Liberty restores dividend despite losses

Liberty, the upmarket retailer, lost more than one-fifth of its average weekly sales following the death of Diana, Princess of Wales. The group closed its flagship Regent Street store for the best part of two days on Sunday 31 August when the company learned of the Princess's death and for the morning of her funeral the following Saturday.

Ian Thomson, Liberty's managing director, said yesterday the decision to close the store lost the group more than pounds 200,000 in sales which would not be recovered and trading in the week following the funeral was below normal.

Speaking as the company restored its dividend, but moved into trading losses for the six months to August, Denis Cassidy, chairman, said the strength of sterling against the yen had depressed the Japanese tourist trade at Regent Street and the group's Heathrow airport shops.

Mr Cassidy said he was extending the Liberty brand into shirts and knitwear, in preparation for a big expansion into airports outside the UK. "Airports are about brands. Well-heeled, busy people who fly are the perfect customers." The group is considering opening a shop at Gatwick airport. Liberty said it was talking to Seibu, its Japanese joint venture partner, on overseas expansion and was also in "fairly serious discussions" with operators in East Asia and the Middle East. The company was also considering expanding in mail order, though it is not "top of the priority list".

Liberty has just received planning permission for the first phase of a three-year, pounds 40m redesign of the Regent Street store, which will include, for the first time, escalators. However, Mr Cassidy was keen to emphasise that the period look of the mock Tudor building would remain. "The escalator will be at the back of the building. It will have no visual impact, but it will improve the flow of people."

The first phase of the refurbishment, which will increase floor space by more than 50 per cent, involves converting a warehouse in Carnaby Street into offices, freeing up space in the main store. The yen effect shaved around 4 per cent off sales and pounds 500,000 from headline profits. Sales in the half year to August rose 10 per cent to pounds 27.3m helped by the building society windfalls. A pounds 137,000 trading loss, compared to pounds 777,000 profits last time, reflected pounds 1.2m spend on marketing and the costs of strengthening senior management.