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Sales rise at Clarks fails to lift profits

Footwear giant Clarks grew sales and clawed back market share for the year ended January 31, but underlying operating profits fell 2.9% to £93.3 million because of increased discounting.

Clarks’ group sales rose 6.6% to £1.1 billion over the period. UK like-for-like retail sales climbed 2.3% - outstripping the British Retail Consortium’s sales monitor, which recorded a 1.6% fall.

However, Clarks sacrificed margin to outperform the market. Average margins fell by 2.2 percentage points over the year because of increased promotional activity and discounting.

Wholesale sales in the UK and Republic of Ireland also fell by 12% as tough market conditions hit forward orders. The collapse of footwear multiple Stead & Simpson and reduced orders from retailer Brantano also impacted the division and wholesale profits dipped by 11.8%.

In a statement attached to the accounts, which was sent to shareholders last week, chief executive Peter Bolliger said Clarks was not immune to the market difficulties. He said trading profit in the first half of this year was likely to be lower and UK retail sales would be flat.
Bolliger said: “The spectre of unemployment still looms large for many people and will continue to inhibit any trend in favour of personal consumption. I am inclined to the view that [recovery] will not emerge until well into 2010.”

Separately, Clarks said it was hedged through much of 2010, giving it some protection from the weak sterling but that margins could be threatened beyond that.

Clarks also said its transactional website, which launched in October, had generated sales of £3.4m over the four months. It said internet sales could grow to £20m this year.

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