Dr. Martens, the renowned footwear specialist, has announced its record-breaking financial results and raised its forecast for the current year, defying the challenges faced by the retail industry. The company achieved its outstanding revenue growth through its largest-ever sale of boots, shoes, and sandals. In addition to this achievement, Dr. Martens has increased its shareholder dividend and workforce bonuses, and is planning a faster expansion of new stores. For the current fiscal year, the company anticipates high double-digit revenue growth, driven by price increases set to take effect from AW22. The company’s projections for volume growth remain unchanged, and it expects the price hikes to counterbalance inflation.
Dr. Martens has already secured factory prices for FY23, with a 6% year-on-year increase. The company also has strong visibility over other operational costs. Its wholesale order book has already been confirmed at 85% of its full-year expectation. Direct-to-consumer (DTC) trading since the start of the new fiscal year has also met expectations. The company projects that e-commerce will account for at least 40% of its sales mix, while total DTC (including retail) will contribute to at least 60%.
Looking at its performance in the previous year, Dr. Martens reported an 18% revenue increase on a reported basis, or 22% at constant currency, reaching £908.3 million in FY22. Profit on an EBITDA basis rose by 18% to £263 million, and pre-tax profit experienced a remarkable 207% surge to £214.3 million. Profit after tax skyrocketed by 422% to £181.2 million. The company achieved exceptional results in the Americas and EMEA, with reported revenue rising by 29% and 19% respectively. It also witnessed impressive growth in conversion markets in EMEA, particularly in Germany, and constant currency revenues in Italy saw a staggering 122% increase in H2. The UK domestic market performed well, with revenue in line with the overall EMEA region. The UK accounted for 17% of Group revenue in FY22.
However, the APAC region, which is Dr. Martens’ smallest market, faced significant challenges due to ongoing Covid-19 restrictions, resulting in a 10% decline in revenue. To foster growth in the region, the company is actively working on gaining control over approximately half of its Dr. Martens branded franchise stores in Japan when the contract expires at the end of FY23. This strategic move will enhance the company’s control over the brand in the Japanese market, paving the way for future growth.
Dr. Martens places a strong emphasis on direct-to-consumer (DTC) sales, with its DTC-first strategy fueling the rise of DTC revenue, which now constitutes 49% of the sales mix, a 6-percentage-point increase from the previous year. E-commerce revenue grew by 11% compared to the preceding year and saw an exceptional surge of 92% compared to FY20, comprising 29% of the overall sales mix. Wholesale revenues also experienced a 5% increase, with a focus on establishing partnerships with high-quality wholesale partners. The company’s wholesale order book for AW22 reflects the previously communicated higher prices, garnering strong demand from wholesale customers.
Despite the retail industry’s challenges, Dr. Martens continues to strengthen its brand, with growing awareness and confidence. While many retailers are retracting from physical stores, Dr. Martens has actually increased its store count. Retail revenue experienced a robust recovery in regions where Covid-19 restrictions were lifted, registering an 86% increase and constituting 20% of the sales mix. In FY22 alone, Dr. Martens opened 24 new stores. Additionally, the guidance for FY23 store openings has been raised due to an accelerated store rollout in the US.
CEO Kenny Wilson expressed satisfaction with the company’s remarkable results, attributing them to the DTC-first strategy and the track record of strong volume-led growth. Despite the unprecedented disruptions caused by the Covid-19 pandemic in the supply chain, the company’s teams demonstrated flexibility and dedication. Wilson emphasized that driving brand equity stands as the company’s top priority, as it ensures sustainable growth in the future. With Dr. Martens still having ample room for global expansion, the company remains confident in its future growth ambitions.
Useful Links:
1. Dr. Martens Instagram
2. Dr. Martens Official Website
