Dr. Martens, the popular footwear brand, has reported impressive financial results for the first half of the year, showcasing record-breaking revenue figures. The company has also seen improvements in foot traffic, although it has not reached pre-Covid levels, and an increase in conversion rates. This positive momentum has continued into the second half of the year, with strong e-commerce sales in October and November.
During the first six months of the year, Dr. Martens saw a 16% increase in revenue (£369.9 million or 24% in constant currency), a 3% rise in EBITDA (£88.8 million or 17% CC), and a substantial 46% surge in pre-tax profit (£61.3 million). Profit after tax also saw impressive growth, increasing by 65% to £48.6 million.
The company’s direct-to-consumer strategy played a significant role in its success, increasing by 6 percentage points to 40% and contributing to a gross margin increase of 2.8 percentage points to 61.3%. Retail revenue experienced a remarkable growth rate of 92%, accounting for 18% of the total revenue mix, up by 7 percentage points. E-commerce revenue continued its strong double-digit growth, increasing by 10% compared to the previous year and an astounding 117% compared to two years ago.
Wholesale revenue saw a modest rise of 6% (or 13% CC), although around £20 million was delayed from the second quarter and is expected to be realized in the second half, primarily in relation to the Americas. Speaking of regional growth, the Americas region experienced a robust increase of 40% (or 57% CC), while EMEA grew by 5% (12% CC). Dr. Martens also expressed satisfaction with the performance of its operations in Italy and Iberia after taking back control. APAC saw a 4% increase in constant currency but a 2% decrease on a reported basis due to ongoing Covid-19 restrictions. Despite this, the company remains optimistic about the long-term growth potential of the APAC region, especially in Japan and China.
Dr. Martens expanded its retail presence by opening 13 new stores in the first half of the year, including notable locations such as Barcelona (Spain), Germany, the US, and APAC. Additionally, the company recently opened its second store in Italy. However, the closure of three third-party factories in South Vietnam due to Covid-19 and shipping challenges posed operational difficulties. Fortunately, the company’s decision to maintain purchasing volumes and build inventory levels in the previous year helped overcome supply shortfalls.
In terms of product offerings, Dr. Martens focused on its “continuity” products, which made up 84% of its revenue. The company also introduced exciting collaborations with brands like Supreme, Bodega, Clot, and A-Cold-Wall to bring newness to its product lineup. The company experienced significant growth in its sandals business, with revenues increasing by 45%, driven by the success of the Voss and Blaire models. Dr. Martens also launched new sole constructions and introduced casual innovations, including the Tarian range designed for sneaker-wearing males in collaboration with Yohji Yamamoto and Atmos.
To ensure pricing effectiveness, Dr. Martens conducted a thorough study across its priority markets to evaluate brand strength and consumer perception of pricing. As a result, the company plans to increase prices in the Americas and EMEA regions from AW22, while maintaining its current pricing structure and expecting no impact on demand.
Looking ahead, Dr. Martens remains confident in its guidance for FY22 and anticipates mid-teens revenue growth in the medium term. The company aims to achieve a mix of at least 40% e-commerce sales, with total direct-to-consumer sales (including retail) accounting for at least 60% of the overall revenue mix. Additionally, Dr. Martens has set a medium-term target of a 30% EBITDA margin.
In conclusion, Dr. Martens has demonstrated strong performance in the first half of the year, achieving record-breaking sales and showcasing resilience in the face of ongoing challenges posed by the pandemic. The company’s focus on direct-to-consumer sales, collaborations, and innovative product offerings has been successful in driving revenue growth, positioning Dr. Martens for continued success in the future. With a robust strategy in place and a strong brand reputation, Dr. Martens is well-positioned to capitalize on growth opportunities in both established and emerging markets.
Useful Links:
1. Official Dr. Martens Website
2. Reuters Article on Dr. Martens’ H1 Sales
