Family blood-letting that sealed emporium's fate

When Arthur Liberty designed his Regent Street store in the 1920s he wanted an atmosphere that would encourage customers to feel they were walking round their own homes. It was an ethos Elizabeth Stewart-Liberty, wife of a former chairman and main shareholder, took to heart.

Staff knew she was not to be disturbed if she was found sitting on one of the beds writing letters. But from now on she will have to deal with her correspondence in her own home. The family's involvement with the 150-year-old store ended yesterday with the announcement they are selling their 20.7 per cent stake, which will net £15m. The store will be run by Marylebone, Warwick, Balfour, a property company.

It marks the end of 10 years of feuding between family members and lately the family and directors. As one joke has it: "Why are the carpets fitted at Liberty? To hide the blood on the floor."

Liberty was once a profitable retailer whose clientele valued beauty and quality over price but its traditional customers, the printed-headscarf set from the Home Counties, are vanishing. It is a far cry from when Arthur Liberty led the way in encouraging the Arts and Craft movement and developing Art Nouveau. Proust bought his ties and George Bernard Shaw employed his designers. Isadora Duncan wore his scarves and Gilbert and Sullivan dressed their actors in his fabrics.

Liberty started the store with a £2,000 loan from hisfather-in-law after his previous employers, the Great Shawl and Cloak Emporium in Regent Street, refused to give him a partnership. He set up Liberty across the road with a 16-year-old girl and a Japanese boy as staff. At the opening there were reports of baronets, architects and painters jostling to see the contents of a crate of Japanese fans. Liberty added dresses and textiles and imported silks, which he dyed himself. The store was the first to stock Chanel jumper suits and in the 1950s was at the forefront of furniture design, promoting Terence Conran among others.

But when Mrs StewartLiberty's husband, Arthur, great-nephew of the founder and a charismatic chairman, died in 1990, events began that culminated in the end of the Liberty family's involvement in their own shop. His sons, Richard and Oliver, argued over the future of the store. Oliver wanted to concentrate on traditional customers; Richard wanted to bring in a new clientele by turning the store into a centre for modern design.

Richard told buyers not to bother with the things Oliver had commissioned if they did not like them. Oliver was accused of being out of touch - he was stunned to find sheets he had bought were not selling, because people preferred duvets - and blamed Richard for not promoting his ideas properly.

Both brothers were eventually forced to step down from the board when Brian Myerson, who had acquired a 15 per cent stake, changed the non-voting shares into voting shares and they were asked to resign from the board. Richard was sacked by the new chairman, Denis Cassidy, although he won his claim for unfair dismissal.

It was the arrival of Mr Cassidy, a tough-talking Geordie and former boss of Newcastle United and Bhs, that reunited the family. He was brought in after complaints that the family were taking liberties with their inheritance. His insistence on modernising the store incensed them. He aggravated them still further by suspending the dividend on Liberty shares, losing Mrs Stewart-Liberty £200,000 income a year.

The Stewart-Libertys allied themselves with Mr Myerson and forced Mr Cassidy out. The latest act was played out yesterday. Whether Liberty can again turn around its fortunes remains to be seen.