Clarks plans permanent store closures, explores options
A “small number” of Clarks stores will not reopen after the coronavirus pandemic ends, the British shoe brand has revealed.
The Covid-19 crisis is putting further pressure on the family-owned footwear firm, which has been working with McKinsey & Co to review the business.
And according to sources cited by Sky News, the company has now hired advisers at Rothschild, the investment bank, to help it explore financing options. These could include accessing new borrowing facilities or launching a company voluntary agreement (CVA), although the company said it was not looking to make widespread shop closures.
But a spokesperson did confirm that a number of the retailer’s 347 UK stores will not reopen once the lockdown comes to an end.
Thousands of store staff have been placed on the government-funded furlough scheme to ensure they continue to receive up to 80% of their salaries during the enforced closure of non-food shops.
The loss-making business is thought to be assessing options for those who have not been furloughed.
A Clarks spokeswoman said: “Clarks continually reviews all its stores to ensure that they are the right size and located in the right areas in order to provide the best possible service and offering to its customers.
"As part of this normal review, we have decided not to renew the leases on a small number of stores and as such, these will cease to trade and will not reopen following the coronavirus closures.”
Clarks, which made an £82.9 million net loss in the year to February 2019, had previously described its stores as a “drag” on its financial performance. Led by new CEO Giorgio Presca, the brand has been warning of store closures for a while.
Patrick O’Brien, UK retail research director at GlobalData, a data and analytics company, said Clarks has an "excessive store estate".
“At the end of its FY2019, Clarks had 521 stores in the UK (including concessions), and while it began a portfolio review in 2017, it really should have started the process of eliminating stores much earlier, as the channel shift over the last decade has not come as a surprise," he said.
"Progress has been at a snail’s pace – while it has shut some concessions it had the same number of full-price stores in the UK at the end of FY2019 as it did at the end of FY2018. The truth is a lack of decisive action over the last five years has put another much-loved British retailer in a weaker position than it should be to withstand the current crisis.”
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