Clarks is bouncing back post-pandemic, is confident for future
C&J Clark (No 1) Limited — better know as footwear giant Clarks — has released its latest set of accounts and the headline story is one of recovery and progress for the firm that had seen quite a few tough years.
The accounts cover a shorter, 48-week period given that the company has changed its financial year to align with the calendar year (and its new owner's own financial year). But those 48 weeks showed “continued recovery from the impacts of Covid-19” and the company said turnover grew.
In fact, although the period covered is four weeks shorter than the previous 52-week year, turnover still managed to rise to £978.3 million from £920.3 million.
And profitability also continued in the right direction with profit before interest and tax rising to £74.8 million from £59.6 million for the earlier, longer period. Profit before tax was £61.3 million compared to £40.1 million. And net profit was £44.9 million compared to £55.4 million.
The profit boost reflected not only the sales growth, but also the maintenance of margins and cost controls.
The company’s ultimate parent company is Chinese Olympic gymnast-turned-business-mogul Li Ning’s Viva China Holdings Limited. Its indirect subsidiary Viva China Consumables Limited started its buyout of Clarks owner Lionrock Capital Partners QiLE Limited last year and complete it in January this year.
Viva China is in expansion mode and other recent investments include Hong Kong casualwear brand Bossini plus Italian luxury footwear maker Amedeo Testoni.
Black with Clarks, the company said that as well as the numbers, looking good, its brand positioning “continued to strengthen throughout 2022”, especially in the key US and markets, “with external metrics for brand affinity, brand love, and brand consideration all up”.
It saw market share growth in key categories, such as women's, sandals and boots, as well as men's boots in both of those markets.
At retail, last year it launched new shopfits for Clarks originals in Japan and the UK and for the main UK Clarks chain, with sales all “trending well above last year and well above the top doors in the chain”.
This was helped by more intensive marketing and having launched a new brand mantra, For The World Ahead, and campaign that saw “major success” across all regions, its social media following has also grown on both TikTok and Instagram. Its Clarks and New York: Soles of the City social mini documentary has also become its most viewed piece of social content, as well as winning several prizes.
Under CEO Jonathan Ram (who joined in April last year), the company said it's focusing on growing in existing and new markets and channels. Its plan is to return turnover to pre-Covid levels over the next three years as it heads towards its 200th anniversary. And it's “confident” in this, despite the current environment in which costs are surging and consumer demand is being impacted by the cost-of-living crisis.
Not everything last year was perfect. Despite the impact of Covid lessening in most regions, it couldn't meet the surge in post-pandemic, demand because of global supply chain issues in the first half.
This resulted in late deliveries, as well as “intermittent quality issues” and reduced stock availability. SS22 wholesale deliveries were disrupted in the US and Europe. And in its domestic market of the UK and Ireland, the reduced stock availability meant lower levels of conversion, both in-store and online.
And while it was able to sell a higher proportion of older stock and maintain prices, in H2, the cost-of-living crisis dented demand. That came as its cost base rose, due to global issues but also UK government support measures from which it had benefited in 2021 being withdrawn post-pandemic.
Consumer spending remains under pressure, but H2 still saw the average selling price and gross margin being higher than those achieved in the previous year in Britain.
But in EMEA, turnover fell as low wholesale turnover due to stock delays and reduced availability hit the SS22 season.
In the Americas, however, it saw improved performance across all channels and a significant recovery in consumer demand. It couldn't always meet that demand though, because of those stock availability issues. And an issue in H2 was customers becoming more price-sensitive.
The company also saw turnover in China declining across all channels due to the ongoing Covid restrictions throughout the year. But a better performance in other Asia-Pacific markets meant turnover for the region as a whole increased. In fact, Southeast Asia and India saw the largest increases post-pandemic, particularly around key holiday periods. Japan also benefited from successful new store openings in 2022.
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