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Liberty sets sail overseas before floating on the stockexchange Liberty sets sail overseas before floating on the stock exchange
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When Arthur Lasenby Liberty laid plans for the London department store that still bears his name, his dream was to metaphorically dock a ship in the streets of London laden with luxuries from the four corners of the British empire.When Arthur Lasenby Liberty laid plans for the London department store that still bears his name, his dream was to metaphorically dock a ship in the streets of London laden with luxuries from the four corners of the British empire.
Having founded the business in 1875, he died before seeing the store in its current location built in 1924. Liberty on Great Marlborough Street was constructed from the timbers of two Royal Navy vessels – HMS Impregnable and HMS Hindustan – and it transported customers to a world of exotic fabrics, ornaments and art imported from around the world.Having founded the business in 1875, he died before seeing the store in its current location built in 1924. Liberty on Great Marlborough Street was constructed from the timbers of two Royal Navy vessels – HMS Impregnable and HMS Hindustan – and it transported customers to a world of exotic fabrics, ornaments and art imported from around the world.
Nine decades later, the good ship Liberty is to set sail overseas – taking its own-label merchandise to department stores in the US and Italy. It is also seeking a whole array of partnerships to build on successful tie-ups with Nike, Barbour and US department store Saks Fifth Avenue.Nine decades later, the good ship Liberty is to set sail overseas – taking its own-label merchandise to department stores in the US and Italy. It is also seeking a whole array of partnerships to build on successful tie-ups with Nike, Barbour and US department store Saks Fifth Avenue.
The overseas adventure is intended to underpin a plan to float on the London Stock Exchange in 2018, taking Liberty back into public ownership. The retailer was bought by private equity firm BlueGem for £32m in 2010.The overseas adventure is intended to underpin a plan to float on the London Stock Exchange in 2018, taking Liberty back into public ownership. The retailer was bought by private equity firm BlueGem for £32m in 2010.
From next month, US fashion retailer Nordstrom will host pop-up shops featuring Flowers of Liberty homewares in six of its US stores, including New York, Seattle, San Francisco and Washington. Meanwhile, La Rinascente in Milan will feature a pop-up for Liberty London, the retailer’s colourful handbag and accessories range, from this autumn. A deal with a second US department store is also on the cards.From next month, US fashion retailer Nordstrom will host pop-up shops featuring Flowers of Liberty homewares in six of its US stores, including New York, Seattle, San Francisco and Washington. Meanwhile, La Rinascente in Milan will feature a pop-up for Liberty London, the retailer’s colourful handbag and accessories range, from this autumn. A deal with a second US department store is also on the cards.
The aim is to use Liberty’s own label to build the London icon into an international brand by cutting exclusive agreements with high-end department stores around the world.The aim is to use Liberty’s own label to build the London icon into an international brand by cutting exclusive agreements with high-end department stores around the world.
Standing in the wood-panelled meeting room made from the captain’s quarters of one of the ships, Marco Capello, the former Merrill Lynch banker who heads BlueGem, says Liberty has been totally transformed from the days when it was mired in losses and selling off property to raise cash.Standing in the wood-panelled meeting room made from the captain’s quarters of one of the ships, Marco Capello, the former Merrill Lynch banker who heads BlueGem, says Liberty has been totally transformed from the days when it was mired in losses and selling off property to raise cash.
The company, which was listed on the London Stock Exchange but controlled by property company MWB Group, had been losing money for years. The retailer was making sales of around £70m but losses were £4.5m in 2009.The company, which was listed on the London Stock Exchange but controlled by property company MWB Group, had been losing money for years. The retailer was making sales of around £70m but losses were £4.5m in 2009.
“Everybody thought I was mad and Liberty could never be profitable. I disagreed … I sat in the cafe for three days and I saw a lot of people coming in and very few coming out with big shopping bags. I thought: ‘The merchandise is not right.’ I thought: ‘There is something we can do,’” says Capello.“Everybody thought I was mad and Liberty could never be profitable. I disagreed … I sat in the cafe for three days and I saw a lot of people coming in and very few coming out with big shopping bags. I thought: ‘The merchandise is not right.’ I thought: ‘There is something we can do,’” says Capello.
The sharp-suited and enthusiastic boss’s plan to turn around Liberty hinged on a number of basics – cutting costs by ditching the culture of big executive offices, trimming the number of staff, changing the merchandise and incentivising staff based on individual sales performance. The captain’s room is now used for hosting VIP guests and staff meetings; Capello works from a cupboard-like white room.The sharp-suited and enthusiastic boss’s plan to turn around Liberty hinged on a number of basics – cutting costs by ditching the culture of big executive offices, trimming the number of staff, changing the merchandise and incentivising staff based on individual sales performance. The captain’s room is now used for hosting VIP guests and staff meetings; Capello works from a cupboard-like white room.
A key first move was the promotion of American Ed Burstell – now Liberty’s managing director, who is well known to watchers of the Channel 4 documentary on the life of the department store. Capello refers to him as Leonardo, after the artist and inventor – “He is probably the best buyer in the world. I respect him very much,” says Capello.A key first move was the promotion of American Ed Burstell – now Liberty’s managing director, who is well known to watchers of the Channel 4 documentary on the life of the department store. Capello refers to him as Leonardo, after the artist and inventor – “He is probably the best buyer in the world. I respect him very much,” says Capello.
Burstell masterminded changes to the set-up of Liberty’s impressive central atrium, where shoppers were being scared off by very expensive products. Handbags costing more than £1,000 were not easy for tourists to tuck into their luggage.Burstell masterminded changes to the set-up of Liberty’s impressive central atrium, where shoppers were being scared off by very expensive products. Handbags costing more than £1,000 were not easy for tourists to tuck into their luggage.
Today, Liberty is far from cheap, but its luxurious wallets, purses and handbags are at least more within reach of ordinary folk, with patterned purses starting at £65. Takings from the atrium have shot up from just £1,500 a day in 2010 to £40,000 now.Today, Liberty is far from cheap, but its luxurious wallets, purses and handbags are at least more within reach of ordinary folk, with patterned purses starting at £65. Takings from the atrium have shot up from just £1,500 a day in 2010 to £40,000 now.
In the year to January 2014, sales were £123m and the company made £18m of underlying profits. Last year, profit rose to £21.5m and sales were up to £132m. In the coming year, the company is aiming for sales close to £155m.In the year to January 2014, sales were £123m and the company made £18m of underlying profits. Last year, profit rose to £21.5m and sales were up to £132m. In the coming year, the company is aiming for sales close to £155m.
“We think this is a fabulous business and it has got a lot more legs. It’s a rare jewel in the crown and I’d like to own it for 20 years,” says Capello.“We think this is a fabulous business and it has got a lot more legs. It’s a rare jewel in the crown and I’d like to own it for 20 years,” says Capello.
Under BlueGem’s agreement with its investors, the business would have been sold last year.Under BlueGem’s agreement with its investors, the business would have been sold last year.
Instead, BlueGem refinanced, allowing some investors to take cash out but nearly all to re-invest in buying the department store for £165m. Capello himself remortgaged his home to secure a 9% stake. Other BlueGem and Liberty management executives share 3% more.Instead, BlueGem refinanced, allowing some investors to take cash out but nearly all to re-invest in buying the department store for £165m. Capello himself remortgaged his home to secure a 9% stake. Other BlueGem and Liberty management executives share 3% more.
“Our ultimate goal is to float the company in three years’ time and then the fund will be able to realise a substantial gain,” says Capello.“Our ultimate goal is to float the company in three years’ time and then the fund will be able to realise a substantial gain,” says Capello.
However, Liberty still has substantial debts for its size – ending last year with debts of £53m after about £20m of investment by BlueGem since its bought the business. Because of this, a flotation is likely to hinge on successful expansion overseas. However, Liberty still has substantial debts for its size – ending last year with debts of £53m after about £20m of investment by BlueGem since it bought the business. Because of this, a flotation is likely to hinge on successful expansion overseas.
It’s a strategy that Liberty has tried before. In 2007, the Liberty of London collection went into international department stores, including America’s Bloomingdale’s, and in 2010 the floral print featured in an exclusive range for the US Target chain. A standalone Liberty of London store opened on London’s Sloane Street. But the small store closed after just a year and Capello says Liberty stopped wholesaling own-label product five years ago.It’s a strategy that Liberty has tried before. In 2007, the Liberty of London collection went into international department stores, including America’s Bloomingdale’s, and in 2010 the floral print featured in an exclusive range for the US Target chain. A standalone Liberty of London store opened on London’s Sloane Street. But the small store closed after just a year and Capello says Liberty stopped wholesaling own-label product five years ago.
Since then, Liberty’s main overseas presence has been via an offshoot in Japan that sells Liberty-branded products in major stores. The company also wholesales its famous printed fabrics around the world and works through brand partnerships with the likes of Nike.Since then, Liberty’s main overseas presence has been via an offshoot in Japan that sells Liberty-branded products in major stores. The company also wholesales its famous printed fabrics around the world and works through brand partnerships with the likes of Nike.
Capello believes the latest effort will be much more significant. Firstly, he has just hired Jose Vaz Guedes, the former worldwide commercial director for Jimmy Choo, to lead overseas expansion. And Capello says Liberty’s two own labels, Liberty Flowers and Liberty London, have been tried and tested in the London store and take two to three times the sales per square foot of any other department.Capello believes the latest effort will be much more significant. Firstly, he has just hired Jose Vaz Guedes, the former worldwide commercial director for Jimmy Choo, to lead overseas expansion. And Capello says Liberty’s two own labels, Liberty Flowers and Liberty London, have been tried and tested in the London store and take two to three times the sales per square foot of any other department.
“We have tested the products for over a year and the results show people really love them,” he says. “Last time, Liberty expanded across various accounts at the same time. By origin, I’m a peasant, so I’m very cautious.”“We have tested the products for over a year and the results show people really love them,” he says. “Last time, Liberty expanded across various accounts at the same time. By origin, I’m a peasant, so I’m very cautious.”