British footwear giant Clarks, operating as C&J Clark International Limited, has released its financial accounts for the 48 weeks ending last year, revealing a decline in both turnover and net profit.
C&J Clark International represents Clarks’ operations in the UK, part of its European wholesale business, and all of its wholesale operations in Asia. These figures do not encompass Clarks’ entire global business, and the reporting period is shorter to align with its parent company’s financial year, which partially explains the reduced turnover.
Turnover dropped by 2%, reaching £502.8 million, while operating profit surged by 53% to £37.1 million. However, net profit experienced a significant decline, plummeting by 28% to £22.6 million.
The company cited the lingering impact of the pandemic, which had mostly subsided during this period. However, it faced challenges in meeting post-pandemic demand due to global supply chain disruptions in the first half of the year. This resulted in delayed product deliveries, intermittent quality issues, and reduced stock availability, consequently leading to lower conversion rates, both in physical stores and online.
Clarks also mentioned that ongoing supply chain problems limited the amount of SS22 (Spring/Summer 2022) stock available in its UK and Republic of Ireland stores, further impacting conversion rates. To counterbalance these challenges, the company implemented pricing initiatives, raising average selling prices.
In addition, direct-to-consumer trading softened from October onwards, primarily due to the UK’s cost-of-living crisis and high inflation, making consumers more price-conscious. Despite an earlier focus on higher prices, the company increased promotional activities in the second half of the year to stimulate sales volumes. Surprisingly, this move did not adversely affect the business, and by December, both average selling prices and gross margin were higher compared to the previous 12-month financial period ending in late January 2022.
As for the decline in profits, Clarks attributed it to increased overheads, as the company was no longer benefiting from one-off government support related to the pandemic, such as business rates grants and furlough credits.
Despite these challenges, Clarks appears to be making positive strides under new ownership, rebounding from a near-existential crisis it faced a few years ago. The brand has undergone transformational changes in 2023, with key product launches, major campaigns targeting younger consumers, involvement in the metaverse, and creative collaborations with cultural figures like Set Free Richardson, Nile Rodgers, Cat Burns, Aleali May, and more.