Kenny Wilson, chief executive officer at Dr Martens, pointed out the brand’s direct to consumer strategy worked well in EMEA and Japan in FY23, however, there were operational mistakes against a challenging consumer environment in America.
He explained: “In EMEA and Japan, where we executed our strategy well, performance was very good with encouraging momentum going into the new financial year.”
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However, he pointed out that in America, against the backdrop of a challenging consumer environment, the company made operational mistakes, such as the move to its LA Distribution Centre, and how it executed its marketing campaigns and e-commerce 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,” he said.
Overview of Dr Martens FY23 results
- Total revenue increased by 10% from £0.9bn to £1.0bn.
- EBITDA was down 7% to £245m due to slower revenue growth, continued investment in new stores, marketing and people, and £15m costs associated with LA distribution centre issues.
- Profit after tax fell 29% to £128.9m from £181.2m in the previous year.
As part of the brand’s strategic changes, the British bootmaker has implemented an order management system in EMEA with an omnichannel trial underway for its UK customer base.
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Dr Martens said the operational issues experienced during the fiscal year 2023 made it clear that continuing to invest in infrastructure and capabilities to support its increasing scale and underpinning long-term growth was the right thing to do.
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By GlobalDataWilson stated: “We achieved annual revenue of £1bn for the first time, up 10% and up 4% in constant currency. Reaching this milestone is a 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.”
Pippa Stephens, an apparel analyst at GlobalData, explained that Dr Martens was aided by the versatility and durability of its products as consumers prioritise value for money. However, she continued, its profits before tax fell by 25.6% due to operational challenges and the opening of new stores, putting it in a poorer position to withstand increased supply chain costs, so must focus on rebuilding this again in the future.
Although, Dr Martens said the quarterly revenue was still below its expectations due to a combination of significant operational issues creating a bottleneck at the new LA distribution centre and weaker than anticipated US DTC trading, in part due to unseasonably warm weather.
