Clarks losses widened as sales plunged last year
Clarks had a tough time of it last year, as did many others in the footwear sector. The company’s sales plummeted and its losses (on both an operating and net basis) in the 12 months to January 2021 rose many times over. But the firm is upbeat about the future under its new ownership.
The company, which had also been struggling pre-pandemic, was faced with a difficult environment as physical stores were forced to close. And even those consumers buying online weren’t shoe-focused, given how restricted their movements outside of their homes were.
The company is also a big provider of kids’ shoes for school but with schools shut, that was another sales avenue closed off, although when the back-to-school season resumed, the company did well.
In its filing at Companies House, C&J Clark Limited said turnover dropped 43.6% year-on-year to £775 million and the underlying operating loss was £70.9 million, down from profit of £46.2 million a year earlier. The net loss (that is, after tax) was £181.8 million after a profit of £17.2 million in the previous year.
The company said that “being a footwear retailer with a seasonally-driven business model, the impact of Covid-19 was immediate, given the reduced demand coincided with the spring/summer season”.
UK and Republic of Ireland turnover fell 42.7% due to lockdowns but the summer 2020 back-to-school campaign was “successful”.
EMEA turnover fell 38.9% and the Americas fell 48.5%, with lower sales in all channels except digital, which saw a small rise. Asia Pacific fell 31.9% with Grater China down 13.3%.
The company has seen a lot of change in the last couple of years with new owners stepping in and in November 2020, it entered a company voluntary arrangement (CVA). This allowed it to move to turnover-based rents for most of its extensive store estate for a three-year period.
A spokesperson said of all this: “The results for the year ending 30 January 2021 reflect the significant impact the pandemic has had on the Clarks business globally. In the current financial year, LionRock Capital acquired a majority stake in the business and following this Clarks has implemented a focused turnaround strategy designed to protect the future of the business, and to build a foundation for sustainable growth in the years ahead.
“We are pleased that the company is currently on track to meet or exceed its forecast revenue and profit goals, and our debt and cash positions have been considerably improved in the last few months. We still face many challenges, but the loosening of pandemic restrictions in our key markets and the strong management of costs in the past six months have resulted in the delivery of an improved financial position in rapid time.”
Its new owners injected a substantial sum into the business (£100 million in total) on taking it over so it clearly has the capital to continue.
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