Dive Brief:
- Reaching a milestone for the brand, Dr. Martens made 1 billion pounds (about $1.25 billion) in revenue during its fiscal year 2023, according to a company press release Thursday. While overall revenue increased 10% compared to 2022, it was a “disappointing year” in the brand’s America region with revenue down 1% on a constant currency basis.
- The footwear brand reported its direct-to-consumer sales increased 16% to 520.7 million pounds while wholesale was up 4%. Dr. Martens’ DTC channel grew to become 52% of the business mix and the brand opened 52 new retail stores internationally.
- Dr. Martens’ profit after tax decreased 29% during the year to 128.9 million pounds while gross margin decreased to 61.8%. The company's operating expenses jumped 18% to 373.1 million pounds, partially driven by labor and warehouse costs at its Los Angeles distribution center.
Dive Insight:
While Dr. Martens saw good performance in Europe, the Middle East and Africa regions this year, America saw the impact of a variety of negative factors.
“However, we were held back in the year by the performance of our America region. The weather worked against us at times and the consumer backdrop was challenging but as the year progressed, we concluded that the biggest driver of our weak performance in America was poor operational execution,” said CEO Kenny Wilson’s review of the past year. “Finally, in hindsight, we ordered too much inventory for America given the tough environment and our poor execution.”
Issues in America for the brand partially stemmed from its “poorly implemented” transition from its main west coast distribution center in Portland to Los Angeles, which took a hit on previous quarterly earnings. The brand also attributed the revenue decline in the region to mistakes in its marketing campaigns, which Wilson said were more focused on shoes and sandals instead of boots.
In fiscal 2024, Dr. Martens will be investing more in its global product and marketing teams, e-commerce development, supply chain capability and talent within the business. Such investment will hold back margins in the upcoming year, but are meant to help Dr. Martens reach its growth goal of becoming a 2 billion-pound brand.
The company is making such investments still in line with what it calls its DOCS Strategy, which puts DTC as a core priority. The brand is also working on creating a profitable “resale, repair and end of life business model.” Dr. Martens ran a repair and resale service trial in the U.K. during fiscal 2023 and plans to start a trial in America in fiscal 2024.
