Clarks on the lookout for reboot underneath new management
PICTURE SOURCE – YOUTUBE
Clarks started with sheepskin slippers in 1825, but Clarks is leaving his comfort zone in the struggle for survival under new Chinese leadership.
The British shoe institution, founded by Quaker brothers Cyrus and James Clark, switched from comfort to fashion after desert boots, inspired by James’ great-grandson Nathan Clark’s time in Burma in the 1940s, became the footwear of choice for the Beatles, Oasis and Generations of became reggae artists.
The founding Clarks family was forced to cede control to Chinese Olympic gold medalist Li Ning and private equity group LionRock after they slipped into the red and struggled to refinance their debts after years of malaise.
Li Ning, the billionaire former gymnast who now runs an athletic shoe colossus with sales of RMB 14.4 billion (£ 1.7 billion), teamed up with LionRock before hitting $ 100 million.
Chinese investors want to follow the example of Dr. Martens and Birkenstock follow, transforming Clarks from a historic brand and Somerset pride into an international powerhouse led by expansion in Asia.
Industry insiders say they will use the Li Ning brand’s contacts to help secure Clarks’ expansion in China and beyond. “Britain won’t be that important now,” said one.
“You are born in Clarks and you die in Clarks, but between 10 and 70 you don’t want them,” said an industry expert.
“The taste was moving faster than they did and the market quickly disappeared into the mid to higher price range,” said one rival.
As the pandemic worsened the years of bad trade, Clarks cut its dividend to shareholders, including the founding family, for the second straight year in January. It did so after sales for the year ended January 30 increased 43% to £ 775 million. Net debt rose to £ 98 million from £ 32 million a year ago and net pension income decreased from nearly £ 128 million to just £ 9.9 million last year.
Clarks’ board of directors warned in May that there was “material uncertainty” about its ability to meet the goals, given the ongoing pandemic.
While Clarks acted ahead of budget when filing its annual report in May, the company said changes in consumer behavior “could raise significant doubts”. [the company’s] Going concern ”and may need to consider an“ equity boost ”or debt swap to raise more cash.
Clarks said his most recently filed accounts reflect the “significant impact” the pandemic had on his business around the world.
A Clarks spokesperson said: “We are pleased that the company is currently on track to meet its forecast sales and earnings targets and that our debt and liquidity positions have improved significantly over the past few months. We still face many challenges, but the relaxation of the pandemic restrictions in our key markets and the strong cost management over the past six months have resulted in an improved financial position in a very short space of time. “
Since LionRock acquired a majority stake in the company, it has implemented a “focused turnaround strategy aimed at securing the future of the company and creating a basis for sustainable growth in the years to come”.
His future strategy could take another turn as Clarks searches for a new boss after going through six directors in as many years. Johnny Chen, the chairman of Clarks, is currently acting as interim boss after taking over Victor Herrero, a former manager of the US fashion label Guess, who stepped down earlier this month after only nine months in that role.