US wholesale puts boot into Dr Martens results, will boost marketing drive

US wholesale puts boot into Dr Martens results, will boost marketing drive

Poor results had been expected from Dr Martens’ FY24 results announcement and poor results were what we got. But the brand remains one that can sell almost £900 million worth of product annually and there were pockets of strength in the report.


CEO Kenny Wilson — who not so long ago was more used to sharing news of seemingly-unstoppable progress — said: “Our FY24 results were as expected and reflect continued weak USA consumer demand. This particularly impacted our USA wholesale business and offset our group DTC performance, where pairs grew by 7%. 

“We have achieved robust performances in EMEA and APAC, and our supply chain strategy continues to deliver good savings. We are clear that we need to drive demand in the USA to return to growth in FY26 onwards and are executing a detailed plan to achieve this, with refocused and increased USA marketing investment in the year ahead. 

“We are also announcing a cost action plan across the group, targeting savings of £20m to £25m. I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead.”

So, in brief: tough times in US wholesale, DTC continuing to deliver, boosting its marketing, but cost savings a priority.

The numbers

Now let’s look at the numbers. Revenue in the year to the end of March fell 12.3% to £877.1 million, having been over £1 billion in the previous year. The fall in constant currency (CC) terms was 9.8%. 

EBITDA fell 19.4% to £197.5 million and the EBITDA margin dropped to 22.5% from 24.5%.

EBIT was down 30.6% at £122.2 million and net profit plunged 46.3% to £69.2 million. Oh, and the company’s net debt increased to £357.5 million from £288.3 million. 

Looking at this in more detail, DTC represented 61% of the revenue mix compared to 52% in the previous year as its revenue rose 2% (or 5% CC). But a 28% wholesale drop (26% CC), as mentioned, dragged the overall revenue figure down.

Within DTC, retail revenue rose 6% (or 10% CC) and e-commerce was “broadly flat”, which means it was actually down 1% in total but up 1% CC.

Tough times in America

By region, EMEA revenue dropped 3% (actual and CC), with 12% growth in DTC offset by the wholesale decline, “driven predominantly by the planned strategic decision to reduce volumes into EMEA e-tailers”.

Americas revenue declined 24% (20% CC) driven by that tough wholesale market.

Dr Martens

And APAC revenue was also described as “broadly flat” (down 7% in actual term but up 1% CC). So why did Wilson say the APAC performance was robust?

Well, it saw lower revenue in China but this was due to the planned exit of the distributor contract in June 2023, and in Japan it transferred 14 franchise stores at the end of last financial year. These two factors drove APAC wholesale revenue down 24% on a CC basis. 

But DTC revenues grew 18.8%, improving the DTC mix by 10.4ppts, with both retail and e-commerce growing in double-digits. This was led by Japan with DTC revenues up 35.5% with both underlying growth and the benefit of the franchise stores transfer at the end of FY23.
Product-wise, the brand saw a strong performance in shoes and sandals, with DTC pairs in both categories growing over 20% year-on-year, “showing the continued strength of the brand”. It didn’t mention how it fared in boots but it plans to boost boots marketing, suggesting this category has underperformed.

Also on the plus side, it opened a net 35 new own stores globally, with the majority of these being in continental Europe and APAC. And it said its “successful supply chain strategy” delivered continued savings, supporting gross margins that increased 3.8ppts to 65.6%.

No good news in the short term

As for current trading, the company said it’s “in line with our expectations and our planning assumptions for FY25 are unchanged from those shared in our announcement on 16 April. There remains a wide range of potential outcomes for both revenue and profit for the year, dependent on the performance through the key peak trading period”.

For the first half, it expects a group revenue decline of around 20%, driven by wholesale revenues down around a third. 

Combined with the cost headwinds that impact both halves, “the impact of operational deleverage is significantly more pronounced in the first half”. Overall results this year will therefore be “very second-half weighted, particularly from a profit perspective”.

It added that FY25 will be “a year of transition for our business”. 

In EMEA and APAC regions it will “continue to execute its successful DOCS strategy, to take advantage of the significant whitespace growth opportunity in both”.

And clearly, fixing the US is a big priority. In citing impressive brand awareness figures for EMEA and APAC, it also said that brand awareness in the US has hit a bit of a roadblock. “We have seen a meaningful decline in consideration from consumers who have not purchased recently and therefore our efforts will be particularly focused on broadening our appeal to attract new consumers,” it explained.  

Also, under the direction of future CEO Ije Nwokorie, in his current role as Chief Brand Officer, “we are shifting our marketing efforts globally from storytelling focused on culture to a relentless focus on product marketing”. As mentioned, its AW24 marketing will “lead and be dominated by boots and the marketing organisation has been reorganised to product-led marketing, centred around icons”.

Also as mentioned, it’s particularly increasing marketing investment as a percentage of revenue in the US in the year ahead.

The messaging coming out of the company suggest that this may not yield spectacular results in the current financial year, but it seems to be expecting good things the year after. We’ll just have to wait and see.

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