Clarks profits 'pass £100m barrier'

Profits at the Clarks shoe-shop chain have broken through the £100 million barrier for the first time in its 186-year history after the group was boosted by overseas sales, it was reported today.

The retailer, which is based in Street, Somerset, saw pre-tax profits jump by 28% to £108.7 million on the back of a 9% rise in sales to £1.28 billion - the equivalent to selling an extra 2.9 million pairs of shoes, according to newspaper reports.

Strong demand for the group's shoes overseas helped to offset flat sales at home as the company suffered alongside other retailers from weak consumer confidence and the squeeze on household incomes.

But the group enjoyed a 19% hike in sales in the US while its shoes also proved popular with the middle classes in China and India.

Just under one million pairs of Clarks shoes were sold in China during the year to the end of January, nearly a fifth more than in the previous 12 months.

The company also expanded into India for the first time, launching stores in Delhi, Mumbai and Bangalore.

Despite the jump in both profits and sales, chairman Peter Davies remained cautious about the group's prospects during the coming year.

He said: "In many of our markets, the consumer is facing significant challenges as governments struggle to tackle their budget deficits with tax increases and cuts in public expenditure.

"In addition, retailers are facing substantial supply chain cost increases in both raw materials and labour."

The group predicted it could be two to three years before it saw a sustained improvement to sales in the UK.

Rising costs are also expected to impact on profits going forward, with the price of leather increasing, as well as labour costs in Clark's factories in China and Vietnam.

Total costs have risen by around 20% in the group's international division this year.

The group, which is still three-quarters owned by the Clark family, who are estimated to be worth £165 million, also said it had reduced its pension deficit from £100.2 million to £88.2 million during the past year.

It is paying a dividend of 36.5p per share, meaning a total of £28.3 million will be returned to shareholders, the majority of whom are members of the Clark family.

Clarks was launched in 1825 when James Clark used sheepskin offcuts from his brother Cyrus' tannery to make slippers.

No-one from Clarks could be contacted to comment on the report.