Clarks sees 48% profit drop amid sterling woes

By

Barbara Santamaria

Published
May 22, 2017

British shoe retailer Clarks has warned that the post-Brexit vote decline in the pound will likely hit its profit this year as it revealed a 48% decline in profits in 2016.

The business has recently submitted its accounts for the year ended 31 January, revealing a slump in profits to £20 million as a result of a restructuring, clearance markdowns and the drop in the pound.

Meanwhile, favourable exchange rates helped the retailer post an 8% rise in turnover to £1.7 billion as income from overseas subsidiaries translated favourably back into sterling.

But the company’s chief executive Mike Shearwood said the sterling fall will have a “profound effect” on cash flow and profit at the footwear business and that it “brings risk and uncertainty” this year.

The former Karen Millen CEO was appointed in September last year to lead the company amid a turnaround of the retail and wholesale business. Under his leadership, Clarks hired Harper Dennis Hobbs earlier this year to conduct a full review and modernisation of its property portfolio and is working on reducing the lead time for products from 72 weeks to 46.

The business axed 60 roles at its headquarters in Somerset in April.

85% of the company is owned by Clark family members, with business investors and employees owning the rest. They will divide up £16.5m in dividends this year, compared with £42.5m last year.