Jun 1, 2022
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Dr Martens stomps to record results, raises guidance

Jun 1, 2022

Dr Martens had good news on Wednesday as the footwear specialist unveiled record results and raised its forecast for the current year, despite the challenges facing retail at present.

Dr Martens

Its record revenue was driven by its largest ever sale of boots, shoes and sandals and as well as raising its shareholder dividend and workforce bonuses, it's also accelerating new store openings.

And it said for the current financial year (FY23), it expects high-teens revenue growth, helped by the price increases that take effect from AW22 with its expectations for volume growth remaining unchanged.

It continues to expect price to offset inflation. Factory prices for FY23 "are now locked in, with a 6% increase year-on-year (for both AW22 and SS23), and we have good visibility over other operating cost lines," it said. 

Its wholesale order book is strong, and already confirmed at 85% of its full-year expectation. Direct-to-consumer (DTC) trading since the start of the new financial year has also continued in line with its expectations. 

And it continues to expect e-commerce to grow to at least 40% of the mix, with total DTC, including retail, of at least 60%. 

So what about the last year? Looking at the results in more detail, revenue rose 18% on a reported basis, or 22% at constant currency (CC) to reach £908.3 million in FY22 (the year ended 31 March).

Profit on an EBITDA basis was up 18% at £263 million and pre-tax profit rose 207% to £214.3 million. Profit after tax was up 422% at £181.2 million.

The company said it saw a “very strong performance” in the Americas and EMEA, with reported revenue up 29% and 19%, respectively. It saw an “excellent performance” in “EMEA conversion markets, with good growth in Germany and constant currency revenues in Italy, up 122% in H2”.

It also saw a good performance in its UK domestic market, driven by strong demand for product categories such as shoes and sandals, with UK revenue up in line with EMEA overall. The UK accounted for 17% of Group revenue in FY22.

Americas revenue was up a very strong 29% (33% CC) but APAC, its smallest region, was heavily impacted by ongoing Covid-19 restrictions, with revenue down 10%.

However, it’s working hard to drive growth in the region and will transfer control of around half of its 31 Dr Martens branded franchise stores in Japan into its own retail, at the end of FY23 when the contract expires. “This has a compelling business case, as it will increase our control of the brand in this important market and enable us to drive growth harder in the years ahead. Following the transfer, our DTC share in Japan will be around 75%,” it said.

And DTC really is key for the brand. Its DTC-first strategy drove the DTC revenue mix to 49%, up 6pts in the latest year. 

Meanwhile, e-commerce revenue was up 11% on the year and 92% higher compared to FY20, accounting for 29% of the mix.

And wholesale revenues were up 5%, with “continued elevation of the quality of our wholesale partners”. Its wholesale order book for AW22 has been written based on the higher AW22 prices previously communicated, “with strong demand from wholesale customers”.

Dr Martens

The company said its brand is “stronger than ever, with awareness rising and it’s clearly brimming with confidence as it opens more and more stores at a time when many are retreating from physical retail.

Last year, retail saw “a very good recovery where Covid-19 restrictions were lifted” in the latest year, with revenue up 86% and the mix at 20%, up 7pts. That came as it opened 24 new stores in FY22 and FY23 store opening guidance has now increased, driven by its accelerated US store rollout.

CEO Kenny Wilson said the “strong results have been driven by our proven DTC-first strategy and continue to build upon our track record of volume-led growth. When we listed [on the stock exchange], we committed to deliver high-teens revenue growth, and today we are pleased to report 22% constant currency growth and EBITDA ahead of market expectations. Our results were achieved against unprecedented Covid-19 disruption in our supply chain, which our teams navigated with flexibility and dedication.

“We have always said that driving brand equity is our first priority, as it will ensure sustainable growth in the decades ahead. Our recent comprehensive brand survey shows that our brand is stronger than ever, with significant growth in awareness, familiarity and recent purchase. Dr Martens remains incredibly under-penetrated globally, giving us conviction in our future growth ambition.”

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