Landlords approve rescue deal for Clarks as the 195-year-old shoe shop company battles for survival - Culture

Landlords of shoe brand Clarks have approved a plan which will allow the struggling chain to pay no rent on many of its stores, as part of a rescue of the 195-year-old company.

Clarks said that 90 per cent of its creditors, which include landlords, have voted for its proposed company voluntary arrangement (CVA), a form of administration.

It clears a major hurdle for the 195-year-old retailer, which was rescued in a £100 million investment by Hong Kong-based private equity giant LionRock Capital earlier this month.

Philip de Klerk, Clarks’ interim chief executive said: ‘I am very pleased that the CVA was approved today. This is a significant step towards the formation of our new partnership with LionRock Capital.’

Clarks will stop paying rent on 60 of its stores and will switch to a revenue-based rent for the other 260 stores

A Clarks Desert Boot advert in the 1980s. More than ten million of the boot were made after Nathan Clark came up with the idea while serving as an officer in the Royal Army Service Corps

The deal still needs approval from shareholders before LionRock can take a majority stake in the business.

Deloitte partner Gavin Maher, who has worked on the CVA, said: ‘The approval of the CVA is an important milestone for Clarks, enabling the business to move forward.

‘The CVA, together with the proposed investment from LionRock, will provide a stable platform upon which the management’s transformation strategy can be delivered.’

Earlier this month, Clarks said that the CVA would allow it to continue paying staff, and that no jobs would be lost.

A man walks past a Clarks shoe shop in West London (file picture)

All 320 stores will remain open, but rent will be slashed to zero on 60 of them.

The rest of the shops will pay rent that is calculated by the amount of cash that the shop takes in.

The chain’s struggles are in stark contrast to the founding family, who have raked in £176.5 million in dividends in the last ten years.

Peacocks and Jaeger fall into administration with 4,700 jobs and 500 shops under threat

Fashion chains Peacocks and Jaeger have today fallen into administration, putting more than 4,700 jobs and almost 500 shops at risk.

The retailers, which were both part of billionaire Philip Day’s EWM Group retail empire, confirmed yesterday that they had appointed administrators from FRP Advisory.

The administrators said no redundancies or store closures have been confirmed yet.

Cardiff-based Peacocks operates 423 stores with 4,369 staff, while Jaeger, which was bought by Mr Day in May 2017, runs 76 stores and concessions and employs 347 staff.

The two companies were put into administration yesterday after a two-week deadline to find a buyer passed.

Mr Day’s EWM Group had already placed its Edinburgh Woollen Mill and Ponden Home business into administration earlier this month.

FRP joint administrator Tony Wright remains positive about securing Peacocks and Jaeger’s futures.

Family shareholders of Clarks shoes were paid £13.4 million of dividends over two years as the company racked up losses of £114.2 million.

The most recent payout of £6.5m came in the year to February 2019 – ahead of 170 job cuts announced in December.

A further 900 redundancies were announced in May 2020, and earlier this month bosses put the jobs of all 4,000 of its shop staff on notice.

Unions representing Clarks’ shop workers lashed out at the payments. Unite’s Gareth Lowe said: ‘The lavish dividends being paid out by Clarks to the founding family, at a time of transformational change for the workforce, are unacceptable.

‘This calls into question Clarks’ corporate priorities and will only cause this iconic brand reputational damage that so easily could have been avoided.’

Retail expert Andrew Busby added: ‘The morality of Clarks paying dividends when they’re cutting jobs and making a loss – it doesn’t do them any favours.

‘The pandemic has made us a lot more sensitive to companies misbehaving, whether it’s paying dividends when cutting jobs, or sustainability issues.’

Dozens of companies have struggled to stay open during the pandemic. Earlier this week, Peacocks and Jaeger entered administration.

Other firms such as Pizza Express, Revolution Bars and Pizza Hut have all turned to CVAs to help them get out of trouble.

There is still a 28-day period during which Clarks’ CVA can be challenged.

But the news was met with concern from landlord associations.

Melanie Leech, the chief executive of the British Property Federation, accused Clarks of exploiting the Government’s eviction moratorium, and said the landlords had been left helpless.

She said: ‘The Clarks CVA exemplifies everything that is wrong with UK insolvency legislation.

‘Far from being treated as valuable economic partners with an interest in the ongoing success of Clarks, individual property owners were not given any meaningful opportunity to engage, on behalf of the savers and pensioners they represent, before the CVA was launched and yet they are the only class of creditor being asked to permanently and irrevocably write down what they are owed. And, this decision has been voted through by parties that are largely unaffected by the CVA.’

Katherine Campbell, a lawyer at Reed Smith, said that it would be a ‘huge understatement’ to say that the CVA was bad news for landlords.

She added: ‘In truth, it is a sign that their worst fears are being realised. Today’s CVA demonstrates that New Look’s previous success in shifting to a revenue-based rent, even at a time of diminished consumer demand, was not a bad dream, but a dawning new reality.

‘It seems inevitable that Clarks will not be the last retailer to demand a transformation in how its rent is calculated, and it may not be possible to hold back the tide.’

Clarks, one of the UK’s oldest shoe shops, was established in Street, Somerset, in 1825 when Quakers Cyrus and James Clark moved from making rugs out of sheepskin to footwear by using the off cuts to produce slippers.

A Clarks shoe advert from the 1970s. The Somerset-based company has operated since 1825

More than 22,000 Clarks styles have been produced since, and the chain is perhaps best known for its Desert Boot made of calf suede leather.

More than ten million of the boot were made after Nathan Clark came up with the idea while serving as an officer in the Royal Army Service Corps in Burma during the Second World War in 1941.

They have since been worn by the likes of Liam Gallagher, Bob Dylan, Robbie Williams and even Tony Blair.

It enjoyed a boom in the 2000s as sales of the boots soared and had pre-tax profits of more than £100million.

But the company has been hit in recent years by the decline of the high street which has intensified in recent months thanks to the lockdown that closed all its stores between late March and July.

The business relocated the bulk of its production to Asia in 2005 and shut its last remaining British plant in 2006.

How nearly 219,000 job losses have been revealed by major UK firms since lockdown began

Some 215,471 job losses have been announced by major British employers since the start of the coronavirus lockdown in March as follows:

November 19 – Peacocks and Jaeger
November 13 – Greggs – 820
November 5 – Sainsbury’s and Argos – 3,500
November 4 – John Lewis – 1,500
November 4 – Lloyds – 1,070
October 29 – Pizza Express – 1,300
October 7 – Greene King – 800
October 6 – Virgin Money – 400
October 6 – Vp – 150
October 5 – Cineworld – 5,500 (many cuts likely to be temporary)
September 30 – TSB – 900
September 30 – Shell – 9,000 worldwide
September 29 – Ferguson – 1,200
September 22 – Wetherspoon – 400 to 450
September 22 – Whitbread – 6,000
September 18 – Investec – 210
September 15 – Waitrose – 124
September 14 – London City Airport – 239
September 9 – Lloyds Bank – 865
September 9 – Pizza Hut – 450
September 4 – Virgin Atlantic – 1,150
September 3 – Costa – 1,650
August 27 – Pret a Manger – 2,800 (includes 1,000 announced on July 6)
August 26 – Gatwick Airport – 600
August 25 – Co-operative Bank – 350
August 20 – Alexander Dennis – 650
August 18 – Bombardier – 95
August 18 – Marks & Spencer – 7,000
August 14 – Yo! Sushi – 250
August 14 – River Island – 350
August 12 – NatWest – 550
August 11 – InterContinental Hotels – 650 worldwide
August 11 – Debenhams – 2,500
August 7 – Evening Standard – 115
August 6 – Travelex – 1,300
August 6 – Wetherspoons – 110 to 130
August 5 – M&Co – 380
August 5 – Arsenal FC – 55
August 5 – WH Smith – 1,500
August 4 – Dixons Carphone – 800
August 4 – Pizza Express – 1,100 at risk
August 3 – Hays Travel – up to 878
August 3 – DW Sports – 1,700 at risk
July 31 – Byron – 651
July 30 – Pendragon – 1,800
July 29 – Waterstones – unknown number of head office roles
July 28 – Selfridges – 450
July 27 – Oak Furnitureland – 163 at risk
July 23 – Dyson – 600 in UK, 300 overseas
July 22 – Mears – fewer than 200
July 20 – Marks & Spencer – 950 at risk
July 17 – Azzurri Group (owns Zizzi and Ask Italian) – up to 1,200
July 16 – Genting – 1,642 at risk
July 16 – Burberry – 150 in UK, 350 overseas
July 15 – Banks Mining – 250 at risk
July 15 – Buzz Bingo – 573 at risk
July 14 – Vertu – 345 July 14 – DFS – up to 200 at risk
July 9 – General Electric – 369
July 9 – Eurostar – unknown number
July 9 – Boots – 4,000
July 9 – John Lewis – 1,300 at risk
July 9 – Burger King – 1,600 at risk
July 7 – Reach (owns Daily Mirror and Daily Express newspapers) – 550
July 6 – Pret a Manger – 1,000 at risk
July 2 – Casual Dining Group (owns Bella Italia and Cafe Rouge) – 1,909
July 1 – SSP (owns Upper Crust) – 5,000 at risk
July 1 – Arcadia (owns TopShop) – 500
July 1 – Harrods – 700
July 1 – Virgin Money – 300
June 30 – Airbus – 1,700
June 30 – TM Lewin – 600
June 30 – Smiths Group – ‘some job losses’
June 25 – Royal Mail – 2,000
June 24 – Jet2 – 102
June 24 – Swissport – 4,556
June 24 – Crest Nicholson – 130
June 23 – Shoe Zone – unknown number of jobs in head office
June 19 – Aer Lingus – 500
June 17 – HSBC – unknown number of jobs in UK, 35,000 worldwide
June 15 – Jaguar Land Rover – 1,100
June 15 – Travis Perkins – 2,500
June 12 – Le Pain Quotidien – 200
June 11 – Heathrow – at least 500
June 11 – Bombardier – 600
June 11 – Johnson Matthey – 2,500
June 11 – Centrica – 5,000
June 10 – Quiz – 93
June 10 – The Restaurant Group (owns Frankie and Benny’s) – 3,000
June 10 – Monsoon Accessorise – 545
June 10 – Everest Windows – 188
June 8 – BP – 10,000 worldwide
June 8 – Mulberry – 375
June 5 – Victoria’s Secret – 800 at risk
June 5 – Bentley – 1,000
June 4 – Aston Martin – 500
June 4 – Lookers – 1,500
May 29 – Belfast International Airport – 45
May 28 – Debenhams (in second announcement) – ‘hundreds’ of jobs
May 28 – EasyJet – 4,500 worldwide
May 26 – McLaren – 1,200
May 22 – Carluccio’s – 1,000
May 21 – Clarks – 900
May 20 – Rolls-Royce – 9,000
May 20 – Bovis Homes – unknown number
May 19 – Ovo Energy – 2,600
May 19 – Antler – 164
May 15 – JCB – 950 at risk
May 13 – Tui – 8,000 worldwide
May 12 – Carnival UK (owns P&O Cruises and Cunard) – 450
May 11 – P&O Ferries – 1,100 worldwide
May 5 – Virgin Atlantic – 3,150
May 1 – Ryanair – 3,000 worldwide
April 30 – Oasis Warehouse – 1,800
April 29 – WPP – unknown number
April 28 – British Airways – 12,000
April 23 – Safran Seats – 400
April 23 – Meggitt – 1,800 worldwide
April 21 – Cath Kidston – 900
April 17 – Debenhams – 422
March 31 – Laura Ashley – 268
March 30 – BrightHouse – 2,400 at risk
March 27 – Chiquito – 1,500 at risk