Liberty shares slump as losses quadruple

LIBERTY, the troubled London department store, disclosed losses which have quadrupled in its first half as it was forced to cut prices to clear unwanted stock.

Shares in the retailer, which had already halved in value since the start of the year, yesterday dropped 12.5p to hit a new low of 170p as losses climbed from pounds 250,000 to pounds 1.1m.

Liberty warned that the second half of the year would prove even tougher due to falling consumer confidence and fewer tourists from Asia. But the company held out the prospect of a return to profits in 1999.

Shareholders have been urging the group to restructure since its dividend was suspended because of a deficit in its distributable reserves. The deficit was caused by a decision to write off losses after ditching a pounds 43m plan to expand its flagship store in London's Regent Street.

Suggestions for restructuring included a plan for a sale-and-leaseback deal on its Regent Street properties, or a straightforward rights issue. But Philip Bowman, the chairman, said neither was likely in the near future.

"Clearly a sale-and-leaseback is always an option. But we would get greater value by retaining ownership of all three properties than by splitting it up." Mr Bowman said a rights issue was an option but it had not yet been considered.

Michele Jobling, managing director since the start of the year, said costs had been stabilised. A cull of 95 of the group's 600 staff would help to save pounds 2.5m a year.

Liberty has suffered for decades from disputes between the families descended from its founders, the Blackmores and the Stewart-Libertys.

The feuding came to a head in December with the ousting of Dennis Cassidy, the former chairman. Elizabeth Stewart-Liberty, who owns 30 per cent of the company, teamed up with her former adversary Brian Myerson, a South African financier with a 17 per cent stake, to vote Mr Cassidy out.

The rest of the board, together with lawyers and advisers, resigned soon after.