Clarks annual report reveals company losses due to COVID-19
Footwear brand Clarks has released its annual report for the financial year ending 30 January 2021, revealing significant losses as a result of the COVID-19 pandemic.
In the report, Clarks acknowledges the significant impact COVID-19 has had on the business. Turnover fell by over £600 million from £137 billion in 2019/20 to £755 million in 2020/21.
Underlying operating profits also fell from £46.2 million in 2019/2020 to a loss of £70.9 million in 2020/2021.
The annual report said: "The impact of COVID-19 in the year was immediate given that reduced demand coincided with the commencement of our SS season and the new inventory resulted in a significant working capital impact which continues in 2021."
Due to the pandemic, Clarks stopped all discretionary expenditure, extended payment terms with its suppliers, stopped 70% of all capital expenditure and focused on critical business spend. Additionally, pay cuts were taken by the Board, Executive Committee and other employees, with the business also stopping company dividend.
Helping the brand, Clarks benefitted from the UK Government's suspension of business rates for 12 months, which saved £21m. The brand also utilised temporary government furlough schemes.
Discussing its priorities during the pandemic, the report said: "Throughout the current pandemic, our priority has been to safeguard our colleagues, suppliers and customers while doing all we can to preserve cash and ensure we have sufficient funding to secure the long-term future of the business."