Clarks posts £32m loss as ‘promotional marketplace’ puts pressure on margins

The footwear retailer saw its margins shrink as it relied on promotional activity to encourage a “discount-hungry” consumer through its doors.

Credit: William Barton / Shutterstock

Clarks has blamed an overreliance on promotions in a “sticky” inflationary environment as reason for its poor performance over the past year.

The British footwear company posted an after-tax loss of £32.1m, a sharp decline of £54.5m from the £22.4m profit it made in the 48 weeks to 31 December 2022. This was despite the business growing its revenue in 2023 to £994.5m up from £980.3m in the prior year.

The business attributed much of the loss to £52.8m in one-off costs, in particular, impairment charges on store assets that totalled £41.6m in its filing to Companies House this week.

Clarks is also facing up to what it calls several “headwinds” in the Western hemisphere which impacted its performance. It pointed to “weak demand” in full price channels as consumers continued to be impacted by cost of living challenges and ultimately led to “dampened” customer demand and store footfall trending below last year.

It also blamed a “promotional marketplace” and “discount-hungry consumer” for putting pressure on selling prices and the level of promotional activity it felt compelled to offer.

“In addition, pressure on product cost prices, driven largely by inflation and exchange rates has resulted in lower-than-expected margin rates in 2023,” said the board in a signed statement.

Welcome to IMGFUCK: Seven steps to kicking your price-promotion addictionIt praised its marketing team for continuing to drive a “social first, consumer centric strategy” for its ‘For The World Ahead’ brand platform. It claims its “well-established” consumer segmentation approach has allowed the business to target “both new and existing consumers” who drive the most sustainable brand and value growth.

Clarks – not too dissimilar to Dr Martens – also says it has moved to an “always on” product marketing approach across its digital and social media platforms, in-store point of sale and direct mail campaigns. This strategy is to “elevate” the brand, drive traffic and build loyalty, it claims.

To turn around its fortunes, the business is looking to “recapture and grow” its established markets of the UK and US. It says the perception of the Clarks brand in the Americas has improved and due to “successful marketing campaigns” it is visible in new places and attracting more “contemporary” consumers.

While in the UK, it “halted” its long-term market share decline and saw growth in the men’s market among UK consumers aged 30 to 44.

The business also points to a refreshed leadership team in the UK to help build future plans in its home market.

There was, however, no mention of an increase in marketing budget.