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Published
Jun 17, 2021
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Dr Martens continues to stride ahead, US trading is robust

Published
Jun 17, 2021

Dr Martens released its first set of results as a listed company on Thursday and the figures showed just why its recent IPO was such a success.


Dr Martens


In the year to March 31, revenue rose 15% and EBITDA was up as much as 22%. That was despite the year covering a pandemic period in which stores were closed for months on end and the footwear category as a whole was reportedly weak.

The company acknowledged that it saw challenges during the year,  but CEO Kenny Wilson said that its “strategy is delivering strong results. We continue to prioritise selling directly to our consumers and, with retail severely impacted by Covid-19 restrictions, we focused our efforts on a step-change in e-commerce, achieving revenue growth of 73%”.

He added that “the investments and improvements we made in our supply chain in recent years, along with our multi-country sourcing model and close supplier relationships allowed us to quickly react to a rapidly changing environment, ensuring minimal disruption and maintaining good availability throughout”.

So let’s look more in-depth at the figures that he was so pleased about. As mentioned, revenue was up 15%, or 16% in constant currency, reaching £773 million. The 22% EBITDA jump saw that figure coming in as £224.2 million, while adjusted pre-tax profit rose 34% to £151.4 million. Net profit actually fell 52% to £35.7 million, but that was because of exceptional items adding up to more than £80 million relating to its IPO.

It’s certainly an impressive set of numbers and came after the business saw strong growth in all regions. As it expected, revenue grew 17% in both EMEA and the Americas, and 7% in APAC. In APAC it saw slower growth in Japan, its largest Asian market, “due to the higher physical retail mix which was significantly impacted by Covid-19”. But its China revenue grew by 46%. And in EMEA, it saw the strongest performance in Germany, following the “highly successful conversion to a directly operated business in the prior year”.

Its direct-to-consumer mix was 43%, which was actually down two percentage points due to its own-store closures. In fact, closures and restrictions meant D2C retail revenue fell 40% to £99.7 million and the mix was 13% (down 12 percentage points). But e-commerce revenue surged 73%, as mentioned, to make up 30% of the total revenue mix, a 10% percentage point rise.

Wholesale continued to grow, with revenues rising 18% to £437.9 million, driven by strong performances from pureplay e-tail customers globally, together with “robust trading” from US customers.

The company said wholesale allows it to reach more consumers in more places globally, “and our strategy here is to have fewer, deeper wholesale relationships with quality partners who understand and appreciate our brand”. It expects wholesale revenues to continue growing in absolute terms but to become a smaller part of its group revenue in percentage terms.

It was also encouraging that the gross margin grew 1.2 percentage points to 60.9%, predominantly due to faster delivery of supply chain efficiencies.

While many companies reined-in spending during the year, and Dr Martens itself was prudent with its cash, it continued to invest in its brand and business. This included increasing its headcount by over 250 people, and opening 18 new stores, as well as a third-party distribution centre (DC) in New Jersey in the US.

So that was then, but what about now and the future? The guidance it issued at the time of its IPO remains in place and in FY22 it expects high teens revenue growth as it laps the Covid-19 impact of FY21.

From FY23 and over the medium term, it’s expecting mid-teens revenue growth. And it’s targeting e-commerce to grow to 40% of the mix, with total D2C, including retail, at 60% of the mix. Trading since the year end has been in line with its expectations, but we’ll hear more about that with a Q1 trading update on 29 July.

The company also announced a deeper sustainability commitment and is targeting carbon net zero by 2030, plus all footwear being made from sustainable materials by 2040.

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