Dr Martens sales rise, LA hub problems largely sorted, but profit to fall
Footwear specialist Dr Martens said on Friday that its latest full year saw revenue rising 10% with Q4 revenue up 6%. Despite the end-of-year slowdown, that’s all relatively good news given the tough conditions out there in the period to the end of March.
By channel, Q4 growth was driven by strong DTC trading, led by retail growth of 36% (or 28% in constant currency). Within Dr Martens’ regions, EMEA DTC accelerated in Q4 and APAC was strong, while America DTC “remained soft”.
But this progress was offset partly by wholesale being behind last year. That statement came on the same day that Superdry also flagged issues with wholesale recently, although in Dr Martens’ case the reasons were company-specific linked to a US distribution hub.
The company said it took “decisive action to tackle the operational issues at our LA [distribution centre] with shipments now back to normal levels”.
However, the cost of putting the previously flagged LA DC problems right “were higher than initial estimates which, in conjunction with softer Q4 wholesale revenue, means we expect EBITDA for the year to be around £245 million”. A year ago it was £263 million.
The LA DC issues were largely to blame for derailing the wholesale performance in Q4, but “our planned shipment reduction to our China distributor” also had an impact, although this was “offset in part by growth in EMEA”.
DOWN TO DETAIL
The 6% Q4 revenue rise actually translated into flat revenue in content currency (CC). In total, Q4 DTC trading grew 20% (13% CC), with wholesale down 4% (-11% CC). Within DTC, retail grew 36% (28% CC) and e-commerce grew 8% (2% CC).
For the full year, revenue growth was 10% (4% CC). DTC was up 16% (11% CC) and wholesale was up 4% (-3% CC). Within DTC, retail was up 30% (25% CC) and e-commerce was up 6% (1% CC).
CEO Kenny Wilson said that company continues “to adopt a custodian mindset, taking decisions in the best long-term interests of all our stakeholders, and I believe firmly in the DOCS strategy, the continued strength of the Dr Martens brand and the medium to long-term growth potential of the business. I look forward to sharing more details at the full year results.”
The company is maintaining FY24 revenue growth guidance of mid-to-high single-digits on a constant currency basis.
It also announced that Jon Mortimore has decided to retire from his role as CFO but will continue in the post until a successor is in place to ensure a smooth transfer of responsibilities. It’s starting an external search for his successor.
Mortimore joined the company in April 2016. During his seven years there, he’s been “instrumental” in delivering its transition from a family-run company to a listed PLC, overseeing revenue growth from £230 million to £1 billion.
Chairman Paul Mason said “his knowledge of the business and understanding of the company's value drivers have played a key part in helping develop the business during this period. We also want to thank him for his careful stewardship of the finance function, in particular during the pandemic period, which is testament to his dedication and exceptional hard work. We wish him well in his retirement.”
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