Clarks stumbles after it commits fashion faux pas

CLARKS, Britain’s biggest footwear brand, has suffered its first sales setback in a decade, after facing strong competition from other retailers and committing some fashion faux pas.

Increased competition from supermarkets, discount stores and fashion outlets such as New Look and Oasis, which have added footwear to their range, meant that sales in Clarks’s core UK market fell by 3.8 per cent to £612.4 million in the year to January 31. Group turnover slid 3.4 per cent to £921.4 million.

Pre-tax profits dropped to £71.9 million last year, from £80.4 million in the previous year, after £3 million of exceptional costs relating to a new distribution centre and closure of the German Elefanten business.

The company gave warning that profits this year could take a hit of £10 million to £15 million if provisional tariffs on shoes imported from China and Vietnam are ratified this autumn.

Roger Pedder, the chairman, who will step down at the privately owned company’s annual meeting next week, said Clarks had suffered from a “genuinely tough market” in which footwear prices had fallen back by 3 per cent.

He said that the UK footwear market as a whole shrank by 4.3 per cent last year, and added: “We are still selling more shoes.”

However, figures from TNS Worldpanel Fashion, the market researcher, showed that Clarks’s market share slid by 0.6 of a percentage point to 8.2 per cent in the first part of this year.

Peter Bollinger, the chief executive, told Drapers, the fashion trade journal, that Clarks had made “errors in product mix, styling and consumer focus”.

He said that its spring range for women last year had focused too much on smart merchandise and not enough on casual, comfortable shoes. In tune with the footwear market as a whole, Clarks also experienced disappointing sales of boots last autumn as a result of the warm weather late into the season.

Men’s footwear performed slightly better but sales also declined on an underlying basis, while sales of children’s shoes remained level with the year before.