Liberty plans a fresh start as Austen exits

Plummeting profits have forced Liberty to restructure, but will prestige be enough to guarantee success?

Since Patrick Austen joined in 1993, Liberty and its chief executive have just about managed to tread water. Until last week, that is.

Profits at the upmarket store plunged and Austen was given his marching orders. Austen, previously group chief executive of BTR’s consumer products division, had signally failed to reverse a five-year profits decline. Pre-tax profits, which hit 7.23m in 1990, came in at only 2.1m for the year ending January 27.

Last year’s results have been blamed on everything from poor retail conditions to a decline in women sewing their own clothes. Everything that is except poor management.

Admittedly, there were other complications. While Austen was trying to calm investors on the back of poor interim results last September, he came under a different sort of spotlight. Newspaper headlines played on the rather tenuous link between Austen and the mysterious death of his former wife’s lover.

So it came as no great surprise when Liberty chairman Denis Cassidy took drastic action last week and relieved Austen of his 236,000 a year job. His replacement Ian Thomson is already in place.

Thomson, a former Sears director who is credited with restructuring British Shoe Corporation, left that company after he was shifted sideways into a supply role.

Thomson and Cassidy have already slimmed down the Liberty board. Three board directors – Tony Salem, John Pugh and John Laflin – have stepped down but will continue in their present jobs.

The shake-up comes amid plans to set up a marketing department – a move that Austen announced last November (MW November 24).

Liberty has been hunting for a marketing director to co-ordinate its wholesale and retail divisions, and to help promote the brand worldwide.

City analysts and sources close to the company say there has been extremely poor managerial co-ordination, especially in areas relating to advertising and marketing.

The lack of direction originates at the top, according to one analyst. “Everyone wondered what Austen actually did,” she says.

The company would not comment on the restructure and why Austen was forced out, but questions have been raised over his relationship with Cassidy. When he joined last year, Austen remarked: “Clearly, he will work part-time as he has other responsibilities. He will have authority, but is not going to be running the company or any of its divisions.”

Liberty claims the group is embarking on a “strategic review” which will result in major restructuring and focus on the “recreation and development” of the brand.

Advertising agencies have effectively acted as the marketing arm of Liberty – but relationships are understood to have been strained by a frustrating lack of direction.

Bartle Bogle Hegarty split from Liberty last January, after declining to repitch for the 1.5m creative account it had held for eight years. BBH vice-chairman Martin Smith said at the time that the account was worth only 200,000 and BBH was “not the most appropriate agency to handle the business anymore”.

Dampier Communications and CIA Medianetwork now share the account.

Liberty is split into three core areas: Liberty of London prints, which includes the fabrics and textiles divisions; Liberty retail; and Liberty brand products.

Part of the overhaul involves slimming down Liberty’s 20 UK branches to focus more clearly on the brand and its Regent Street flagship.

Thomson declined to comment on the group’s future plans or whether there will be imminent closure of some stores outside London.

However, it is understood the group’s successful Heathrow stores will be exempt from the shake-up.

“Any business that’s been around for the more than 100 years needs to change, to evolve – they have left their changes quite late,” observes one City analyst.

However, it was not through lack of advice. Two years ago, Liberty was advised that it needed a better marketing infrastructure. Charles Barker was hired to gather marketing and PR ideas.

Market Research company GSR Group was also taken on and produced recommendations for Liberty in January 1994. Both companies declined to comment on what marketing initiatives they recommended.

Whatever comes of the planned shake-up, the board and its new chief executive will be mindful of anxious Liberty shareholders.

The Stewart-Liberty family owns 44 per cent of the business, with South African investor Bryan Myerson sitting on a further 17 per cent. At its interim results last week, the board announced that it would not be recommending a final dividend.

A lot of effort will be needed to turn around staff morale at the Regent Street store, which one insider described as a “graveyard” after last week’s events.

But as one analyst adds, Liberty will survive because it is a unique brand. “It’s in its own field with a wonderful tradition and history, a fabulous building and quirky designing.”

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here