C&J Clark International Ltd.

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C&J Clark International Ltd.

40 High Street
Street, Somerset BA16 OYA
United Kingdom
Telephone: (+44) 1458 44 31 31
Fax: (+44) 1458 44 75 47
Web site: http://www.clarks.co.uk

Private Company
Incorporated: 1825
Employees: 15,270
Sales: £937 million ($1.55 billion) (2001)
NAIC: 448210 Shoe Stores; 316212 House Slipper Manufacturing; 316213 Men’s Footwear (Except Athletic) Manufacturing; 316214 Women’s Footwear (Except Athletic) Manufacturing; 316219 Other Footwear Manufacturing; 424340 Footwear Merchant Wholesalers

C&J Clark International Ltd. (Clarks) is a world-leading manufacturer and retailer of footwear. The company produces shoes, boots, and other footwear under the renowned Clarks brand name, as well as K Shoes in England and Bostonian in the United States. Clarks is also one of the world’s leading manufacturers of children’s shoes, which include the Germany-based Elefanten brand, a leading European brand, acquired in 2000. Based in the village of Street, in Somerset, England, Clarks is that country’s largest shoe manufacturer, with a particular focus on the “comfort” category, and is also the United Kingdom’s leading retail shoe specialist, with more than 500 Clarks, Ravel, and K Shops. Formerly committed to manufacturing in the United Kingdom, Clarks has trimmed its manufacturing base in that country from a high of nearly 30 factories in the 1980s to just four remaining sites at the end of the century. As the company has switched its emphasis from manufacturing to design-oriented branded consumer goods, production has shifted to Brazil, China, India, and Portugal. The company also has been working to build its image among consumers, while revitalizing its store formats and marketing campaigns. This restructuring has enabled the company to post renewed profit growth, and rising revenues, which were expected to top £1 billion ($1.6 billion) in 2002. Clarks remains 80 percent owned by the more than 400 members of the founding Clark family. The company has long resisted the temptation to go public; CEO Peter Bollinger, who joined the company in 1994, has reiterated the company’s decision to remain a private company.

Founding a Footwear Dynasty in the 1830s

Cyrus Clark, son of Somerset-based farmers, went into business for himself as a wool stapler and tanner, establishing a workshop in the village of Street, in Somerset, England, in 1825. Clark then added the production of sheepskin rugs, before being joined by brother James in 1828, who began looking for a way to make use of the scraps of sheepskin left over from the rug-making business. The younger Clark found his product—slippers—which were launched into production in 1830 and given the name of Brown Petersburgh, which quickly became better known as the Brown Peter. The slippers were a success, and were to remain in production for more than 100 years.

In 1833 James was taken on as a full partner in the business, which was renamed C&J Clark. By then, the company’s footwear accounted for more than one-third of its total business. Over the next decade, sales of Brown Peters continued to build, topping 12,000 pairs per year in the early 1840s. The company also had taken advantage of another sheepskin byproduct, adding lamb’s wool stockings. The company’s growth was aided by the family’s Quaker beliefs. As members of the Society of Friends, the Clark family was able to take advantage of personal and business connections throughout the United Kingdom and the British Empire, and the Clarks brand name quickly became a prominent name in British footwear.

The Clarks business nonetheless experienced difficulties during the middle of the 19th century, when demand for the Brown Peter slipped and brought the company to the brink of bankruptcy. When the company again faced bankruptcy in 1863, the decision was made to turn over its operation to James Clark’s son William Stephens Clark. The younger Clark became the driving force for the company’s growth into the next century. After Cyrus Clark died in 1866, James and William reformed the partnership, while retaining the C&J Clark name.

Under the new generation, Clarks began turning to more industrialized production techniques, including adding Singer sewing machines, which had been invented in the 1850s. The new machines enabled the company to step up its production levels, and also enabled Clarks to begin experimenting with new shoe designs. These were initially sold under a new brand name, Torbrand.

At the beginning of the 1890s, Clarks’s design experiments had led to the development of shoes that more closely followed the line of the foot. The company debuted its new “Hygienic” line of shoes in 1893. The success of those shoe styles led the company to specialize in so-called “comfort” shoes.

The next generation of Clarks—William’s children John, Roger, and Alice—joined the company in the early years of the 20th century and built it into a modern manufacturing operation, adopting mass production techniques and incorporating new materials and new technologies, including techniques for crafting soles, insoles, and heels to enhance the shoes’ comfort. The company also debuted modern warehousing and distribution techniques and began adding vertically integrated operations, giving it control of nearly the entire shoe production process.

By 1920, the company had dropped the Torbrand brand name and placed its own name on its shoes instead. During the 1920s, Clarks responded to the far-reaching changes in fashion, particularly in women’s fashion—where shortening hemlines revealed more and more of a woman’s footwear—by launching new women’s shoe and boot designs.

Booting Up for Success in the 1950s

Not all of the company’s expansion came through its own brand name. In 1927, Clarks added a new brand name when it debuted its Wessex line. In the 1930s, the company began looking to expand beyond manufacturing and gain control of its distribution market as well, which resulted in the acquisition of a chain of shoe stores, renamed as Peter Lord, in 1937. The Peter Lord chain grew into a nationally operating retail network of some 180 stores. The company later expanded its retail offerings with the addition of the James Baker chain, which reached 65 stores in England, and the Rayne & Duckett chain, which featured 70 stores in Scotland.

Under the leadership of Bancroft Clark during the post-World War II years, the company enjoyed still more success, as Clarks began building up its international export market. A major factor in the company’s success during this period came with the launch of the Desert Boot. Family member Nathan Clark, who became part of the next generation to take over the company’s direction, had served in the British Army in India during World War II and had been inspired by boots brought over from Egypt by a number of British officers. Returning home, Nathan Clark brought the boot design, which featured a suede upper on a crepe sole, to C&J Clark.

The first Desert Boot was produced in 1946, but it was not until the beginning of the 1950s that the company launched full production of the design, which became an instant success. The Desert Boot also expanded the scope of the company’s consumer base, traditionally skewed toward the older consumer, to include a growing number of young customers, who adopted the Desert Boot as their own in the 1950s and 1960s. The company had a new hit in the mid-1960s when family member Lance Clark introduced another popular shoe design, the moccasin-styled Wallabee, which went on to become a classic in the comfort shoe category.

Meanwhile, Clarks also began building up a worldwide reputation for its children’s shoes, becoming, in the 1960s, one of the first to provide so-called “fitted” shoes that took into consideration the particularities of children’s feet. Before long, Clarks had established itself as a world-leading producer of children’s shoes; in the United Kingdom alone, the company had captured half of the children’s shoe market. Children’s shoe manufacture, which required more specialized manufacturing techniques, was also to become the mainstay of the company’s U.K. manufacturing base.

Clarks had long invested in developing new technologies, such as a process for vulcanizing rubber soles directly onto leather uppers in the 1950s. In the 1970s, the company began working with the recently developed material polyurethane, adapting the lightweight, resistant material as part of new sole designs, including its poly veldts soles in the 1970s and air-cushioned soles, which formed the basis of the company’s Air Comfort line in the 1980s.

At the end of the 1970s, C&J Clark went on an expansion drive. In 1978, the company turned to the United States, acquiring noted shoemaker and retailer Hanover. A year later, the company made a still more significant purchase, buying up Bostonian. Founded in 1899, Bostonian had pioneered the introduction of an extensive range of widths, and then entered the retail market in 1925, building a strong network in the United States. The two acquisitions gave Clarks a manufacturing base with production of some 1.5 million shoes per year, and a retail operation of more than 500 stores throughout the United States.

Company Perspectives:

The Clarks business has come a long way in the past 176 years. From humble beginnings in 1825 as a small Somerset sheepskin business it has entered the 21st century as one of the world’s leading shoe brands and the UK’s number 1 shoe retailer.

This success has come from a commitment to individual design, exceptional comfort, premium quality and expert service that remains unchanged today.

Clarks followed its U.S. expansion with a boost to its U.K. position in 1981, acquiring K Shoes Ltd. That company had been founded in 1842 by Robert Miller Somervell as an offshoot to his leather merchant business, in the town of Kendal, in Cumbria, England. The company had adopted the K brand for its shoes in 1875, before going on to build up both its manufacturing and a strong U.K.-based retail business, with nearly 240 K Shoe Stores in operation. The K Shoes acquisition complemented Clarks’s existing portfolio, with a particular strength in attracting an older consumer segment.

Private or Public for the New Century?

The K Shoes acquisition had enabled Clarks to boost its market position substantially, becoming the world’s second largest family-owned shoe manufacturer, behind Bata, and the United Kingdom’s second largest shoe retailer, behind British Shoe Corp. Yet the company’s newly expanded U.S. operations lagged behind, in part because of a company decision to emphasize the Bostonian and Hanover brands, instead of the company’s own Clarks branded shoes. By the mid-1980s, the company found itself outpaced in the U.S. market by a number of rivals as the comfort category took off in that country. Even in its core British market, the company was losing ground.

After reviewing its operations with McKinsey Consultants, Clarks underwent a thorough restructuring program in 1986, which included encouraging a number of its elderly upper management to take early retirement in order to replace them with younger staff. The company also brought in Lawrence Tindale as chairman, the first time the company turned to someone from outside the Clark family for leadership. The company began repositioning its retail operation, launching a new store concept, Clarks Shop, in an attempt to regain momentum for its core shoe brand. By the end of the decade, the company had streamlined its retail holdings into just three outlets, Clarks Shop, Ravel, and K Shoes.

In 1986, Clarks announced its interest in selling off its U.S. holdings to emphasize the Clarks brand in the United States, but was unable to find a buyer offering the right purchase price. Meanwhile, on the manufacturing side, Clarks introduced new CAD/CAM design and manufacturing technology, placing the company at the leading edge in the shoe industry.

Clarks attempted to broaden its retail operations, targeting the European continent, when in 1987 it signed a deal with Fish Carnuto to bring the 9 West retail store concept to Europe. The deal initially called for the opening of nine 9 West stores in London and Paris, with plans to extend into other European countries. By the end of the 1980s, however, the companies dropped their agreement, and Clarks returned its focus to its own operations.

Clarks, which by then counted some 400 family members in its shareholder base, made its first flirtation with a public offering in the late 1980s. In 1988, the family shareholders voted to take the company public. Yet the shareholders’ hopes for cashing in on their shares were dashed on the one hand by the collapse of the stock market and the slump into global recession and on the other with the growing threat of competition from cheap shoe imports, as the world’s shoe manufacturing increasingly shifted production to lower wage markets. In 1989, the Clark family voted against taking the company public.

In that year, as well, Clarks was forced to begin shutting down its U.K. manufacturing base, moving its own sourcing overseas, which saw it pare down the number of its U.K. production sites to just four by the beginning of the 2000s. Nonetheless, the company’s Quaker heritage and its longstanding commitment not only to its workers but to its home base in Street, put the brakes on the restructuring of the company’s manufacturing operation. Instead, Clarks attempted to meet the need to cut costs by adopting less expensive materials. The company also attempted to respond to the growing market for athletic shoes, which was draining its shoe sales, by moving into that area as well. In 1989, the company was granted the European marketing license for the United States’ Ryka brand; that deal collapsed, however, when it was discovered that Ryka was already a registered trademark in Europe. Instead, Clarks turned to another U.S. sport shoe company, K Swiss, forming a joint venture European distribution company, K Swiss Europe.

In 1990, Clarks brought in a new chairman, Walter Dickson, again from outside the Clark family, to help return the company to growth. Yet the company was hit hard by the recession, which saw both its sales battered and its costs increase. By 1992, the company was forced to slash its dividends, provoking a rebellion from a faction of the Clark family, which demanded Dickson’s ouster. Dickson survived, backed by managing director (and Clark family member) John Clothier.

Key Dates:

1825:: Cyrus Clark founds a tanning and wool stapling business in the village of Street, in Somerset, England.
1828:: Joined by brother James, Clark begins producing sheepskin slippers, called the Brown Peter.
1833:: James becomes a full partner; business is renamed C&J Clark Ltd.
1863:: William Clark, son of James Clark, takes over the company.
1893:: The introduction of the “Hygienic” line of shoes begins the company’s focus as a “comfort” shoemaker.
1937:: The company acquires a retail shoe store chain and renames it Peter Lord.
1950:: The company launches the successful Desert Boot.
1965:: The first Clark Wallabee model is launched.
1978:: The company acquires the Hanover shoe manufacturing and retail business in the United States.
1979:: The company acquires the Bostonian shoe manufacturing and retail business in the United States.
1981:: The company acquires K Shoes Ltd., a U.K.-based shoe manufacturer and retailer.
1988:: C&J Clark abandons its plans to go public.
1993:: The company puts itself up for sale, then rejects an offer to buy from Berisford.
1996:: The company begins restructuring, transforming itself from a manufacturing-oriented business to a consumer-driven, design-oriented branded products group.
2000:: The company announces that it has decided not to go public for the near future.
2001:: The company acquires Elefanten, a children’s shoe manufacturer in Germany.

Yet Clarks continued to struggle into 1993. At the beginning of the year, the company decided to sell out, and began taking bids. In 1993, the majority of the board recommended accepting a bid of some £184 million from investment group Berisford. But the Clark family once again divided over the sale—and in the end the family voted not to sell. Dickson left the company, replaced by Roger Pedder, a Clark family member.

The company began restructuring in the mid-1990s toward the goal of going public later in the decade. Clarks began shutting down more of its U.K. manufacturing units, which still numbered 12 sites at mid-decade. The company also began strengthening its design component in an effort to recapture its position, particularly in the fast-moving women’s shoe market. Another change was the creation of the new position of chief executive officer. In 1996, the company brought in its first CEO, Tim Parker, who stepped up the company’s restructuring efforts.

Under Parker, Clarks began transforming itself from a manufacturing-dominated company to a consumer-oriented, branded products group. Rather than manufacture its products and hope the consumer would buy them, the company now focused on increasing its responsiveness to shifting consumer demands. The company began adopting more modern shoe designs, while revamping its retail store formats and shutting down a number of poorly performing locations. Clarks then began new marketing efforts to broaden the Clarks brand’s appeal, which resulted in the highly successful “Act your shoe size, not your age” campaign. Also helping the company was renewed interest in the Desert Boot, which had been made fashionable again by a new generation of British pop stars.

Parker, meanwhile, continued trimming the company’s operations, shutting down more factories and selling off the company factory outlet business, which netted a windfall worth some £50 million for the company’s shareholders—a move viewed by some as a way to placate family members waiting for a public offering. The company appeared to take a step closer to that goal at the beginning of 2000, when Clarks hired advisors to help evaluate the possibility of a floatation. Yet by the end of 2000, the company announced that it had decided once again to postpone a public offering.

Instead, with its sales swelling—topping £830 million in 2000—C&J Clark once again eyed international expansion. In 2001, the company turned to Germany, paying £23 million to acquire children’s shoe specialist Elefanten from industrial conglomerate Freudenberg. That purchase gave Clarks a major position in the German and Benelux markets, as well as boosted its position in the United States. Clarks intended to use the acquisition as a springboard to launch its own Clarks branded children’s footwear onto the European continent.

By 2002, Clarks’s repositioning was mostly completed. Sales continued to build strongly, topping £930 million by the end of 2001, with expectations to grow past £1 billion by the end of 2002. In that year, Tim Parker left the company and was replaced by Peter Bollinger, who reiterated the company’s intention to remain private, at least for the time being. Clarks had successfully weathered a turbulent decade to reemerge as a strongly positioned international brand name for the new century.

Principal Subsidiaries

C and J Clark America Inc. (U.S.A.); C J Clark - Fabrica de Calcado Lda Castelo de Paiva (Portugal).

Principal Competitors

Kesko Oyj Helsinki; Reebok International Ltd.; Industria de Diseno Textil S.A.; Gucci Groep NV; Brown Shoe Company Inc.; Phillips-Van Heusen Corp.; Ssangyong Corp.; Amsteel Corporation Bhd.; Euretco NV; Skechers U.S.A. Inc.; Robert Stephen Holdings PLC; Carolina Shoe Co.; Casual Male Corp.; Esprit Europe AG; Spalding Holdings Corp.; Adidas UK Ltd.; Aerogroup International Inc.; Nimox NV; Euro Shoe Group; Vans Inc.