The impact of the economic climate over the past 12 months on retailing has been well documented. Yet, in spite of the difficulties imposed by the credit crunch, Liberty was one of the sector’s few beacons as it produced a 9% uplift in sales across its business to £50.9m for the year.

The results for the year to 31 December 2008 reflect our strategy and foundations developed over the past 18 months. At the heart of this strategy is the creation of Liberty as a global luxury brand across our four distinct business activities, with each based on a common heritage and shared support functions. These foundations have been consolidated through the creation of a dynamic international executive team capable of delivering our key objectives and goals over the medium term.

Our major focus in 2008 was to restructure and invest significantly in our retailing activities, particularly in the flagship store and our online sales facility, culminating in the “Renaissance of Liberty” which was launched by the actress Freida Pinto, of the Oscar-winning film Slumdog Millionaire, in February 2009 to great acclaim, both from the public and the industry. Since the launch, I am pleased to report that trading has exceeded our expectations, delivering double-digit growth on comparative trading in 2008.

As a result of all these efforts, and despite the adverse economic climate, group sales for the year to end December 2008 totalled £50.9m against £46.7m for the same period a year earlier, with the flagship store virtually matching the previous year’s record performance at a little over £32m. We regard this as a very creditable performance in the current adverse economic and retailing climate.

Particular successes in the flagship came from Menswear, up 6%, and Beauty, up 5% on the comparative period in 2007. These two areas continue to underpin flagship store sales, producing consistent growth for the past three years and attracting our loyal Liberty customers back time and time again. We have exciting plans for our beauty hall in the second half of 2009, building on our range of exclusive and limited edition skincare, cosmetics, perfume and home fragrance products. Liberty carries one of the sharpest and most focused edited ranges of any store that carries luxury men’s clothing, which is attracting increasing footfall as customers discover the products that our experienced buyers have chosen.

EBITDA for the year slipped slightly from a loss of £3.5m to a loss of £3.9m, resulting in a pre-tax loss of £6.7m after increased interest and other costs, compared to £6.5m last year. It must be borne in mind that during the year the group had to bear some large one-off costs that included the launch of the independent Liberty of London store and our new internet sales platform, together with major reorganisation expenses within the flagship store in preparation for the Renaissance and to take the business forward in the coming years. All of these costs have been accounted for in the 2008 year results.

Liberty Art Fabrics, where restructuring started in 2007, delivered an impressive 31% sales growth and a 35% uplift in EBITDA. This remarkable performance was driven equally by our wholly-owned Japanese subsidiary assisted by a strong Yen and by the impact of our new international commercial team outside Japan.

Liberty Art Fabrics can now be seen on a wide array of global brands such as Nike, Balmain or Junya Wattanabe. Collaborations with contemporary artists such as Grayson Perry reinforced the positioning of our Art Fabrics Studio as one of the most avant-garde and eclectic providers of top quality fashion and design prints currently in London.

Liberty of London, our in-house studio which develops fashion accessories for men and women opened its stand-alone store on Sloane Street, Knightsbridge in July 2008 to critical acclaim from both the fashion and retail press alike. Although trading has been slower than anticipated, this store is helping us re-engineer our product strategy under the direction of our new commercial director, Fabio Guidetti, who joined in October 2008 with the clear objective to make Liberty of London profitable in the near future.

Liberty of London wholesale distribution, which only started in 2007, continued to expand in the most prestigious and directional stores such as Corso Como in Milan, Tokyo and Seoul, Jeffrey in New York and Le Bon Marché in Paris, with the total number of outlets now exceeding 100. Our men’s shirts collection was awarded the prestigious “best print of the year” award by Wallpaper magazine. A limited edition scarf for the Chelsea Flower Show met with immediate success and more collaborations with high-profile brands, designers and artists are planned for 2009.

We successfully launched the Liberty transactional website in July 2008 which has developed rapidly since then, culminating in excellent trading performance in the run up to Christmas. Spanning a selection of the best in Beauty, Design, Fashion and Gifts, the response to our fashion offer indicates a huge potential for this part of our business.

The worldwide potential of the website will be further enhanced by the global awareness of the Liberty brand name through the flagship store’s Renaissance as a leading curator of international Fashion, Design and Beauty.

Despite the general consensus that Christmas 2008 was going to be the worst for a very long time, Liberty virtually matched the record sales achieved in the previous year and exceeded forecasts. Contributing factors to the high level of sales were some excellent customer promotional events and our determination to clear stocks in preparation for the “Renaissance of Liberty” renovation programme within the flagship store, all of which achieved their targets.

At the heart of the flagship store’s Renaissance is a new lay out and product offer. There are now three new fashion floors with a large number of newly added exclusive brands. The new International Room on the first floor houses sophisticated collections from Jil Sander and Alexander McQueen next to the work of younger generation designers, such as Christopher Kane, Balmain, Josh Goot and Peter Piloto.

The central atrium on the first floor now showcases avant-garde anchor brands including Rick Owens, Martin Margiela, Acne and Dries Van Noten, each with their distinct corners in a beautiful light-flooded space.

Considerable thought has been given to our customers’ desire for affordable luxury. The new Essentials Room on the second floor houses focused selections of key pieces in denim, t-shirts and cashmere from hot brands such as Acne, Aquascutum and APC. The room will evolve season by season and is expertly edited to ensure that our customers are not overwhelmed by choice.

Our Home business has not been forgotten. New bathshop and gift areas are open on the third floor, and the revamped Dress Fabrics and Haberdashery atrium space is trading much better than expected. Carpets have moved to the east gallery, whilst Liberty of London Home enjoys a new atrium space with exposed fireplaces and comfortable seating.

The store has been further enhanced through the addition of a new scarf room and our jewellery room that has been doubled in size. At the same time we have re-focused Liberty’s bag offer with a wide range of accessible pieces and introduced, for the first time, sunglasses and hair accessories.

To support this Renaissance we have significantly upgraded service standards within the flagship store to provide a more friendly and welcoming approach from all staff. A new style service ensures expert advice is always available to even the most demanding clients but in a private and discreet environment.

In short, we are returning to our roots but with a 21st Century look and feel. What Arthur Liberty, the founder of Liberty, did was to make the store a fantastic backdrop for everything that was innovative and avant-garde in design, but still affordable. Supporting these products from around the world was a knowledgeable sales staff whose style and demeanour reflected the ambiance of the store and its range of design-led goods: and this is what we are achieving today.

Our principal aim is to re-capture our position as London’s destination for all that is avant-garde in the world of fashion whether that be womenswear, shoes, jewellery, accessories or fabrics. In turn this will enable our transactional website to expand globally, it will nurture the Liberty of London collections and make the brand more desirable. The website will also make our Liberty prints even more popular and fashionable, both to artists and discerning shopper alike, for whom Liberty will again become the retail destination of choice.

We appreciate we are entering a difficult and uncertain economic period. However, I am confident that investing during these challenging times to refocus our identity will considerably improve our ability to achieve our vision and create value for shareholders.

Geoffroy de La Bourdonnaye
Chief Executive
Liberty Plc
28 April 2009