Liberty Retail, the luxury London department store, has demonstrated signs of recovery in its latest financial results. The company’s total revenue reached £82 million in the year ending January 2023, up from £59.6 million in the previous year. This nearly restores revenue to pre-pandemic levels, although profitability has been affected by the higher variable costs associated with increased online sales, compared to the predominantly fixed costs of the flagship store.
Despite this hurdle, Liberty has experienced positive indicators of recovery. Sales per square foot at the flagship store rose to £1,072 in the latest period, compared to £779 the previous year. The company’s EBITDA, before exceptional costs, also showed improvement, with a loss of £3.5 million compared to a loss of £12.3 million in the previous year. However, it has not yet reached the £14.4 million profit generated before the pandemic hit.
Liberty’s flagship store in London’s West End faced closure at the beginning of the financial year due to lockdown measures and remained closed until mid-April. Even after reopening, footfall remained below normal, impacting trading. However, sales strengthened during the summer months, instilling confidence in management that the recovery would continue during the crucial Christmas trading quarter.
The pandemic has also had an impact on Liberty’s online business. Though the closure of physical stores led to a surge in online shopping, the challenge has been to retain these customers as stores reopened. Nevertheless, online revenue experienced slight growth during the period, which is a positive considering that physical stores were open for a larger number of weeks in 2022 compared to 2020.
One area where Liberty has found success is in its beauty offerings. The company has prioritized its beauty range in recent periods and has witnessed record-breaking sales in this category. The success can be attributed to its physical store presence and special launches such as the Liberty Beauty Advent Calendar. Additionally, Liberty introduced its first subscription service, Beauty Drop, which has garnered a strong initial response from customers. Beauty Drop offers curated beauty products in four boxes per year in exchange for a monthly spending commitment. Liberty expects this subscription service to increase customer retention among high-value customers in the long run.
In conclusion, while Liberty’s financial results demonstrate the ongoing impact of the pandemic, there are encouraging signs of recovery. The company’s focus on online sales and its beauty offerings have contributed to revenue growth, and the reopening of physical stores brings optimism for further expansion in the future.
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