Clarks founding family cashing in on dividends 'unacceptable'
Unite slams Clarks founding family for enriching themselves while making hundreds of job cuts
Earlier this month, UniteLIVE highlighted some big companies behaving badly during the pandemic, cutting jobs while still paying out dividends to shareholders.
British footwear retailer Clarks has now joined their ranks, after it was revealed that the firm’s founding family has enriched themselves even as their company has slashed jobs and teetered on the brink of going bust.
It was reported this week that family shareholders cashed in on over £13m in dividends in the last two years, over which time the company racked up more than £114m in losses.
The last family dividend pay-out of £6.5m came in February 2019, just months before the retailer cut 170 jobs in December that year.
In May this year, Clarks announced plans to make 700 cuts to jobs worldwide, including 108 in the firm’s warehouse and central offices in Street in Somerset.
Now, Clarks is intending to go further after announcing earlier this month that it would be consulting with all 3,969 staff in its more than 300 UK shops over potential redundancy. While Clarks would not confirm how many redundancies it plans to make, the Guardian reported that it is understood that two staff members from each shop may be cut.
The Clarks family has now lost a controlling stake in the business, after last week it agreed to sell a majority stake of the business to Hong Kong-based private equity firm LionRock Capital, which will inject £100m in the company to keep it from going bust as part of a rescue deal.
Also part of the rescue deal, Clarks wants to cut rents on 60 stores to zero, which drew ire from landlords who said that they have no choice but to accept these rent cuts as they represent only a small proportion of Clarks’ creditors and cannot vote against the cuts.
It is understood the rent cuts might put more jobs at risk as a result of potential store closures.
In all, Clarks’ founding family has made more than £175m in dividends in the last ten years alone.
Commenting on the latest news that the Clarks founding family has lined its pockets with millions in shareholder dividends before successive waves of job cuts and mounting financial losses, Unite regional officer Gareth Lowe said, “The lavish dividends being paid out by Clarks to the founding family, at a time of transformational change for the workforce, are unacceptable.”
“This calls into question Clarks’ corporate priorities and will only cause this iconic brand reputational damage that so easily could have been avoided.”
The latest revelations come as UniteLIVE highlighted earlier this month how major supermarket retailers are cashing in on Covid by paying out dividends to shareholders even as they benefit from government relief on business rates at a time when their businesses are booming.
Morrison’s, Tesco and Sainbsury’s were among these supermarket giants paying out dividends, with Sainsbury’s doing so after announcing 3,500 job cuts in the coming months with the closure of some Argos stores as well as their supermarket counter services.
Commenting, business, energy, industry and skills select committee chairman and Labour MP Darren Jones told the Times, “Some businesses are doing very well and shouldn’t be taking taxpayers’ money, especially when that goes towards shareholder dividends or bonuses. If companies can afford not to take taxpayers’ money, they should give it back and the chancellor should put it to better use for those who need it most.”
By Hajera Blagg