Dr Martens has invested to support its fast growing direct-to-consumer sales channels in the first half of its financial year. Investment came despite a slowing in second quarter direct sales as consumer spending weakened.
The retail brand’s direct ecommerce sales are now fulfilled from new third-party distribution centres in Los Angeles and the Netherlands, while it also opened 21 of its own new stores. The retail brand has also invested in a ‘Resouled’ repair scheme in the UK in order to boost sustainability. From next year, and into the medium-term, it expects 60% of its sales to be direct to consumer, with 40% of that online.
A new order management system has been put in place and the brand is testing multichannel services in the form of click and collect and return to store. It says it has recovered from last year’s Covid-19 supply challenges that last year restricted peak availability in America and Japan, while in Europe continuing Covid-19 restrictions also held back sales. While it has invested to ensure it has stock available for peak trading, it says that 84% of that stock is “continuity product” and so carries “minimal” risk of needing to be discounted to sell.
The update came as Dr Martens today reports revenue of £418.6m in the six months to September 30 2022. That’s 13% up on the same time last year. Within that, direct to consumer sales grew by 21% to £179.8m – with growth both in-store (+38% to £91m) and online (+8% to £88.8m). Online sales were held back by lockdowns in Shanghai, where its distribution centre is based, and it has therefore moved to new, larger centres in LA and the Netherlands for more efficient pick and dispatch.
Wholesale was 15% ahead at £238.8m, as the brand concentrated on selling through fewer (-13%) but better quality partners. However, labour shortages at its Netherlands distribution centre and strikes at Felixstowe port meant that £10m of planned wholesale revenue moved from September into October. Half-year sales grew in all of its three regions of Europe, Asia and America, led by America, where underlying revenue grew by 31% to £179.7m.
Pre-tax profits of £57.9m were down 5% on last time, reflecting the decision to continue investment for the future. In the medium term Dr Martens targets an EBITDA margin of 30%, as it offsets inflation through price.
Dr Martens chief executive Kenny Wilson says: “Our growth is built on the successful execution of our Docs strategy, led by the DTC-first approach, with DTC revenue up 21%. At the heart of our continued success is the strength of our brand.. We have further pricing headroom for AW23 so we will offset cost inflation once again.
“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.”
Dr Martens, ranked Top500 in RXUK Top500 research, sells online, through 174 own shops, and through wholesale partnerships.