The future of Oxford University's business venture with Liberty was in the balance this week following the upmarket retailers' announcement that all its branches outside London are to close to stem mounting financial losses.

The university said its international business, known as Oxford Ltd, had projected sales worldwide of Pounds 4 million next year and discussions were taking place with Liberty about the future of the Oxford Collection Shop in the city's high street. The premises and staff are provided by Liberty.

June Clark, managing director of Oxford Ltd and director of the university's research services, said the university was keen to maintain a retail presence in Oxford and played down the impact of Liberty's financial crisis.

"It has been great having Liberty as a partner and if they are pulling out we shall obviously be sorry but we are now five years in to the business, which is continuing to grow," she said.

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Oxford Ltd was set up five years ago to license the university's registered trademark. The company produces a selection of merchandise such as T-shirts, mugs and pens bearing the university logo. These are on sale through a number of licensed outlets throughout the United Kingdom and overseas, including the Oxford Collection shop.

Liberty has been a key player in the business and essential to its development, according to Ms Clark, designing the trademark and working on a range of merchandise. The International Management Group, a sports marketing organisation, is also a partner in the venture acquiring new licensees for the operation.

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The majority of Oxford Ltd's sales are to Japan and Southeast Asia and Ms Clark said newer lines including rings and ceramics were selling well there. "We have doubled our sales in three years and are very positive about the future," she said. However, she would not reveal how much income the business generated for the university saying only that there was a "reasonable income stream" providing valuable unearmarked funds.

Liberty is expected to make a further announcement about the future of its various operations at the end of next week, along with its financial results for the year.

The shop closures will cost Pounds 5 million and a recent warning to shareholders indicated that profits would be down more than Pounds 1 million.