UK footwear manufacturer Clarks has sounded an upbeat note despite moving to a loss in its last financial year, hurt by historic losses in the US.
For the 2017/18 financial year, Clarks swung to a loss of GBP31.1m (US$41.7m) from earnings of GBP26.5m a year earlier, driven entirely by a one-time, non-cash impact from the US tax reform. Adjusted for the charge, earnings amounted to GBP12.3m.
Clarks, which is preparing to begin making shoes in the UK again, says it is relatively less exposed to the UK market than many of its competitors.
Operating in over 90 markets, China is the company’s third largest market where it has 124 stores and 420 concessions. It has continued to increase investment here and saw sales grow 11.2% at constant exchange rates in 2017/18. Meanwhile, total sales fell 6.7% to GBP1.54bn.
A decade after Clarks shuttered its last manufacturing facility in the UK, the company is preparing to begin footwear production at its headquarters in Street, Somerset this summer. The new facility that will utilise “cutting-edge technology” for greater speed to market and greater flexibility and innovation in design.
“Clarks is on a journey to become a brand-led company through a renewed and segmented brand approach to better target consumers in the 90 markets in which we operate,” the company said in its trading statement today (23 May).
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By GlobalData“The retail environment remains challenging for all organisations, with increasing cost pressures and ever-changing consumer expectations. Our renewed strategy focused on business fundamentals will address this and deliver sustainable improvement in Clarks’ performance in its established markets.”
Clarks has been focusing on de-risking the balance sheet, and as such, net borrowings at the end of the financial year were GBP27.3m, representing a year-on-year reduction of GBP106.4m.
“We will continue to work hard to rebuild the profitability of the business and have invested in the capabilities and expertise of the team to deliver on our business objectives,” the company concluded.
