RETURN OF THE OLD SOFT SHOE - A struggling shoemaker earmarked for takeover in 1993, the old family firm of Clarks has been brought smartly up to date by a slick chairman/CEO double act. By scaling back UK manufacture and exploiting a back catalogue of de

RETURN OF THE OLD SOFT SHOE - A struggling shoemaker earmarked for takeover in 1993, the old family firm of Clarks has been brought smartly up to date by a slick chairman/CEO double act. By scaling back UK manufacture and exploiting a back catalogue of de

by RHYMER RIGBY
Last Updated: 31 Aug 2010

When he's down with his home boys (gangsta rap crew, the Wu-tang Clan) Ghost-face Killah is usually bigging it up on the mike - disrespecting women, badmouthing fellow rappers and telling you about his less-than-convivial relations with the local police. But when he gets home and kicks back, he's just a regular guy who likes to slip on a pair of Clarks Wallabees and relax. That's Clarks as in the shoes that 95% of Britons grew up in.

What's more, the nice Mr Killah isn't the shoe company's only unlikely customer. Brit-twit brothers Noel and Liam are big, big fans of the company's venerable desert boot; the shoes regularly crop up in the glossy mags like The Face, Arena and GQ; and if you hang around glitzy London bars and glance down at the footwear sported by the beautiful people, chances are that among the Prada trainers and Patrick Cox loafers you'll spot a couple of pairs of Clarks.

Clearly something happened to one of Britain's best-known brands when we weren't looking. Clarks shoes aren't supposed to be cool. And Clarks shops are meant to be where mums and dads drag unwilling offspring to buy sturdy, sensible shoes untouched by the vagaries of fashion. And in years gone by Clarks was all that. But it isn't any more. The shops have lost their '70s shopping mall decor; the traditional shoes have been bought smartly up to date and some of the new collections are positively weird.

Even the current ad campaign, with its 'New shoes' leitmotif, is by uberhip London agency St Lukes. Oh, and while we're at it, the company's profits have also changed for the better. In early April, it turned in a third year of record results, with sales up a respectable 5% to pounds 832 million (not bad when the shoe market is pretty much a zero-growth area) and profit improvement of 19% to pounds 50.4 million.

Descendants of the original Clarks still own about 70% of equity, making AGMs a little like extended family reunions. Yet this venerable British business has undergone a management revolution in recent years. To see the whole story requires a visit to Street, in the shadow of Glastonbury Tor. This is Clarks' global (more of which later) headquarters and a company town if ever there was one. Across the road from The Bear (the company pub) is an imposing, if rather austere, Victorian structure that dominates Street. And inside work the duo behind the transformation of the business. These are Roger Peddar, the avuncular, rather traditional-looking chairman, and Tim Parker, the CEO who, with his jacket, jeans and enormous mop of curly hair, is the last person you'd expect to find heading up a British institution.

Peddar's story begins in 1963, when he joined the company, quickly becoming the chairman's PA. This, he says, 'is normally a one-year tour of duty, though for me it became a lifetime's duty, as I wound up marrying his daughter in 1968.' Shortly afterwards, he left the company, making him a Clark by marriage but not a Clarks' Clark, an important distinction.

Some 20 years later he rejoined the business as a non-executive director - having worked for BHS, Burton, Halfords and Harris Queensway and co-founded Pet City en route. He was there, he explains, as a 'quasi-outsider', pressed onto the board by shareholders who were concerned about the company's lacklustre performance and boardroom wrangles.

Matters came to a head in early 1993 when the chairman, Walter Dickson, recommended the shareholders to sell up to Berisford, a former sugar company.

In what was, by all accounts, a tempestuous meeting, 'the family reasserted itself', voting overwhelmingly not to sell. Other shareholders, largely institutional, were in favour.

Unsurprisingly, Dickson resigned shortly afterwards and the company looked to Peddar. He became chairman at the end of 1993, and then 'took a year to determine what needed to be done'. The answer was a lot. And this included appointing a new, 'fully outside' CEO. His eventual choice of Tim Parker owes much to luck: reading a business magazine (not this one) on a plane, he came across an article about Parker, an LBS graduate who had been mixing it at Kenwood, the kitchen appliances company. 'So I said to my secretary: 'Can I have that article about that curly-headed fellow?' She gave it to me and I posted it to the head-hunter and said: 'Please can I talk to this man. I doubt he'll reply.''

Two weeks later Parker did reply. He'd got the call and, like many of us, remembered Clarks in the form of 'funny sandals I had as a kid'. But he asked for some more information and realised that the company was far bigger than he'd imagined and that it had 'boxed itself into a corner'.

After numerous discussions, he persuaded himself that it was an exciting opportunity. Besides which, he adds, he liked shoes, even if he wasn't terribly keen on what his prospective employers had to offer at the time.

With Parker on board, the company could set about doing what needed to be done. Clarks' main problem was that it was manufacturing 70% of its shoes in the UK. This was in a market that had globalised quickly (for example, the US imports 95% of its shoes) and almost everyone else was manufacturing in low-cost countries such as Brazil and India. The main reason behind this approach was the company's traditions. Clarks' founders had been Quakers and, in the Quaker tradition, treated their workers in a caring, paternalistic way. The company's shares had largely passed to Clarks' descendants and the ethos lived on: sacking people en masse was not something Clarks did.

As a consequence, it had sought to reduce its costs in other areas: cheaper leathers, reduced detailing and so on. The result was rather dull yet still expensive products. Clarks' bottom line was suffering and would continue to do so as long as it manufactured most of its products in the UK.

'Look,' says Parker, 'nobody likes redundancies and one of the difficulties the company had was that it had got confused between benevolence and inaction - and sometimes you use the notion that you are benevolent to avoid taking hard decisions. But that's destructive in the long term, because the decisions don't go away.'

This is a point that Peddar agrees with strongly. 'You're preserving that which has no future beyond its natural life,' he adds. 'That's not just dangerous, it's anti-social.' The choice was stark: declare a lot of redundancies or watch the company slowly die.

So they embarked on the inevitable, from the top down. Management was cut, a big layer was taken out, outsiders were brought in and some existing employees were promoted. To try to make the process understood (if no easier), Parker made a real effort to explain what he was doing. 'I spent a lot of time trying to get to know people in the company rather than just hiding away in my office, issuing edicts. If people meet you and know you're a flesh-and-blood individual with a family and all those tedious concerns, it makes it far easier for them - even if they don't agree with you - to not cast you in the role of some nasty, dangerous outsider.'

He took this process to impressive lengths. When they lost a quarter of the staff in Street (about 400 people in what is still a village), he went to a meeting of the parish council to account for himself. Here he was asked by the depressed villagers to promise no further redundancies - an assurance he couldn't give. It was, he says, an experience 'I vividly remember'.

Painful, though this period was, it wasn't quite as dreadful as it could have been. Some of the factories weren't shut completely, but they had their workforces cut and their processes simplified; others were sold as going concerns (notably to Doc Martens). Some manufacturing workers were moved into retail or other areas and, in the event, only 9% of its workforce were actually made redundant. 'We have become a UK retail business,' says Peddar. 'The nature of the activities has changed but, in terms of headcount, the attrition hasn't been that great.'

Over to the shops - of which the company has 550 in the UK - and the company sold the 'non-core' Clarks Village, to MEPC, for which it received pounds 54 million. This was distributed to shareholders, who for years had been suffering lousy dividends. And then there was the high street refit. Out went the green-and-white trim (which probably looked pretty swish back in the late 1970s); this has now been largely replaced with a far more millennial glass and blonde wood look.

There were also the shoes, which had become, well, staid. 'Like a rock music business, we have a back catalogue,' says Parker. Using this as a base, they set up a business called Clarks Originals, which produces the footwear that has got the style press into such a lather. It is these that look like the kind of thing you'd find in ranges by Patrick Cox or Prada; the only difference is they cost a third as much. 'What we've got now is a business that isn't just selling shoes to people in their seventies,' says Peddar. 'It is, but it's also selling surprising numbers of shoes to young people and has a fair amount of kudos.'

Was all this easier because the company was private? Not really. 'Most of the big problems with turnarounds,' explains Parker, 'occur because management creates unrealistic expectations, especially about how long things will take.' Indeed, the main difference, adds Peddar, is that you don't get any hassle from City analysts or the media - 'meaning we can take a medium-term perspective.'

From a British perspective, one of the most surprising things about Clarks is its enormous global presence. It is, in fact, the number one 'brown shoes' brand in the world. (For those unfamiliar with shoespeak, black shoes are formal, white shoes are trainers and brown shoes occupy the casual ground between the two - docksiders, loafers and so on.)

Actually, Clarks' international operations go back a long way. Its shoes travelled with the Empire and (unlike the Empire) stayed. Which is why the company has as real brand presence from Bermuda to Papua New Guinea.

It's also big in Japan, where teenagers and twentysomethings have taken the Originals to their hearts, to the tune of half a million pairs a year.

And the other great market is the US, where, with the Clarks and the Bostonian brands, it generates about pounds 200 million in sales and about a quarter of its profits. 'In the last five years,' says Peddar, 'we've gone from UK exporter to branded international retailer.'

So, worldwide activities then, but, thus far, no mention of the world wide web, at a time when most businesses are shouting their net presence from the rooftops. Well, Clarks does have a web site, but it's in no great hurry to sell shoes electronically.

'We were at a conference in America recently where they suggested Tim was a Neanderthal and I was a Luddite, because we hadn't 'got religion'.

But there's one big barrier for us - it's called fit,' laughs Peddar.

The problem, you see, is that although white shoes have a wide fit tolerance (usually about two sizes), meaning that a size eight trainer wearer can get away with anything from a seven to a nine, the tolerance for brown shoes is half a size, meaning you really need to try the things on. That said, adds Parker, 'we will be selling shoes on the internet early next year and we will be collaborating with people who sell on-line, but I have no desire to tell people I'm spending pounds 10 million of the company's profits on the web. That's an advantage of being private - I don't need to protect my backside against acquisition by chivvying up the price.'

Some e-presence aside, what else does the future hold? The downside is that shoes are pretty much a zero-growth market.

As Parker says: 'Every extra shoe we sell is at the expense of someone else.' More positively, the market remains very, very fragmented, with vast scope for acquisition in almost every country that Clarks operates in. Flotation? The possibility seems to have receded at the moment, though will doubtless raise its head again at some point. Diversification? The company already does a nice line in handbags and enjoys the distinction of being the world's largest seller of shoe-care products.

But to be honest, says Peddar, it has only one real goal: 'We want to be known as the international casual shoe company. Why muck about.'

1825: Cyrus Clark establishes his own business in the sheepskin rug trade at Street, Somerset

1828: James Clark is apprenticed to his brother Cyrus. James uses reject rugs and off-cuts to make slippers called Brown Peters

1833: James becomes a full partner in the business. In addition to the slippers, socks, boots and welted shoes now account for a third of sales

1849: The first company poster is introduced showing Cyrus Clark's house and the front of the factory

1851: Two prizes at Prince Albert's Great Exhibition at Crystal Palace turn around dwindling sales and save Clarks from almost certain bankruptcy.

1863: Second threat of bankruptcy. William Stephens Clark is put in charge and is 'very soon able to alter much that had gone wrong'

1866: Cyrus Clark dies

1870 Sheepskin business transferred to Clark, Son & Morland at Northover, Glastonbury

1872: A new partnership is formed between James Clark and William Stephens Clark

1880: 'Torbrand' shoes launched

1883: William buys a cider house opposite the factory and turns it into a coffee house to dissuade workers from drinking

1893: Hygienic Boots and Shoes launched. Coffee house demolished; Bear Inn established

1903: London showroom opens on Shaftsbury Ave

1908: Clarks becomes a limited-liability company

1910: First 'in-stock' system: shoes dispatched from the warehouse on receipt of order

1913: Most of Street depends on C&J Clark

1920: 'Torbrand' becomes 'Clarks'

1925: Clarks lab opened

1927: 'Wessex' range of shoes launched

1934: First press ads

1937: Clarks starts shoe retailing using the name Peter Lord

1938: Roger Clark becomes chairman.

1940 Clarks contributes to the war effort by making aircraft components and torpedo parts

1942 W Bancroft Clark succeeds his father Roger as chairman and leads major expansion

1950 Desert Boot introduced by Nathan Ckark

1952 Clarks brand first appears on shops

1967 W Bancroft Clark retires

1975 Clarks celebrates 150 years

1980 Clarks takes over the 'K' brand

1985 'K' launches Springers range of women's comfort sandals

1993 Shareholders reject Berisford bid; chairman Walter Dickson resigns. Roger Peddar becomes chairman

1996 Tim Parker joins as CEO and starts restructuring and moving production overseas

2000 Clarks celebrates 175th anniversary and third consecutive year of record results.

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