The British footwear brand Dr. Martens reported a jump in full-year revenue and earnings in its first results as a listed company, driven by solid online sales as it reiterated its medium-term guidance.
In the year to March 31, 2021, revenues rose by 15 percent to £773.0 million (€904.0m-$1.08bn). However, pre-tax profit fell by 30 percent to £70.9 million (€83.0m-$99.1m), dented by £80.5 million (€94.1m-$112.5m) of costs related to the group’s initial public offering. Stripping out the cost of the float, pre-tax profit was 34 percent higher at £151.4 million (€177.1m-$211.6m).
Earnings before interest, tax, depreciation and amortization (Ebitda) rose by 22 percent to £224.2 million (€262.0m-$313.4m).
The iconic footwear brand, known for its boots with yellow stitching, hailed “strong” growth across all regions, with revenues in the EMEA region up by 17 percent to £335.6 million (€390.5m-$463.9m). In Europe, Germany grew by 56 percent to become its second largest market in the region after the U.K. following its conversion to a directly controlled market in the prior year. The region has two main distribution centers (DC), in the U.K. and the Netherlands, and, as a result, Brexit did not had a material impact on the company’s operations or results. Regional Ebitda was up by 25 percent to £115.3 million (€134.2m-$159.4m).
Sales also grew by 17 percent to £295.8 million (€344.2m-$408.9m) in the Americas. The company enjoyed a ”very strong” e-commerce business in the region and went live with a new Hispanic website. To support growth in the region, it also opened a new third-party run DC in New Jersey. Ebitda grew by 22 percent to £91.9 million (€106.9m-$127.0m).
Asia Pacific revenues were 7 percent higher to £141.6 million (€164.8m-$195.7m), hamstrung by slower growth in Japan, the company’s largest market in the area. The Japanese business experienced marginal revenue growth with ”exceptionally strong” e-commerce growth offset by negative retail and wholesale revenues due to strict social distancing and store closure rules, particularly in and around Tokyo, stemming from the Covid-19 pandemic. China revenues were up by 46 percent thanks to digital sales and the opening of a net 35 mono branded franchise stores. In the region, Ebitda rose by 12 percent to £39.7 million (€46.2m-$54.9m).
Overall e-commerce revenues were up by 73 percent and made up 30 percent of the mix. This helped to offset a 40 percent decline in retail revenues, which were hit by Covid-19-related restrictions.
The company continued to invest during the pandemic, increasing its headcount by more than 250 people and opening a net 13 stores, increasing the number of directly-operated stores (DOS) to 135. Dr. Martens also trades from 49 concession counters in department stores in South Korea and a further 203 mono branded franchise stores worldwide, of which 85 in China. In fiscal year ending in March 2022, Dr. Martens plans to open 20 to 25 DOS.
“The investments and improvements we made in our supply chain in recent years, along with our multi-country sourcing model and close supplier relationships allowed us to quickly react to a rapidly changing environment, ensuring minimal disruption and maintaining good availability throughout,” said chief executive officer Kenny Wilson.
“Whilst the global trading environment remains uncertain, the strength of our iconic global brand means we look to the future with confidence.”
In the full-year ending in March 2022, Dr. Martens expects revenues to increase by a high-teen rate. From the following year and over the medium-term, it anticipates to achieve a mid-teen rate in revenue growth. It plans to increase direct-to-consumer (DTC) revenues to 60 percent of the total top line over the medium-term, with e-commerce growing to at least 40 percent of overall sales. In the year ending March 31, 2021, DTC represented 43 percent of sales, down from 45 percent the previous year. The company is also targeting an Ebitda margin of 30 percent in the medium term.
The company plans to pay its first interim dividend in January 2022, representing about a third of the total dividend payment for the year. It intends to pay a dividend representing between 25 percent to 35 percent of net income.
Dr. Martens aims to fuel growth through e-commerce, supported by stores ”as profitable brand beacons.” Thanks to its DTC strategy it wants to control its ”brand engagement” with consumers and ”ensure the best possible environment to showcase our products, both digitally and physically.”
The brand focuses on seven core markets: the U.K., France, Germany, Italy, the U.S., Japan and China, where it sees the biggest headroom for growth over the medium-term.
Dr. Martens also announced its sustainability targets. By 2028, all packaging will be made from recycled or sustainably sourced material. By the same year, it will ensure that no waste goes to landfill across the value chain.
By 2030, it plans to be net zero and remove fossil-based chemicals from its products. By 2040, all products sold will have a sustainable end of life option and all footwear will be made from sustainable materials, it pledged.
