Poon to triple investment with Harvey Nichols float

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The Independent Online
Dickson Poon, the Hong Kong businessman who bought Harvey Nichols for pounds 50m in 1991, will triple the value of his investment when Princess Diana's favourite store comes to the market this month. Back in profit, and about to embark on an ambitious expansion into the provinces, Harvey Nicks is expected to be worth up to pounds 150m.

Issuing its pathfinder prospectus yesterday, the company promised potential investors that it would resist attempts to popularise its upmarket brand name. Joseph Wan, chief executive, said he had turned down requests from BAA, the airport operator, to open stores at Heathrow and Gatwick.

"We are always totally mindful of doing only the best of the best and preserving the brand name. I want to take the brand even more upmarket," Mr Wan added.

Dickson Concepts, the vehicle through which Mr Poon acquired the shares, plans to place 49.9 per cent at 240p-270p a share. At that level, he will more than recoup his original investment and still retain majority control of the company.

Mr Poon bought Harvey Nichols in the depths of the recession when it was loss-making. He has since turned it round and profits of pounds 9.1m are expected for the year to March just ended. That would represent a 50 per cent increase on the previous year.

Harvey Nichols is coming to the market at a time when the group is planning a number of new investments. These include a new store in Leeds in the autumn and a restaurant at the newly refurbished Oxo building on the south bank of the Thames in London.

Mr Wan said the company also planned to increase the profits of the flagship Knightsbridge store and to develop a string of regional outlets in large cities and more stand-along restaurants. There are proposals to create a wholesale fashion business that would attempt to set up exclusive distribution deals with top fahion names such as Calvin Klein and Ralph Lauren.

He countered fears that the group might be expanding too quickly: "We are an ambitious group and want to grow our business, but we will not run before we can walk." No other provincial stores will be opened until 1999 when the success of the Leeds pilot store will have been established.

Of restaurants, Mr Wan said: "We will select only unique locations with excellent food and quality of service. Why should it not succeed?"

Harvey Nichols' main store is expected to benefit from an improvement in the retail climate in the UK. However, the company believesthat even without improving trading conditions profits can be improved by raising sales space and density and by maximising the balance between own bought products and concessions.

The valuation of pounds 132m-pounds 148.5m was in line with analysts' expectations, although some suggested this was a little expensive at a price/earnings ratio of around 24 against a retail sector average of about 18.5.

Mr Wan dismissed that concern, saying Harvey Nichols should be compared with other top stores in the sector rather than the average, and that on this basis the ratio was reasonable. He said the House of Fraser traded on a p/e of 24 while Liberty was value at 26 times earnings and Next at 22.

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