London department store Liberty has reported that EBITDA was in positive territory for the first time in a decade in the year to December 31.
The retailer said EBITDA rose to £100,000 in 2009, against a loss of £3.9m the year before. The retailer attributed the improvement to a strong performance following the revamp of the business in February by chief executive Geoffroy de La Bourdonnaye, dubbed the ‘Renaissance of Liberty’.
Pre-tax losses after depreciation and interest narrowed from £7m in 2008 to £4.5m last year, reflecting close cost control said the business.
Liberty, which is 68% owned by property and hotels group MWB, said it benefitted from the bounce back in the commercial property market and that its landmark Tudor style store on Great Marlborough Street was valued upwards to £30.25m at the year end, against £28.8m in June 2009.
Full-year sales during the year rose 20% to £59.6m compared with £49.9m the year before.
Sales at the flagship store grew 18% to £37.3m versus £31.5m. Liberty said that the store’s performance was a “major contributor” to the business’ overall 20% like-for-like sales uplift.
Liberty’s fabric business, which has embarked on a string of successful collaborations with brands and retailers including Fred Perry, US chain Target and has announced an upcoming partnership with footwear designer Manolo Blahknik, had a record year with sales soaring 23% to £21.5m. Liberty said that a major factor in the uplift at the fabrics business was due to favourable currency conversions at its Japanese fabrics business.
However, Liberty warned that margins came under pressure in the course of the year leading to a fall in gross margin from 47% to 45%.
Liberty began a strategic review of the business in the autumn. It has since exchanged contracts on the sale of the freehold of the Tudor style building for £41.5m to property group Sirosa. Liberty will lease back the Great Marlborough Street store on a 30 year operating lease at an initial rent of £2.1m, with five fixed yearly uplifts.
The business has also been in talks with a number of parties about a sale of the operating business. On March 12 Drapers revealed that former Merrill Lynch Global Private Equity managing director Marco Capello was set to buy the operating business via his BlueGem Capital investment vehicle.
The retailer also closed its standalone Liberty of London store in Sloane Street last summer following an unsolicited approach for the store. Liberty of London creative director Tamara Salmon left the business in February. Liberty said that it had slimmed down the own-brand operation and expanded the brand across a wider product mix.
De La Bourdonnaye said: “Liberty has demonstrated its ability to buck economic and retail trends by returning to profitability during one of the worst downturns in recent retail history. It has created an environment that is increasingly appealing to an ever widening customer base while at the same time enhancing the brand and the values that it represents.”
Chairman Richard Balfour-Lynn said: “This has probably been the most exciting and successful year in Liberty’s recent history, despite the challenging economic environment.”
He added that 2010 had “started well”. He said: “While there are some signs of a return to economic stability, the uncertainties surrounding the year ahead make it difficult to forecast performance with certainty.