Clarks has announced significant job cuts as it faces financial challenges, with more than 150 roles at risk worldwide.
- The retailer reported a £20.3m operating loss for the year ending 31 December 2023, a stark contrast to the previous year’s £54.5m profit.
- Job reductions are spread across global offices, including key locations such as Somerset, UK, and Massachusetts, USA.
- Contributing factors to the financial downturn include weak demand in full-price channels and inflationary pressures.
- Leadership changes have occurred, with key executives departing and an interim executive committee now in place.
Clarks is undertaking substantial job cuts globally as it grapples with financial difficulties, posing a threat to over 150 positions. The roles affected are diverse, spread across Clarks’ offices in Somerset, Massachusetts, and other international locations such as Shanghai and Tokyo. This move follows a previous round of redundancies, where 103 roles were eliminated to safeguard the company’s progress in improving trading performance.
For the fiscal year ending 31 December 2023, Clarks reported an operating loss of £20.3 million, a significant downturn from the £54.5 million profit achieved the prior year. Revenue increased by 1.4% to £994.5 million, yet the loss before tax amounted to £39.8 million compared to a £35.9 million profit previously. The disappointing financial results were due in part to one-off costs totalling £52.8 million, with store impairment charges alone reaching £41.6 million.
Clarks identified several reasons for its financial woes, citing weak demand in full-price channels and inflationary pressures on product costs. Additionally, challenges arose from wholesale partners’ overstocking and a promotional marketplace. The company acknowledged that these factors led to outcomes that fell short of forecasts and prior year standards, amidst a business climate marked by uncertainty and persisting pessimism that prevails, especially in Western regions.
In light of these challenges, Clarks has experienced a reshuffle in its leadership team. Notably, the UK and Ireland managing director and the chief product officer have departed, succeeding the earlier exit of the CEO. Currently, Clarks is being steered by an interim executive committee, formed under the guidance of chairman Colin Li. This committee is tasked with navigating the company through its current difficulties.
Clarks’ financial position has also been affected, with its net cash reserves dwindling to £20.4 million from £52.1 million at the close of the previous year. The retailer’s majority stakeholder since 2021, Hong Kong-based Viva Goods, remains actively involved, alongside the Clark family’s continued minority ownership. However, the company has opted not to comment publicly on the specific job cuts.
The challenges faced by Clarks highlight the current economic pressures impacting the retail sector.
