Harvey Nichols bid fails

A fall in the number of tourists has hit sales

Shareholders in upmarket department store Harvey Nichols have foiled the chief executive's first attempt to take the company private.

Dickson Poon failed to secure enough support from shareholders to go ahead with his offer of 250 pence a share.

But Mr Poon has not abandoned his bid.

At an extraordinary general meeting on Monday a majority of the votes - 55.2% - were in favour of the takeover.

But the scheme could not go ahead because, under the method being used, known as a scheme of arrangement, those in favour needed to represent 75% of the total number of votes cast.

However, Mr Poon will now be able to go ahead with what is called a recommended final offer, at the same price.

And he would need the backing of only 50% of shareholders to approve the deal.

Sales still suffering

Deutsche Asset Management, the biggest institutional investor with 14.9% of the shares, voted against the offer at Monday's meeting.

And it said it would continue to campaign against the bid on the grounds that 250p per share was not enough.

Mr Poon paid £53m ($84m) for the retail group in 1991.

Five years later he floated part of it on the stock market, but his investment company Broad Gain kept control of 50.1% of the company.

In September, Mr Poon said he wanted to buy back the rest of the shares because Harvey Nichols was no longer benefiting from being a public company.

Sales suffered at the group's flagship store in London's Knightsbridge because fewer tourists came to the capital after last year's September 11 terrorist attacks.

Earlier this month the company said that sales had still not returned to their levels achieved before the attacks.

The company's faltering sales performance has hit its bottom line, with pre-tax profits for the six months to late September falling 18.8% on the year to £5.6m.

In the City, Harvey Nichols shares closed up 5.5p at 243p on Monday.