Clark family in sell-off bonanza

Around 400 family shareholders who control the Clarks shoe business are set to receive a large windfall payout after the company sold its factory outlet retail business yesterday for pounds 80m.

C&J Clark, Britain's best known shoe business, is selling three factory outlets to property group MEPC and will distribute pounds 53m of the proceeds to its shareholders. As the family controls 70 per cent of the company, this means that family members will receive an average payout of pounds 93,000 each. The windfall is thought to be the equivalent of 10 years of dividend payments.

The 6,000 Clarks employees who own shares in the company will also benefit from the deal The payout will provide a boost for the small Somerset town of Street which has been the centre of Clarks operations since 1823.

As some shareholders are thought to control up to 2 per cent of Clarks, the biggest payouts could as much as pounds 1m. The biggest beneficiaries are likely to be some of the family members with seats on the board. These include Roger Pedder, the chairman who married into the family, Lance Clark, the managing director of its Barkers shoes subsidiary and Caroline Gould, a non-executive director. Hugh Pym, the ITN news reporter is also a shareholder.

However, Mr Pedder said that the company's Quaker tradition was likely to rule out a mass Somerset spending spree. "I think you'll find quite a lot of it will be reinvested," he said. "Quakers regard themselves as custodians of wealth rather than consumers of it."

He declined to reveal the level of his own payout though the Clarks annual report shows he is one of the largest shareholders on the board with 3.5 million shares. Mr Clark controls nearly 9 million.

He also denied that the payout was a means of pacifying family shareholders who have been waiting for a stock market flotation of the company since they turned down a hostile bid by Berisford International in 1993.

"We will go public as and when it is appropriate. There is no pressure to float and this sale has no bearing on it."

Clarks shareholders voted against the Berisford takeover on condition that the company sought a stock market flotation by 1998. That deadline has since been extended with shareholder support, Mr Pedder says.

Mr Pedder also said Clarks might be interested in buying parts of Sears footwear interests which include Dolcis, Shoe City and Cable & Co. He said that Clarks had held talks on a possible deal with Sears and that it was keeping the matter under review. "If something became available at the right price then it might be possible," he said.

Clarks is selling its factory outlets centres in Street in Somerset, Kendal in Cumbria and its 50 per cent share in the centre in Doncaster. Factory outlets consist of well known brand name retailers who sell goods at discounted prices. Pioneered in the United States, they have become popular here and there are now 13 in the UK.

Clarks three outlets made profits of around pounds 3m last year but the company has been keen to sell them in order to concentrate on its core shoe retailing and manufacturing interests.

The sale will need to be approved by shareholders at the group's annual meeting next month. The approval of the High Court will also be required for the scheme of arrangement needed to effect the deal. Shareholders should receive their cash in July or August.

MEPC said it was buying the outlets to increase the proportion of retail property in its portfolio. As it already owns a factory outlet in North Shields it now controls four of Britain's 13 centres.

Clarks also announced its results for 1995/96 yesterday showing a net loss for the year of pounds 3.2m. Operating profits fell from pounds 35.8m to pounds 33.6m but there was a pounds 30.4m charge to cover the cost of closing five factories and a reduction in central overheads, largely at the Street operations in Somerset. Group sales were up slightly at pounds 727.3m.

Clarks has been undergoing a fundamental restructure under chief executive Tim Parker who was brought in from Kenwood Appliances. Last year it cut 1,400 jobs, a tenth of the total.

Commenting on the results, Mr Pedder said: "In the context of a turbulent year for the shoe industry, the results are satisfactory and Clarks has emerged in good shape to face the future."