Clarks slips into the red despite sales stepping towards £1bn
Clarks fell to a loss of almost £40m in 2023 despite its revenue increasing to almost £1bn during the year, it has been revealed.
The historic Somerset-headquartered company has reported a pre-tax loss of £39.8m after making a pre-tax profit of £35.9m in the 48 weeks to the end of 2022.
Newly-filed documents with Companies House also show that its revenue increased from £980.3m to £994.5m over the same period.
Clarks said it faced a number of one-off costs in 2023 including £4.6m on restructuring, a £3m increase in the bad debt provision for sales made by the company to its joint venture and an impairment charge on store assets of £41.6m. It also spent £3.6m to support a major upgrade to legacy systems.
Clarks said that it faced “weak demand in full price channels”, its Western outlet stores performing below expectations and wholesale demand reduced.
The company added that a “promotional marketplace and a discount hungry consumer” have led to pressure on selling prices and the level of promotions offered by the business.
Clarks said: “A combination of the above factors has resulted in loss after tax performance short of target expectations and last year’s levels.
“Weaker consumer sentiment is exacerbated by the hangover from supply chain issues in 2022 that has impacted the confidence of some consumers and trade partners, along with continued structural pressure on margins from exchange rates and inflationary impacts on costs.”
Clarks: ‘2023 has been a challenging year’
A statement signed off by the board said: “The business and trading environment at the close of 2023 is one of ongoing uncertainty and relative pessimism, especially in the Western hemisphere.
“Continuing major conflicts and inflationary pressures are the key drivers in subdued consumer sentiment, resulting in stagnant economic growth expectations in major markets.
“This is evident in the financial performance of Clarks in 2023, operating in a market with weak demand that has been ‘over supplied’ in the global recovery post pandemic.
“Whilst 2023 has been a challenging year financially, there has been some notable achievements and high points.
“Inventory focus and control has been a particular highlight, managing to reduce inventory aged over two years by 76.7 per cent versus the prior year.
“The business has also completed investments in technology platforms to replace legacy systems, recovered supply chain operations and continued to generate brand heat in multiple important territories.
“Borrowing continues to be controlled and managed well within the ceiling of the current facility, with more than three years remaining on the life of the facility.”
Clarks was founded in 1825 and is majority-owned by Viva Goods Company.
Clarks CEO steps down after two years
The accounts come after City PM reported in April 2024 that the chief executive of Clarks resigned after two years in the role.
Jon Ram had been on the job since April 2022 having previously been group president of global activewear at Hanesbrands in the US. He has also served in several senior roles at New Balance and the NBA.
In a statement, Clarks said Ram had decided to leave the company to “pursue other opportunities”.
The business added that an interim executive committee would be formed to lead the firm until a new chief executive is appointed.