Taking Liberty

Bringing in new investors or embarking on a joint venture at Liberty should benefit the loss-making retailer. Interest from wealthy overseas investors seems probable, given Liberty’s cache as the purveyor of avant-garde fashion and exclusive luxury brands. However, overseas investor or not, Liberty cannot afford to stray too far from its roots as the most iconic London department store.

Liberty has already achieved success overseas through the wholesaling of its Liberty of London luxury own-label brand and its barnstorming fabrics business. Plus, its recently revamped website has driven sales and presents an opportunity to further its reach in other countries. The foundations are already there for the easiest and cheapest routes to overseas customers.

A full-scale department store offering overseas – if that is on the cards – becomes problematic in a business that is reliant on brands, many of which may have exclusive overseas rights agreements with other franchise partners.

The overseas journey has not been an easy one for fellow luxury fashion department store retailer Harvey Nichols, while Fortnum & Mason has also been cautious in its overseas pursuits.

Liberty should look closer to home to really drive home its retail renaissance, and even then standalone stores in the UK are not the solution.

A disastrous decision to open a standalone Liberty of London store was only saved by a unsolicited approach for the Sloane Street store last month. The shedding of the store – the opening of which contributed to the majority of widening losses at the retailer – will save the retailer £500,000 a year in costs.

If Liberty turns its focus closer to home and its flagship store, the signs of an upwards trajectory are already there. The transformation of the store – unveiled on February 14 this year – coupled with a stronger marketing campaign and focus on communicating with its customers, has helped it achieve a strong performance in the first half of the year.

If a new investor were to acquire a stake in the retailer, it could help wipe out some of the £358m debt pile weighing heavily on the balance sheet. The fact that it is understood that parent company Marylebone Warwick Balfour – which owns 68 per cent of the retailer – is not seeking an exit, shows confidence in the business.

The decision to seek advice has not come too late, but the solution to the problem should avoid taking Liberty too far down the wrong route.