Group sales over the six months ending June 30 were£19.9 million, down from£20.1 million last year.
Flagship store sales at the group, which moved all operations back into its original Tudor store during the period, were up 2 per cent at£18.8 million.
However, the business saw pre-tax loss widen to£1.6 million from a loss of£342,000 the previous year.
Liberty chairman Richard Balfour-Lynn said: 'We are laying the foundations for the creation of a serious global luxury goods brand.'
He added that the retreat back into the Tudor building on Regent Street had allowed the company to deliver efficiencies and enhance the customer experience. The consolidated store recorded an 11 per cent higher conversion rate of footfall into sales over the period, along with a 12 per cent jump in average transaction value.
Balfour-Lynn added he was confident in shareholder value over the medium term. He said: 'Against this background, we view the future with cautious, but positive, optimism.'
Liberty said that the Japanese joint venture will be in place by the beginning of next year, aiming for a spring 2008 launch.