C&J Clark (Clarks) said in its annual report that it wants to shift its development focus to Asia in the next five years, with the aim of building up a business of similar scale to Europe and the Americas by 2023/24. The company will also boost marketing and drive its global online sales operations, aiming for annual double-digit growth in the segment, while trying to reach mid-single-digit growth for its wholesale operations in the Americas.
It will continue to scale back its own and franchised brick-and-mortar store network in the U.S., the U.K. and the rest of Europe, where it already closed 56 stores in the past year, and it will exit some smaller markets. The company is trying to renegotiate onerous leases with landlords as an alternative to straight shutdowns.
At the end of the last financial year, the group had a total of 784 directly operated stores around the world, down from 840 a year earlier, including 410 stores in the U.K., 276 in the Americas, 26 in the rest of Europe and 72 in the rest of the world. Adding franchises, the total number of doors was down to 1,377 units from 1,453.
The new priorities for the next five years were set after a comprehensive strategic review which showed that Clarks' gross and operating margins are lower than that of some of its competitors and that it is spending less than they do on marketing as a percentage of sales. One of the reasons is that it has a costly and complex structure because it uses many different distribution models, trying to respond to differing customer needs in three different regions of the world. Another factor is a costly and complex IT infrastructure that doesn't meet all the company's requirements.
The new strategic plan was formulated in the annual report by the company's former interim chief executive, Stella David, who became the new executive chairman of Clarks at its annual meeting on May 3, taking the place of Thomas O'Neill after nearly 15 years in the post. The business plan is due to be implemented by Giorgio Presca, the seasoned Italian footwear executive who became the company's new CEO in March.
The company has already built up an in-house digital engineering team of 40 people that has enabled Clarks to launch new omni-channel capabilities in the U.K., fulfilling e-commerce orders in its stores. The company launched new web stores in the U.K. and Japan last year and is investing £8.2 million (€9.4m-$10.4m) this year on new consumer websites in other key markets. Clarks has also almost fully transitioned its SAP platform to a new HANA operating system with enhanced analytical capabilities.
O'Neill said in the report that Clarks will also seek to diversify its portfolio into the athleisure sector through the development of its Cloudstepper concept, which is being supported in China with the establishment of dedicated pop-up stores intended to boost brand awareness. The company has also decided to set up a European Distribution Center in Continental Europe to prepare it for the U.K.'s exit from the European Union.
O'Neill, who plans to remain a shareholder of the group, said that Clarks should continue to generate cash, but the outlook is still “extremely challenging,” especially in the U.K. and the U.S.