Clarks's private equity owners accused of betraying its Quaker roots

Clarks’s private equity owners have been accused of betraying the shoemaker’s Quaker roots by threatening staff with the sack if they do not accept pay cuts.

Workers at Clarks’s Westway warehouse in Street, Somerset, have gone on strike for the first time since 1880 claiming Lion Rock Capital is using ‘despicable tactics straight from the private equity handbook’ to force them to accept a £3,000 wage cut.

Cyrus and James Clark, who came from a Quaker farming family, started the company in the town 196 years ago when they used offcuts from their sheepskin rug firm to make slippers.

Clarks has provided libraries, a theatre and the public swimming pool to Street, reflecting its Quaker values.

But in November last year, Lion Rock, a Hong Kong-based private equity company, snapped up Clarks on the cheap after it was hammered by the pandemic.

The sale meant the Clark family, which includes the BBC’s health editor Hugh Pym, lost control of the business for the first time in nearly 200 years. 

Now the firm is threatening to ‘fire and rehire’ workers – a controversial tactic whereby companies pressure workers to sign on again for lower pay or worse terms. If staff refuse to accept the new contract, they are deemed to have resigned and get no redundancy pay.

The changes mean workers face a 15 per cent pay cut, reducing their hourly wage from £11.16 to £9.50 – or an annual reduction of £3,000. 

The company is also cutting sick pay, reducing redundancy packages and scrapping paid tea breaks. Similar tactics were levelled at the 600 staff in its head office, who were also forced to accept worse terms.

More than 100 warehouse staff went on strike on October 4 – the first walkout for more than 140 years, according to historian Mark Palmer, who has written a history of the company.

Clarks hit back, saying the pay cuts are needed to turn the company around after it suffered a £172million loss in the pandemic, adding that Lion Rock’s rescue saved it from going bust. It will only use fire and rehire as a ‘very last resort’, it said.

But workers at the warehouse said the private equity buyers ‘let down’ the company’s heritage. 

Father-of-two Trevor Stephens, 45, who has worked at the warehouse for 17 years, said: ‘This will affect whether I can afford my rental home, and if I lose that my kids won’t be able to stay over and I won’t see my them. It’s scary.’

Francis Foley, 54, an employee of 34 years, who has been signed off work due to stress, said: ‘They’ve let down the family and Quaker heritage.

‘It’s an absolute disgrace. Take the deal or we fire you – this isn’t what Clarks is about.’

Adrian Axtell, of the Community union, said: ‘It’s despicable and outrageous to treat people in this way. They are doing it without any real care to what that means to people’s lives.’ 

Street effectively grew off the back of the employment the company provided, with many workers still living in buildings erected by the Clark family.

Lion Rock promised to inject £100million to rescue the business, but as part of the deal it also forced landlords to vote for swingeing rent cuts as part of a company voluntary arrangement (CVA). 

At the same time the company put the jobs of all its 4,000 shop staff up for consultation, following the loss of 900 jobs earlier in the year.

Clarks, famous for launching the desert boot in the UK and selling shoes to generations of schoolchildren, generated over half a billion pounds of profit between 2010 and 2017.

But even before the pandemic it had fallen into losses. Sales fell as shoppers moved online and it was hit by rising costs from rents, rates and increases in the minimum wage. 

The pandemic pushed Clarks to a £172.2million loss on £775million of revenues, 44 per cent lower than the year before.

In response, Clarks said it has been consulting with unions since May, and that staff working on minimum wage will receive a pay rise.

It added: ‘Clarks did not undertake this lightly, but the proposals are part of a company-wide plan to secure future viability, with a view to protecting over 4,000 jobs in the UK. 

‘We are not singling out Westway employees – all our employees have been affected over the last year, many have had to leave the company, taken voluntary pay cuts and foregone pay rises and bonuses.’

It said it had taken a ‘constructive and collaborative approach’ to the consultation and sought to ‘avoid the need to terminate contracts on current terms and offer re-engagement on new terms, which the company has always regarded as the very last resort’.