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Jan 27, 2022
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Dr Martens powers ahead in Europe and America, upbeat on future progress

Jan 27, 2022

Dr Martens delivered another good performance in the three months to the end of December with the company’s trading update on Thursday saying that its third quarter was driven both by very strong e-commerce and more buoyant retail store trading. 

CEO Kenny Wilson - Photo: Dr Martens

Its direct to consumer (DTC) revenues grew 33% compared to Q3 in 2020 and made up 64% of the total revenue mix.

And CEO Kenny Wilson said: “We continued to put our long-term custodian approach at the heart of decision making and proactively managed the business against a changing Covid backdrop, prioritising the higher-margin DTC channels in line with our strategy. We remain confident in achieving market expectations for the full year and I would like to thank everyone at Dr Martens for their exceptional hard work and dedication.”

Looking at the numbers, Q3 revenue overall rose 11% year-on-year to £307 million. It was up 15% on a constant currency basis and compared to two years ago, it was 21% ahead.

That meant revenue in the year to date is running 14% ahead at £676.9 million, or 20% ahead on a constant currency basis. Up against the performance in 2019, it's 30% higher. 

E-commerce has clearly been the standout performer with revenue up 16% year-on-year but up a massive 85% on a two-year basis. For the year to date, those figures are 13% and 97%, respectively. 

Not that the retail stores performance has been unimpressive. So far this fiscal year, Q1 was the only quarter in which the company saw a negative figure here and in Q3, revenue was 72% ahead on the year and 16% ahead on two years ago. That's a big achievement given that many businesses are still lagging the two-year performance in their physical stores. For the year to date, those figures are 81% and 9%, respectively.

But as the company has focused more heavily on its own e-commerce operation and on its directly operated stores, and as some parts of the world have continued to struggle with Covid restrictions, wholesale has understandably suffered. The company said that wholesale revenue fell 14% during the quarter compared to a year earlier and was down 10% compared to two years ago. For the year to date, it was down 1% against this time last year but up 15% against two years earlier.

By region, EMEA recorded strong growth at 40% (or 45% constant currency). This was driven by solid e-commerce growth and the recovery of retail, together with a good wholesale performance. It saw “excellent” revenue growth in Italy, following conversion to a directly operated model earlier this financial year, in line with the trend seen in Germany in its first year of conversion.

The Americas delivered a “solid” Q3 (up 4%, or 6% constant currency) with a very good DTC performance, which was partially offset by wholesale. APAC revenues were impacted by renewed Covid restrictions across the region and fell 28% (or 24% constant currency). It saw “particular weakness in our distributor markets, where third-party stores were impacted by renewed restrictions, most notably in Australia and China”.

The company said the physical stores overall saw strong in-store conversion and improved footfall. But the emergence of the Omicron Covid variant “curtailed the improving trends through December, with increased trading restrictions”.

But overall, it said it had a “very strong DTC peak trading period, with February and March now being our quieter trading months. We remain confident in achieving market expectations for our first full year as a listed business, subject to no significant Covid impact in Q4”.

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