Tourist slump drives Liberty to £15.5m loss

Losses at the department store Liberty have spiralled to £15.5m in the past year, its owner, Retail Stores, revealed yesterday.

The news came as Retail Stores' dominant shareholder, Marylebone Warwick Balfour, posted a group loss of £109.5m for the year ended 30 June.

As well as the difficulties at Liberty, which has a flagship store on London's Regent Street, MWB was hit by a sharp downturn at its serviced offices business.

MWB shares closed down 25 per cent at 49p, its biggest one-day decline in six years, on a raft of negative announcements from the company.

Analysts said that investors should have been prepared for the full-year outcome after the group flagged up most of its problems in the first half, which was responsible for most of the full-year losses.

Occupancies at MWB Business Exchange centres fell to 61 per cent, from 72 per cent in the previous year. The company has also had to slash the rates it charges tenants.

Brian Myerson, the chairman of MWB, said: "This has been an extremely difficult year for the group. As we look forward, much will depend on the global economy and conditions in our specific markets and with that in mind we are adopting a cautious view on the current year."

Retail Stores said Liberty's results were affected by a reduction in tourist trade following the 11 September terrorist attacks, and 12 per cent less space at Regent Street due to refurbishment. It said that it was creditable that the sales were down "only" 10 per cent as a result, at £46.8m.

Richard Balfour-Lynn, the chairman of Retail Stores, said: "This has been something of a roller-coaster year for Liberty. On one hand the period saw the refurbishment and re-opening of 17,000 sq ft of new and modern retailing in Regent House to great acclaim while on the other, the events of 11 September had an instant impact on our overseas customer base."

The losses were also badly hit by Retail Stores' decision to write-down the value of the Liberty brand by £11.4m to reflect the "tougher retailing climate". Liberty, known for its fashion, fabrics and gifts, also generates sales through satellite sites in Windsor and at Heathrow airport, and a venture in Japan.

Retail Stores was set up as an AIM-listed group to buy Liberty two years ago, with the property group Marylebone Warwick Balfour a key backer.

Mr Richard Balfour-Lynn insisted work to revive the business was beginning to pay off. Underlying operating losses in the business were cut by £3m to £1.9m as it benefited from a reduction in running costs. "Our key objective is to return the flagship store to profitability, something we believe we are close to achieving," he said.

But the bottom-line pre-tax loss of £15.5m compares with pre-tax losses of £4.3m for the same period a year ago.