To support its volume-led strategy, Dr. Martens will raise prices by 6 percent on average to cover cost inflation. The company said it believes its pricing headroom will increase further as it continues to invest in the brand and product proposition.
The price increase is a result of rising labor, energy and supply costs—including the bouncy sole and leather the brand is known for.
In A Nutshell: “I am pleased to report another strong set of results covering the first half of our financial year. Underlying revenue growth was 18 percent, and the EBITDA margin was in line with our guidance,” Kenny Wilson, CEO, said. “I’d like to thank all Dr. Martens people for their hard work and custodianship over the last six months in helping to deliver these results.”
Dr. Martens added a net of 16 new stores in the first half, taking the total number of owned stores to 174. This was made up of 21 new stores and five closed stores as the brand continues to expand and improve the overall quality of its store estate.
The company’s product strategy is rooted in its Originals, the most renowned styles, and anchored within the “big three” of the 1460 boot, the 1461 shoe and the Chelsea boot. Originals and Fusion combined generated 85 percent of revenue over the last 12 months.
Boots saw the continued success of platform soles, including the Quad range. Platform boots that performed well with Quad soles included the Audrick, the Jetta in APAC and the Jarrick in EMEA. Within Dr. Martens’ casual range, it launched the new Boury utility boot in September. Shoes saw success across the Adrian loafer range, supported by its relationship with Blondie McCoy, Mary Janes and limited edition 1461 offerings such as the City Pack, which included a shoe from each region based on London, New York, Los Angeles and Tokyo. Sandals growth was again led by its Voss and Blaire styles and products using the innovative Zebrillus lightweight platform sole. Strong growth was seen in mules, led by the Carlson and Jorge styles, with particular success for the Made in England line.
Net Sales: The iconic yellow-stitching brand sold about 6.3 million pairs of shoes in the six months ending Sept. 30, up 400,000 pairs from last year and setting a new record.
Revenue increased 13 percent to 418.6 million pounds ($504.2 million) in the first half. Dr. Martens saw growth in all channels, with direct-to-consumer (DTC) up 21 percent to 178.9 million pounds ($215.49 million) and wholesale up 15 percent to 238.8 million pounds ($287.63 million). Retail was up 38 percent and e-commerce was up by 8 percent, driving the DTC mix.
Still, investors were not pleased and shares dropped 20 percent after the company cautioned a hit to margins due to a weaker-than-anticipated demand ahead of the holiday season.
E-commerce grew 8 percent to 88.8 million pounds ($106.96 million), up 1 percent in constant currency, as consumers rediscovered the enjoyment of physical after lifting global COVID-19 restrictions.
Net Earnings: “Our first-half results were solid with good direct to consumer led revenue growth, gross margin expansion and a strong balance sheet. Underlying revenue, which exclude certain distributors that we exited in H2 last year, grew by 18 percent to 418.6 million pounds [$504.2 million] and total revenue was up 13 percent,” John Mortimore, CFO, said. Pre-tax profit fell 5 percent to 57.9 million pounds ($69.76 million).
CEO’s Take: “Our growth is built on the successful execution of our Docs strategy, led by the DTC-first approach, with DTC revenue up 21 percent. At the heart of our continued success is the strength of our brand, highlighted by underlying pairs growth and continually improving brand metrics. We have further pricing headroom for AW23 so we will offset cost inflation once again,” Wilson said. “Although there are economic challenges ahead, we are well positioned for future growth. We will continue to drive growth investment to deliver the Docs strategy, mainly in new stores, marketing, people, technology and inventory. Reflecting our confidence in the future, our balanced global revenues and our strong balance sheet, the board has decided to increase the interim dividend by 28 percent to 1.56 pence per share.”