Liberty freely admits bidders are circling

Bidders may apparently fork out £70m for department store Liberty. The question is: why?

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Last Updated: 06 Nov 2012

Happy days for Liberty: after months of speculation, the famous London department store said this morning that it has received a number of bid approaches. The 134-year-old British retailer, which was put up for sale by majority shareholder MWB last summer, could apparently fetch up to £70m. That’s about the same valuation it had when MWB bought its controlling stake 10 years ago, suggesting that not much has changed since – despite several changes of leadership and MWB’s grand ambitions to turn the company into a successful e-tailer. On the other hand, revenues do seem to be climbing again, which is more than can be said for lots of other retailers at the moment. Just look at the Argos figures out today…

Liberty, which also owns a fabric company and luxury goods brand as well as the historic Regent Street store (plus another on Sloane Street), has spent the last six months thinking about how it might be able to raise some cash in order to expand operations at home and abroad. As well as a possible sale of the whole business, it’s also thought to have been mulling the sale and leaseback of its flagship store in London's prime West End theatre district, which would apparently generate about £40m. Nice.

Liberty didn’t disclose the identity of any interested parties, but rumour has it that luxury investor Robert Bensoussan and Marco Capello, former MD of Merrill Lynch Private Equity, are among those vying for the business. But whoever it is will certainly have their work cut out. Liberty may be a big name and a famous brand, but it has had a rather inglorious recent history; when MWB bought it 10 years ago, the company had just reported a pre-tax loss of almost £1m, following a boardroom coup that led to the ousting of chairman Denis Cassidy. To be fair, things do seem to be looking up: overall revenues were up a very healthy 20% last year in a very tough market. But its 1920s heyday was a long time ago now; unless there's an unexpected Arts & Crafts revival, the new owner is going to have to come up with something pretty clever to bring the good times back.

Speaking of tough markets, there were some rather nasty results out today from Home Retail Group: Britain’s biggest household goods retailer said that like-for-like sales at Argos were down by a whopping 9.4% last quarter on the same period last year, with sales at sister company Homebase also down (albeit by a less dramatic 0.6%). CEO Terry Duddy refused to be downbeat, suggesting that the company’s full year profits would be slightly ahead of market expectations at around £290m.

But make no mistake: it’s a tough time to be in retail. So however well it did last year, it’s a brave investor that will fork out £70m for Liberty in the current climate...


In today's bulletin:

UK firms slammed over Lehman collapse
BA staff to strike for seven days before Easter
Liberty freely admits bidders are circling
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