Clarks enters talks with landlords over plan to shut 50 stores putting hundreds of jobs at risk as part of new reduced rent deal based on turnover at each branch
- Clarks could shut 50 of its 345 stores as footwear retailer battles to survive
- Footwear retailer in talks with landlords about shop closures and rent cuts
- It is discussing possible restructuring that would see it pay a ‘turnover rent’
- Hundreds of jobs are said to be at risk amid company voluntary arrangement
It has a proud 195-history having been a Quaker enterprise that grew from humble beginnings to become the world’s best-known shoe brand.
But Clarks is now yet another high street chain being hammered by the coronavirus crisis, with fears around 50 of its 345 stores could be shut as it battles to survive.
The footwear retailer based in Street, Somerset, has begun talks with landlords about shop closures and rent reductions with hundreds of jobs said to be at risk.
A man walks past a Clarks shoe shop in West London (file picture)
Bosses for Clarks and their advisers are meeting with landlords this week to discuss a possible restructuring that would see it pay a ‘turnover rent’, reported Sky News.
The deal would be a company voluntary arrangement or CVA, which is a form of insolvency mechanism used by retailers and casual dining businesses.
If the move is approved by creditors it would mean Clark can receive more than £100million cash from Hong Kong-based private equity firm LionRock Capital.
That would see the Clark family lose majority ownership of the company for the first time since it was founded by Cyrus and James Clark in 1825.
Clarks grew from humble beginnings to become the world’s best-known shoe brand
A Clarks spokesman said: ‘We recently announced Clarks’ long-term ‘Made to Last’ strategy that is designed to ensure that our business has a sustainable and successful future, keeping it in step with changes in how consumers around the world choose and buy their shoes.
Clark: 195-year-old firm founded by Quakers that is best known for the Desert Boot
Clarks was established in Street, Somerset, in 1825 when Quakers Cyrus and James Clark moved from making rugs out of sheepskin to footwear by using the off cuts to produce slippers.
More than 22,000 Clarks styles have been produced since, and the chain is perhaps best known for its Desert Boot made of calf suede leather.
A Clarks Desert Boot advert in the 1980s
More than ten million of the boot were made after Nathan Clark came up with the idea while serving as an officer in the Royal Army Service Corps in Burma during the Second World War in 1941.
They have since been worn by the likes of Liam Gallagher, Bob Dylan, Robbie Williams and even Tony Blair.
It enjoyed a boom in the 2000s as sales of the boots soared and had pre-tax profits of more than £100million.
But the company has been hit in recent years by the decline of the high street which has intensified in recent months thanks to the lockdown that closed all its stores between late March and July.
The business relocated the bulk of its production to Asia in 2005 and shut its last remaining British plant in 2006.
‘As part of this strategy, the Clarks board of directors is currently reviewing options to best position our business, our people and the Clarks brand for future long-term growth.’
It comes as data revaeled footfall on the UK’s high streets has fallen by 3 per cent in seven days as local lockdown restrictions dealt a new hammer blow to retailers.
The number of people shopping at UK retail destinations – including high streets, shopping centres and retail parks – dropped by 1.2 per cent last week, according to retail experts Springboard.
It was only around a third of the week-on-week decline of 3.1 per cent the week before. But it is not known yet the extent Wales’ firebreak lockdown coupled with the half-term school holidays could impact next week’s figures.
Most of last week’s fall was suffered by high streets – as footfall declined by 0.1 per cent in shopping centres and actually rose by 1.3 per cent in retail parks.
In May, Clarks announced 160 redundancies globally, including 108 job losses at its headquarters in Street, Somerset.
The retailer said it expected that roughly 700 employees will leave the business over the 18 months up to winter 2021, after creating 200 new roles.
The company said 170 employees left the business last year as it started its turnaround strategy.
It also said that the business would focus on three specific parts of its brand portfolio – Clarks Originals, Clarks Collection and Cloudsteppers by Clarks.
Meanwhile research today suggested deserted high streets and city centres are hampering Britain’s jobs recovery.
Urban areas in Scotland and south England are bearing the steepest declines in vacancies, the Centre for Cities found.
The think tank, and jobs site Indeed, found that seven months after the nationwide lockdown was imposed, job vacancies have failed to return to pre-Covid levels in all 63 towns and cities analysed.
Aberdeen recorded the steepest fall with a 75 per cent year-on-year decline, followed by Edinburgh (57 per cent), then Belfast and the West Sussex town of Crawley (both 55 per cent).
London has seen the sixth biggest fall in job postings at 52 per cent, while overall UK vacancies are 46 per cent behind last year’s level, said the report.
The rise in people working from home has dried up demand for local services in big cities, it was indicated.
While no area of the country or sector has escaped the labour market crisis, those where high street footfall returned to normal more quickly, such as Birkenhead, Chatham and Hull, have seen a faster recovery in job vacancies, the report said.