exiting its Landmark store in Hong Kong, but retaining its Pacific Place location, while in April 2024, the company announced it was cutting some jobs to stem losses.

Accounts filed at Companies House in April 2024 revealed that Harvey Nichols owner Sir Dickson Poon has lent the department store £25.5 million, and had committed to pay a further £7 million after its year-end last April. Poon has lent a total of £106 million to the retailer, which now has no external debt.

Harvey Nichols recently announced a host of top team hires. Julia Goddard, formerly at Alexander McQueen, was announced as the new CEO in April and joined in June, while a newly created Creative Director position has been filled by Kate Phelan, a British stylist who previously worked at British Vogue and Topshop. It is worth noting, she will continue her freelance editorial and commercial styling collaborations alongside her new role. Both industry heavyweights, will they be given the time and means to create what Harvey Nichols desperately needs?

Harvey Nichols has been stuck with an Absolutely Fabulous image which has aged with its customers. It hasn’t felt relevant since Edina was buying her Lacroix crosses from the Knightsbridge store. While Flannels appeals to younger generations hooked on branded street and sportswear.

While Poon has invested in the group, this has been more down to offering life-support rather than funding a retail glow-up. The brand’s website says it is “Seen as ‘the place to be’, Harvey Nichols is the club that doesn’t require a membership.” Question is, would anyone under 40 care about being part of it?