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LIBERTY FOR ALL

THE ICONIC BRITISH RETAILER MULLS EXPANDING TO JAPAN, THE MIDDLE EAST AND THE U.S.

By Mark Faithfull

Having already spent 132 years importing the world to the shelves of its iconic premises in London, Liberty is now seeking to take its own products out to the world. In particular, this venerable, upscale department store plans to bring its brand to Japan, the Middle East and the United States. “This may involve looking at joint ventures or overseas partners,” CEO Geoffroy de La Bourdonnaye, who was appointed July 1, told investors this investors. “At this stage nothing is excluded.”

Whether the company is to roll out stores or sell its products through other retailers has yet to be established. The company declined a request for an interview.

The global expansion plan reflects growing confidence as the once troubled retailer, famous for its cutting-edge design, stems its losses and gains stability.

Liberty is a landmark in London’s West End. The familiar mock-Tudor facade of its main (and now only) building, on Great Malborough Street, which stretches from Regent Street to Carnaby Street, features timbers taken from two 19th-century Royal Navy ships: the HMS Impregnable and the HMS Hindustan. Arthur Lasenby Liberty founded the emporium in 1875 to sell ornaments, fabrics and objets d’art from Japan and the Far East. Liberty went on to develop a distinctive style closely linked to the aesthetic movement of the 1890s and to art nouveau. As the years went on, Liberty branched out to include home wares and furniture and from the 1980s added fashion, cosmetics and accessories.

But recent years have not been so kind, reaching a low for the year ending June 30, 2002, when the company lost £15.5 million ($31.2 million). Current owner Marylebone Warwick Balfour Group bought Liberty in 2000 from its private, largely family, owners and laid down the first real marker of recovery in March 2003 with the completion of a $14 million refurbishment of the Regent Street section of the two-building store. Last year Liberty moved out of this part of the building, retrenching to the adjoining Tudor-style building. (Spanish fashion retailer Desigual opened its first U.K. store in the vacated space in June.)

Liberty halved its pretax losses to $4.33 million for 2006, while same-store sales rose by nearly $3 million, to $86.6 million. At home Liberty will open a second London store by the end of December, and it is looking at Dubai, United Arab Emirates, for its first non-U.K. store. The company is also weighing whether to bring its Liberty of London brand to the U.S. and Japan.

The company had made no secret of its desire to penetrate the Japanese market. But prior to May it was more reticent about negotiations with key franchise partners in the Middle East for stand-alone shops or for concessions within existing stores in Dubai. Those discussions are understood still to be at an early stage but are likely to focus on the Liberty of London private label collection of leather goods and accessories rather than on the export of Liberty department stores.

The Liberty of London label, launched in 2005, is regarded as pivotal to Liberty’s internationalizing of its brand. “Their attitude is to create a premier designer brand,” said one source close to the retailer, who requested his name be withheld. “As a full-line department store in the Middle East, they would face problems surrounding exclusivity agreements already in place with brands.”

Those plans will now come under the auspices of de La Bourdonnaye. He replaces Iain Renwick, who departed in April after four and a half years in charge. De La Bourdonnaye has pledged to beef up the retailer’s growth plans and says his strategy will focus on expansion in the U.S., the Middle East and the Far East through the opening of stores or, at least, the export of its brand products, and possibly both.

De La Bourdonnaye joined from luxury business conglomerate LVMH, where he was president of the Christian Lacroix fashion subsidiary for four years. Before joining LVMH, he held senior brand management, retail and marketing posts at Disney, L’Oréal and Pepsico.

But though the company is bullish about its international direction, it is short on details. A Liberty spokeswoman said simply, “We are in talks with retail partners in the Middle East, and Dubai is one of the areas we are considering.”

Chairman Richard Balfour-Lynn told investors and the media in May that “discussions are ongoing regarding a distribution agreement in Japan, with these likely to be concluded by the second half of the year.”

Closer to home, the retailer is set to open another store in London devoted to the Liberty of London brand. Some real estate executives say that this will be a 2,000-square-foot boutique in Knightsbridge. At present, the retailer sells its own label in the 2,000-square-foot central atrium area of its Great Malborough Street store.

Now the economic climate is right for growth at Liberty, analysts say. “Retail conditions in the U.K. are difficult, but high-end retailers like Liberty are doing particularly well,” said Richard Ratner, a retail analyst at Seymour Pierce, a London-based investment bank. “Customers are trading up, and the figures confirm the message about this upper-end of the market, and that is what is giving Liberty such confidence in its plans.”

As for overseas growth, “the Middle and Far East are obvious expansion routes for a high-end brand like Liberty,” said Steve Davies, retail analyst at Numis Securities. But he urges caution when it comes to the U.S. “The U.S. has been a banana skin for more than one U.K. retailer,” he said.

Balfour-Lynn says he views the future with “cautious optimism,” particularly when it comes to exporting the Liberty of London brand. “Significantly, this refit of the central atrium has been designed and branded in a way which enables it to be easily replicated elsewhere, either in London or abroad.”

It seems unlikely that Liberty would attempt to open full-line department stores outside the U.K. Having carefully crafted its Liberty of London label and with the additional London boutique planned to test the waters on domestic soil, one of Britain’s oldest retail names seems set to embark on global expansion to satisfy the demands of an increasingly affluent high-end consumer base.