Marking his first year back, Clarks Americas President Gary Champion reports on righting the ship and steaming toward bigger and better results.
Gary Champion knew he had his work cut out for him when he returned to Clarks Americas last February. He’d spent eight years away, first serving as president of Geox, North America for a year and then heading Earth Shoes for six years. Clarks, where he had spent 25 years, was not the same company he had left. Not by a long shot. As senior vice president of sales, Champion had been instrumental in building the brand into one of the industry’s marquee businesses, with annual sales north of $800 million, and creating a revered corporate culture among its 300-plus employees. But a lot had changed after his departure, and much of it was for the worse.
The missteps stemmed largely from new management’s decision to globalize the business, according to Champion. Perhaps the worst “streamlining” move of all had been transferring U.S. product development to England. It didn’t take long, he says, for the styling to become out of touch with the tastes and demands of American consumers. Making matters worse, the bugs in Clarks’ new state-of-the-art distribution center hadn’t been worked out, creating numerous shipping delays. These led to markdowns that further ate into profit margins. It became a vicious cycle. On top of that, the company had shifted focus to the volume end of the market, ignoring premium independent retailers who had been key to its earlier success. In a word, Champion says, the business had become a mess. “They siloed out the divisions and stopped communicating with one another,” Champion explains. “It got to the point where they paralyzed employees and couldn’t get anything done because no one could get answers. Then we lost the connection with our consumers and retailers.”
Things got so bad that Tom O’Neill, Clarks’ chairman of the board, embarked on a worldwide, months-long due-diligence tour, interviewing upward of 2,000 employees to find out how the company had gotten off track. He concluded that the business wasn’t stabilizing, nor were solutions being put into place where one could envision significant improvements. Changes had to be made, starting with the departures of Clarks’ global CEO, CFO and head of HR. Not long after, O’Neill, as interim CEO, determined that the U.S. division president wasn’t getting the job done either. Then he gave Champion a call. Over dinner the two talked about why he had left, what he’d been doing since and whether he’d be interested in coming back. Champion said he would, but only with the autonomy to recreate the structure in place during his first stint with the brand. “I want people to be working for me and with me,” he explains. Another stipulation: Bring product development back to the States. Done and done. Thus began the return of a Champion—literally and figuratively.
When Champion walked back into the office, he received a standing ovation from employees. Some had tears of joy running down their cheeks. Far from deeming himself a shoe messiah, Champion believes their reaction showed how difficult the business had gotten and how debilitating the downturn had been on morale. Still, about 50 percent of Champion’s old team was still there, a credit to the strong culture that had once existed at Clarks. “They are still here because they love the brand,” he says, noting that the Clarks family has always treated employees well and provided room for advancement. “The company has traditionally bred opportunity for good people,” he adds. (Champion himself started as an entry-level HR person before moving to sales four years later and climbing the ranks to senior vice president.) “That creates loyalty and passion, and the people here truly care about this business,” he says.
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Returning to Clarks.
Condoleezza Rice. She’s brilliant, a great statistician and very strategical. I have always admired the way she handles herself.
Indeed, Champion believes that much of the talent required to return Clarks to its marquee position is already in-house. His main task is providing the focus and direction they need to excel. “We have 358 combined years of experience in our sales force just in selling Clarks,” he says. “We have both the knowledge the relationships to run a successful business. It’s all here.”
Building on that experience, Champion has overseen the introduction of a tiered business model—one loaded with fresh product to be cleanly distributed. (Now that the distribution center is up to speed, the goods are being delivered on time as well.) At what he calls “the halo,” sits Clarks Originals, a relaunched lifestyle collection for Fall ’17, and a revamped Privo brand. Below that is the contemporary Clarks line, which includes more sophisticated styling. At the base sit the Cloudsteppers by Clarks and Clarks Collection products, which are everyday value propositions. “There’s a real strategy now that’s built for success,” Champion says. The days of losing business are over, as he assured the team at its recent sales conference. “I told them that this is the day we turn the corner. We are not giving up any more market share,” he says. “We’re going to show people again what Clarks can be.”
Champion is thrilled to be leading the charge. In fact, leaving the first time was the toughest business decision he ever made. “I grew up with the brand. This was family to me,” he says. “To walk away from the business when it was very healthy and with [former President Bob Infantino] still in charge was really tough.”
But Champion was determined to run a company, and Earth Shoes’ rapid growth during his tenure as president proved he could. “We basically built that brand from scratch,” he says, noting Earth’s negative heel design was the starting point. “The brand driving that business today is our interpretation of it.” What’s more, the experience made Champion a better executive. “I’m not the same person I was before,” he says. “I’ve learned so much about managing businesses, brands and people. People rely on you to make the right decisions so they can work for a healthy company and provide for their families.” Champion says he welcomes the challenge and responsibility of running Clarks Americas and making the business bigger and better than ever. “The company has always treated me well,” he says. “The opportunity to come back to the brand I love, to fix it and move it forward…It was just too good to pass up.”
How would you grade your first year back? As far as getting control of our business is concerned, I think we’ve done a terrific job. But we are only a quarter of the way there. We understand now where and how things are moving, what and how much we are selling and how much we are earning. We also have an adequate product line for spring, and our fall line is strong enough to start getting back the market share that we’ve lost over the last three or four years. While I’m not expecting to get it all back in one season, we will start getting it back that season. Our team recognizes the big step forward we’ve taken in product, and we are shipping again on time for spring. We won’t let our inventories get out of line again because we’ve got the right controls in place now.
All systems are go?
It’s just about getting that machine working in the right direction again. Dawn Porto, for example, really knows our product lines. She’s been here for 12 years and learned under the engine that was driving our business forward. She was part of the women’s product line then and now oversees all wholesale product development. She knows our retailers. She and her team have been on the road visiting our key accounts and getting their feedback. We are making the right decisions about product again. When you put that in the hands of salespeople who know how we operate and what we need to accomplish, we will get this company moving in the right direction again.
The goal is to grow beyond the business Clarks lost, correct?
Absolutely. First, we need to start gaining market share back. While it’s not a huge amount relative to overall sales, we had been losing the premium comfort casual business, which was hurting our profit margins and the brand overall. The product mix got screwed up, basically. Our new chief brand officer, Jason Beckley, gets this totally. He had been here for a year and a half trying to figure out where to take the business, but he had no one to help him lead.
Where can Clarks go from where it currently sits?
There are plenty of opportunities. We have Cloudsteppers, which was introduced in Fall ’15, that will be close to a three-million-pair program this year—and we’re not in half the distribution we should be in. That, along with Clarks Collection, presents huge growth potential. At the other end of the spectrum is the relaunch and repositioning of Clarks Originals. It includes our classic Desert Boots in Italian suede and lizard-skin Wallabees, all made in England and priced at $350 retail. The line also includes a full collection of new styles for men and women, which are offshoots that target, younger-aged consumers. We are taking a social media approach to let Millennial-aged customers discover it on their own. This represents a consumer who traditionally doesn’t buy our other shoes—younger even than our contemporary Clarks customer. It’s the first time we’ve directly approached that market.
How many styles, exactly?
Forty. Originals is a complete lifestyle line. We showed it at FFANY and Agenda, and the response was terrific. Remember, Clarks has been making shoes for more than 190 years. We’ve been innovative throughout that time. The Desert Boot and Wallabee were both before their time. Privo was also before its time—selling athleisure-type shoes before athleisure was popular.
How is Privo being updated?
We are reintroducing Privo as if we were launching it today. It has seamless insides, where it’s almost like the shoes have been turned inside out. Think lots of cup soles with triple-density PU and all one piece—very cool stuff. But it’s not just another sneaker, nor is it athleisure specifically. It’s an interpretation of casual and athletic, a different attitude for that type of customer. The distribution will be a tier below Originals in premium comfort specialty stores. It’s a sophisticated look, but not necessarily for Middle America.
And the Clarks brand?
We are getting a little more contemporary—more sophisticated styling than our traditional customer. It’s the same Clarks comfort systems, fit and beautiful leathers now layered with more contemporary styling to attract that consumer who seeks a little more style. We are just starting to get on track with that. We expect that to be our bread and butter and drive sales through the roof.
Are you more optimistic now as opposed to when you first came back?
I’m optimistic for this year. I think it will be a reset year for us. The question is: How quickly can we rebound from the three or four years that we were off track? That’s tough to project. In the meantime, we’ve just been squaring everything away and regaining control of the business to the point now that I believe we are making the right product again. Now it’s a matter of getting our sales, marketing and logistics teams around that so we can move this business forward. By the end of this year, we’ll know better what the next five years will entail.
How much might the overall disruptive state of retail impact those efforts to move forward?
I would be more worried if the brand didn’t have the recognition that it has. I think consumers find comfort in walking into a store and trusting that the Clarks brand is on the floor. They know what they are going to get. Now, are retail and the overall economy flying high? No. But we have a good base, and if we start doing the right things we should move the needle.
You described the industry overall as currently “stagnant.” (See side bar, p. 20) How so?
There’s nothing new, really. The lightweight story that’s been going on for a while represents the underbelly of the business. It squares up and it’s a good price point, but it’s not driving innovation. It’s driving commercialization but, other than lightweight EVA and a lot of padding, it’s not something so innovative that it is pushing the whole market forward. How do you take that up market? I think there’s opportunity to take the DNA found in a Skechers GoWalk sneaker or one of our Cloudsteppers styles and make it in leather and essentially Clarksify it. I believe that could be an innovative and successful venture. We are working on that now.
Leather is the key word. It’s a knitted-uppers world right now, but that leaves the door open for something different, correct?
Yes. Our Clarks Originals and Privo collections give us an opportunity to do just that. What’s more, we will be able to test those styles in our A-level stores. Overall, we will use our stores as a test market. If we get a good reaction, then we can move quickly to commercialize it and drive it through our retail partners.
Clarks wasn’t testing product before in its stores?
No. They had been more focused on opening new stores, which amounted to 20 to 30 in a little over two years. Our current retail portfolio, in fact, is too large and diverse. We are getting that back in line as well. We want to have a good package of stores that can drive our business and tell us what our consumer wants. And once we start driving the business forward again, I want to offer franchise opportunities to retail partners to open around our remaining flagships. It’ll be a great opportunity for some of our retail partners—the ones who helped build our brand. So why not let them benefit from it as well? In five years, that’s what I envision.
What’s your policy on direct-to-consumer (DTC) sales, particularly online?
We have a DTC site, but we have cut back on a lot of the promotional activity that had been going on. Our inventories are back in line, so we won’t have to discount as much. Going forward, our e-commerce site will be full-price except when it’s the season to promote like everybody in the market might also be doing, but only on the items where it’s necessary. That should take some pressure off the marketplace. We also need to start sharing what we learn from consumer insights at the point of sale in our stores and online. Who and what they are buying? We should share that information with our independent retailers. Our best practices can help them with their own sites, Amazon Marketplace or wherever it might be.
Is the mood overall at retail as dire as being reported?
No, but it’s not great. The holiday season wasn’t great. It wasn’t in the tank, but it wasn’t what it was built up to be.
Do you expect this year to be as bad as last? Can the industry correct some of its problems?
I think some are in the process of doing that. For example, Macy’s laying off 10,000 people and closing 100 stores. Those 100 stores probably weren’t profitable. The revenue might go down, but the profit could rise because they can cover some of that online. Those kind of changes as reported in the news are doom-and-gloom, but they are healthier for the market overall.
Even with all the closings so far and those announced, are we still over-stored?
Yes. But we are not selling fewer shoes overall. So how do you play in that game and survive? I think the most resilient retailers in our industry are independents. They’ve survived department stores and big box, and I believe they are going to find a way through e-commerce. Some, for example, have found a way to play on Amazon Marketplace and are building relationships with vendors in a full-price way that is helping offset declines in their brick-and-mortar stores. They are also learning things from their Amazon sales to pull into their physical stores. Those are nuances that they must grasp if they are going to be around in the longer term. The other piece is how to get interactive with the customers who are coming into their stores. How do you make it interesting for them to come in and shop? They need to get technology on the floor. That’s a tough one for independents, but it’s what they need to do.
Do you think the majority of consumers will still want to shop the old-fashioned way?
I do, but it’s going to require a more interactive environment. You’ve got to give consumers a reason to come into your store other than treating them nicely. Price, honestly, has never worked. Those types of stores have historically thrived because of their selection, but now consumers can find a bigger selection online, and often at a lower price. So how do those retailers attract consumers now? What’s the interaction? What’s the experience like on your floor? Something needs to be going on in the store, whether it’s videos or events—whatever interacts with that consumer. Retailers need to create special experiences. There are ways to make it more interesting and to tell better stories.
It seems like a lot of potential remedies lie in common sense. Like don’t over distribute and create a store environment where customers may be less inclined to whip out their phone to find it for a few bucks cheaper online. Easier said than done, but…
It’s pretty close to that easy. But that kind of easy requires hard work and sticking to your guns.
Where do you see Clarks Americas in five years?
I see us on a healthy growth path with different options within different sub brands and maybe a mix of franchise-owned stores and our full-price stores. Overall, I see a very healthy business that’s well over $1 billion business in annual sales.
What do you love most about your job?
I love the idea that this marks a rebirth of Clarks Americas. When I started in this company the first time around, it was about a $20 million business. I remember sitting in my first sales meeting in the Mendenhall Inn just outside of Kennett Square, PA. We were sitting in chairs with only a women’s Sunburst sandal and a men’s style on the floor. But we made a stance to go after every retailer we could find starting with those two shoes. We made a commitment then to growing the business. It was about drawing a line in the sand and telling ourselves we could do better than who we were that day. We grew it to more than $800 million. While we are a much bigger brand now, we have drawn another line in the sand. We are going to grow this business again. I would love for the company to be in the shape I left it in the first time, only bigger. It would mean so much to me to see that come to fruition. Stepping back in and seeing it unhealthy made me feel ill. I want to build it to something that we can all be proud of, and then I’ll have someone great step in to keep it going. That’s what I would love. That’s what brought me back. •