Liberty on recovery trail but latest results still show pandemic impact
Liberty Retail — the company behind the luxury London department store — saw its total revenue leaping to £82 million in the year to the end of last January, from £59.6 million in the previous 52-week period period.
Revenue has almost recovered to match the year ending 1 February 2020, but profitability is still affected as the move to online sales has increased its cost base (due to the higher variable costs to serve online channels compared to the predominantly fixed costs in the flagship store).
But at least flagship sales per square foot are on a recovery trajectory, reaching £1,072 in the period compared to £779 the year before.
And its accounts filed at Companies House show that EBITDA before one-off costs, was a narrower loss of £3.5 million compared to a loss of £12.3 million in the previous year. But it still trails the £14.4 million profit generated in the last year before the pandemic hit.
It made operating profit of £2.4 million in the latest year compared to a very small £88,000 operating profit in the year prior. And the loss before tax shrank to £187,000 from a loss of £2.8 million 12 months earlier.
The flagship store in London’s West End was closed from the start of the financial year in line with the lockdown in place at the time and didn't reopen until mid-April. But as Liberty stressed, the store reopened "to a market that remained heavily impaired by lower footfall". That said, trading strengthened progressively during the summer months and “gave management confidence that the pace of recovery would be in line with expectations for the important Christmas trading quarter”.
Despite the "notable reduction" in international visitors, the store was getting close to pre-Covid levels in certain periods, although its performance was impacted once again in December 2021, when new measures to tackle the rapidly spreading Omicron variant meant people started working from home again.
But there was some usual business going on during the period with the two-year store renovation project completed after major works both inside, and outside the historic building.
The company also said that during the year, its online business benefited from shoppers being unable to visit stores, although the challenge in the year was to retain those customers as shops reopened. However, it's online revenue "grew slightly" in the period, which is encouraging given that physical stores were open for more weeks and they had been during 2020.
The retailer sells a wide variety of luxury merchandise but has been putting a bigger-than-ever focus on beauty in recent periods and said that beauty in its physical store and special launches such as its Liberty Beauty Advent Calendar saw another record year.
It also launched its first subscription service called Beauty Drop, which it says is unique and received a very strong initial response from customers. Basically, subscribers get four boxes of curated beauty products a year in return for a monthly spend commitment. It believes that the long-term benefit it will see is higher retention levels of high-value customers.
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