A number of private equity firms are said to be circling around struggling U.K. footwear firm Clarks.
The groups that have surfaced in the last few months include Sycamore Partners in the U.S. and Alteri Investments in the U.K. Both have expertise investing in distressed firms. OpCapital, a U.K.-based firm that helps underperforming companies in need of operational transformation, was said to be interested as well. The investment firm last year took a majority stake in Maurices, with the now bankrupt Ascena Retail Group retaining a minority stake. It wasn’t immediately clear if OpCapital is still in talks with Clarks.
On Thursday, Sky News reported that Hong Kong-based private equity firm LionRock Capital is in discussions with the footwear maker on a financing deal. The report said LionRock and Alteri are expected to submit bids soon. It wasn’t clear if Sycamore will do so as well, and a spokesman declined comment. Sycamore earlier this year pulled out of a deal to acquire a majority stake in Victoria’s Secret, and is said to be keeping tabs on the J.C. Penney bankruptcy. It also shut down its Coldwater Creek operation to pursue a sale of the business, and tried several times to acquire Chico’s FAS Inc. last year, but was rebuffed.
Clarks reported a loss of more than $106 million in 2019. In April, it started conversations with advisory firms on restructuring options. In early May, the company began exploring funding opportunities to give it a much-needed liquidity boost following the coronavirus outbreak that saw the temporary closures of its stores. The company at the time had about 1,400 doors in 75 countries.
In May, the company embarked on a restructuring that resulted in the loss of 900 jobs, as well as the closure of an undisclosed number of stores. It is still in the process of shedding those jobs, which is expected to continue over a period of 18 months. Clarks has denied that it would consider a “company voluntary arrangement,” which under U.K. bankruptcy law allows an entity to repay creditors over a period of time provided certain conditions are met.
The company operates under the trade name Clarks, but was founded under the name C. & J. Clark International Ltd. in 1825 by brothers Cyrus and James Clark. The Clark family still retains a majority stake in the business. That holding is believed to be in the 80 to 85 percent range. What isn’t clear is whether the family would still retain its majority stake or instead take on a minority interest if an investment deal is inked with one of the private equity suitors.