U.K.-based footwear specialist Clarks published its annual report for the year ended 2025, showing a return to profitability for the first time in two years and exceeding expectations. Results benefited from cost-cutting moves and a margin recovery in retail operations.

Net earnings for the privately held firm came to £31.3 million ($42.2 mm) against a loss of £39.3 million a year ago. Sales declined 3.3 percent to £871.5 million ($1.17 bn) from £901.3 million the prior year.

Gross margins improved to 49.2 percent from 47.9 percent in 2024; while selling, distribution and administration expenses decreased 8.8 percent to £363.6 million, or 41.7 percent of sales from 45.2 percent the prior year.

Operating profit totaled £66.3 million against a loss of £18.1 million.

Clarks said it ended the year cash-positive, with zero bank borrowing, driven by strong cash management and improvements in working capital.

Performance Review
In its “Business Review” section of its annual report, Clarks said, “2025 marked a pivotal point in the business’s return to profitability. A strong effort to streamline core processes and reduce structural overhead costs has driven a return to profitability for the first time in two years. This will provide a solid foundation for future growth and expansion.”

The footwear maker said the “most significant internal change” was the appointment of Victor Herrero as interim CEO in June. succeeding the Interim Executive Committee and “providing the organization with clear strategic leadership and direction.”

Externally, Clarks said it faced sustained pressures arising from unfavorable global market conditions. The company said, “Shifts in US trade policy pushed tariff levels to their highest point in nearly a century. driving up costs across international supply chains and injecting additional volatility into global financial markets. At the same time, rising wage inflation and ongoing energy price volatility further intensified cost pressures for retailers.”

Clarks added that, against this backdrop, consumers became “increasingly cautious, selective and value driven,” leading retailers to discount in several markets. Clarks added, “Despite the unfavorable macro-economic factors in 2025, moving into our 200th year, Clarks had a turnaround year, and returned to profitability.”

Wholesale Performance
Clarks said its wholesale business remained its largest revenue source. The Americas, continuing as the largest wholesale market, showed “gradual improvement in volume and net turnover in 2025. However, impacted by the unfavourability of tariff policy and off-price deals, margin was adversely affected.”

In the U.K. and EMEA, the wholesale market was “still challenging as wholesale customers cautiously managed their own inventory and cash position to avoid piling stocks, given the weak retail demand in the unstable macro-economic environment. Though sales performance was impacted by the volume drop, reduction of off-price deals in 2025 protected the margin and was broadly in line with 2024.”

Retail Performance
Retail momentum in the Western Hemisphere remained soft, with footfall stabilizing in 2025 but not yet returning to pre-pandemic levels. Clarks added, “Supported by a successful expansion strategy and right product assortments and right price in markets, direct-to-consumer channels in Clarks recorded sales overachievement in 2025 versus 2024, particularly in e-commerce in the UK & ROI region and outlet in the Americas region.”

Retail gross margin improved “notably and returned to a healthy level,” as the year-ago performance was “significantly impacted” by the heavy promotional activities to clear aged stock.

APAC business experienced strong organic growth and aggressive expansion of its distribution points. Clarks said of APAC, “All AРАС regions trended ahead in 2025 with double-digit sales growth, followed by an increase in brand awareness and comparatively higher average selling price than the Western regions.” To diversify the business with a lifestyle concept, Malaysia launched the first-ever Cloudsteppers store featuring the brand’s full range of shoes, apparel and accessories. In the regions, Clarks re-entered the India market.

Clarks said cost control was a “key focus” in 2025. Cost savings in the year were realized through several projects, including the centralization of distribution center operations in Somerset, England; the implementation of new HR solutions; and the achievement of synergies from simplifying the global organizational structure.

Outlook
Looking forward, Clarks said it’s focused in 2026 on “growing market share and driving sustainable growth through targeted business development and new market expansion.”

Growth strategies include new store openings globally, already underway, including full-price, outlet, Originals, and Cloudsteppers stores. Clarks is planning “strong business development” in both new and existing markets, expanding distribution points, and adding new partners in India, Australia, and Mexico. Clarks will also pursue digital growth, including the recent launch of its first owned marketplace on clarks.com in the U.K.

Clarks said, “The footwear industry is highly competitive around the globe. In 2026. Clarks focuses on winning market share and driving cost efficiency by speeding up the expansion globally, introduction of non-footwear products, entrance to new markets, adjustment of pricing strategy and continuation of identifying areas of cost improvement in operations. With the effort put in globally. Clarks aims to achieve another milestone of success in 2026 – driving profitable, scalable growth through disciplined execution. organizational clarity, and simplicity across the business.”

Image courtesy Clarks