International -- Int'l Business: BRITAIN
CAN CLARK GET ITS SHOES IN STEP? (int'l edition)
The shoemaker is cutting costs and remaking its image
In mid-June, the C&J Clark Ltd. shoe factory in the tiny town of Shepton Mallet, Somerset, threw open its doors to the public to celebrate its 50th anniversary. About 500 locals came for a guided tour, cookies, and coffee. A nice touch, in keeping with the 171-year-old company's cozy community ways. Unfortunately, just two weeks later, Clark announced the shuttering of the Shepton plant and two others. "We were absolutely shocked," says Terrence S. O'Connor, a company employee for 40 years and union official at Shepton.
It's a new era at Clark, maker of the well-known Clarks brand. Like the shoes and sandals it makes, the company has long been sturdy and reliable, but stodgy. With $1.1 billion in sales, Clark is one of Britain's biggest privately held companies, but it has been tripped up by cheap imports, poor management, and soporific styling and marketing. Profits from core shoe operations are flat--in the British market, profits fell 17%, to $20.5 million, last year. The company, which sells shoes in 85 countries, admits profits also fell last year in the key U.S. market.
CASHING OUT. The sprawling Clark clan, which owns 70% of Clark, wants action taken. After a very public feud between various branches of the clan, the family rejected a $285 million takeover bid in 1993. The family is now pursuing a strategy to cash out. In January, Clark's board, which includes three family members, recruited a new outside CEO, Timothy Parker, who had turned around the appliance division of Thorn EMI PLC. His orders are to prepare the company for a public offering by mid-1998.
Saying that "the company hasn't been earning a decent return on capital," Parker will slash 1,400 jobs out of a total of 18,200. He will also cut capacity and boost sourcing from countries with cheaper labor, such as India, China, and Brazil. Industry insiders see a lot of these moves as hard but necessary. With production dropping nearly 50% over the past decade, Clark failed to cut capacity to keep pace. Says one industry insider: "Clark has not been as crisp in decision making as it should have been."
Money saved from the restructuring will go into promoting Clark's brands--including doubling the ad budget, to around $30 million a year. To update the company's image, Parker is assembling a top design team to come up with different looks for different groups of buyers, especially younger ones.
It's imperative that Parker introduce some pizzazz to Clarks shoes, which sell for anywhere from $38 to $230 a pair. True, Clark has a lock on the 40-plus crowd. Anne M. Dunne, 55, who was recently window-shopping outside a Clarks store in London, buys the brand for comfort, not for fashion. "For my age group, the styles are all right," she says. "But they are not so good for the young." Without some appeal to teens and young adults, Clark is losing out on a big-spending group of consumers. In contrast, R. Griggs Group Ltd., the British maker of Doc Martens boots, has scored big with trendy young buyers, who are willing to pay $71 to get a pair. Griggs's sales have risen 198%, from $88 million in 1991 to more than $263 million last year, and profits are about the same as the much bigger Clark.
The trick will be to gain cachet among young buyers without muddying its image among older customers. A tough feat, but necessary. It's time Clark put some spring in its step.By Heidi Dawley in London