Footwear giant Clarks is reportedly taking measures to close multiple stores through a company voluntary arrangement (CVA) in order to secure a rescue deal. Recognizing that these under-performing stores have been negatively impacting its business, Clarks plans to shut them down. LionRock Capital, an investment firm based in Hong Kong, has set the condition of store closures as part of its new investment in Clarks. The approval of this CVA by creditors is crucial for the LionRock deal to proceed. While the exact number of affected stores is uncertain, reports suggest that up to 50 stores could be at risk, which may lead to significant job losses. Additionally, Clarks aims to transition its remaining stores to turnover-based rents, following a similar strategy recently adopted by New Look.

In exchange for this restructuring, Clarks is expected to receive a substantial injection of funding, potentially exceeding £100 million. However, this influx of investment will come at the cost of the company’s founding family losing control of the business, marking a significant change after nearly 200 years. The decision to pursue a CVA comes at a time when the UK high street has been greatly impacted by the COVID-19 pandemic, with footwear sales being particularly affected. Due to consumers prioritizing essential purchases over non-essential items like shoes, Clarks has faced significant challenges throughout the year. The closure of under-performing stores seems to be a necessary step for the company, as its 345-store estate has been a persistent issue even prior to the pandemic. Clarks has not provided any official statements regarding the CVA reports.

Sources:
Sky News
New Look