Dr. Martens to double store count, grows in Asia

There was good news and bad from British footwear specialist Dr. Martens on Friday as the Permira-owned firm reported lower revenue and profits in the year to March 31 but international expansion, as well as a new products boost and a plan to double its store count.

The revenue and profits drop came as it closed wholesales accounts, and invested in stores and online capacity.

Dr. Martens has expanded its own stores while cutting back on wholesale - DR

The company said its total revenue fell 4% to £232.4m on the back of closing “several non-strategic wholesale accounts” as it refocused its wholesale and export channels to “ensure its distributors properly support and enhance the wider brand.” Those wholesale cuts added up to as many as 250 accounts and resulted in a 14% reduction in wholesale revenues to £160.2m.

It also said that earnings before interest, tax, depreciation and amortisation (EBITDA) in the year to March 31 fell to £29.6m from £39.1m.

The company explained that the drop reflects “significant investment in product, new stores and online capability” and that it has seen an “excellent performance in key growth areas”.

Why was it so upbeat? The good news included a 24% rise in direct-to-consumer revenue to reach £72.2m, plus 25% growth in retail sales to £51.2m, with comparable sales up a healthy 5%. It also saw 20% growth in e-commerce sales to £21m and 19% growth in Asia to £46.3m.

During the reporting period, the firm rolled out 11 new stores and nine concessions and drove e-tail sales to 9% of its total revenue. The 20 openings meant that by year-end, its store base was 100 (including 44 concessions) and it plans to double that by 2021, which means it needs to keep up the same pace of openings every year for the next half-decade.

The company has been working hard to reshape its offer and said Friday that 30% of its sales now comes from new product (compared to 14% a year ago) while 79% of sales come from outside of the UK.

In fact, international growth has seen it focusing on boosting management outside of its domestic market as well as at home with new regional president roles for the Americas, EMEA and Asia, plus global heads of product, IT, logistics, legal and e-commerce.

As the focus on new products suggests, since the year-end it has also significantly strengthened its product merchandising and design teams with the successful launch of its next generation product line, DM’s Lite, in September.

CEO Steve Murray said of all this: “We’ve made considerable progress over the last couple of years in repositioning Dr. Martens for long-term sustainable growth. As part of our strategy we identified the need to expand and upgrade our direct relationship with consumers at point of purchase, be it through our own stores, our partner stores, or a much better web experience. This is working and it’s been particularly satisfying to see double-digit sales increases in our owned retail and e-commerce channels.”

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