Clarks is understood to have started discussions with landlords over the potential switch to a ‘turnover rent’ model as part of a restructuring by the UK footwear chain.
According to a report published by Sky News, Clarks is meeting with landlords this week to discuss a restructuring that would see the chain switch to a new model for future rent payments. The deal, which would need the approval of creditors, would be in the form of a company voluntary arrangement (CVA).
A CVA is an insolvency procedure that allows a company to reach a voluntary agreement with its business creditors to repay its debts to avoid going bust.
If the CVA is approved, Clarks could receive a cash injection of more than GBP100m (US$130.4m) from private equity firm LionRock Capital. But it would see the founding Clark family relinquish majority ownership of the company. The restructuring would also result in around 50 UK shop closures.
A spokesperson for Clarks said: “We recently announced Clarks’ long-term ‘Made to Last’ strategy that is designed to ensure that our business has a sustainable and successful future, keeping it in step with changes in how consumers around the world choose and buy their shoes.
“As part of this strategy, the Clarks board of directors is currently reviewing options to best position our business, our people and the Clarks brand for future long-term growth.”
Earlier this year, Clarks outlined a new growth strategy, which would see it make 900 job cuts globally, and introduce digital enhancements as well as a focus on sustainability and product innovation.
As part of the initiative, Clarks will focus on “exploiting the brand’s potential, leveraging its heritage, its iconic timeless shoes and their consumer relevance in today’s market.” It will focus on sustainability, product innovation, design and quality, and digital enhancement to help customers properly interact with the Clarks brand, and select and buy shoes in the most convenient ways for their lifestyle.
In 2019, the footwear retailer reported full-year losses of GBP82.9m as turnover slipped 4.6% to GBP1.47bn.