Dr Martens sales top £1bn but profits drop

Revenue at the retailer reached £1.03bn for the year ending March 31, 2023, up 10% on FY22 or 4% in constant currency. 

Profit before tax dropped 29% to £128.9m due to expected charges from an impairment and Euro bank debt, as well as costs associated with a move to a Los Angeles distribution centre – a decision it describes as an operational mistake. 

Dr Martens said it had a “very good year” in its home market, the UK, and it had made good progress on its omnichannel trials like ‘look up in-store inventory’ and click and collect, and the launch of its repair and resale trial with Depop. 

However, its performance was hampered by softer sales in America, which was down to the “poor implementation” of its DC move from Portland to LA, ordering too much inventory and mistakes in its marketing on top of an already challenging backdrop. 

As a result of the issues, the retailer said it would be investing in its infrastructure and anticipated its FY24 EBITDA margin would drop 1-2 percentage points lower than FY23.

Global DTC sales were up 16% to £520.7m, and 11% in constant currency, while retail grew 30%, 25% in constant currency, to £241.7m. 

The retailer added 52 new stores to its estate in the year, including 12 franchise transfers in Japan, offset by three closures and three relocations in London, Dublin and Glasgow. 

Dr Martens chief executive Kenny Wilson said: “We achieved annual revenue of £1bn for the first time, up 10% and up 4% in constant currency. Reaching this milestone is testament to the strength of our brand, our long-standing DOCS strategy and the hard work and dedication of our fantastic people globally.

“Direct to consumer is now more than half our revenue and the Dr Martens brand remains strong with all key metrics either ahead of or in line with last year. In EMEA and Japan, where we executed our strategy well, performance was very good with encouraging momentum going into the new financial year.   

“In America, against the backdrop of a challenging consumer environment, we made operational mistakes, such as the move to our LA Distribution Centre, and how we executed our marketing campaigns and ecommerce trading.

“We have undertaken detailed reviews to understand why these issues occurred and have begun to embed the lessons learned into the business. We are fixing the issues in America, including a significant strengthening of the team there, and returning America to good growth is our number one operational priority.

“We are focused on the successful execution of our proven DOCS strategy, which we will underpin with continued investment in the business and our people to support our increasing scale and capitalise on our iconic brand’s strength.

“The board retains its conviction in the strategy, long-term growth and cash generation of the business. It is therefore proposing to maintain the final dividend at 4.28p per share and will seek shareholder approval at the AGM to commence an initial share buyback programme of up to £50m.”