Dr Martens marches on with strong sales but listing dents profits

Footwear business Dr Martens has enjoyed soaring sales despite the global pandemic leaving many of its customers stuck indoors, the company has revealed.

Sales in the 12 months to March 31 jumped 15% to £773 million, with strong growth in its online business up 73%.

But pre-tax profits took a heavy hit – down 30% to £70.9 million – due to costs of £80.5 million associated with the retailer’s stock market listing in January.

The majority of the initial public offering (IPO) costs were due to a £49.1 million bonus paid out to staff.

Chief executive Kenny Wilson explained the strong growth was due to online expansion over the past three years.

He said: “At the point I joined we were doing 8% of our sales online, so we made a conscious decision three years ago to heavily invest in digital.

“People buy their first pair of Dr Martens in their late teens or early 20s. Those consumers have grown up in a world where digital is the norm, so our strategy has been for a long time to build the digital capabilities of business.

“When the pandemic actually hit, we were ready and we were able to drive more of our demand to online.

“The trend towards digital was something we’ve been working on for years so we were agile enough to move quite quickly.”

Dr Martens did not give figures for each country in which it trades, but said sales in Europe rose 17%, with the same levels of growth in North and South America.

In Europe, the UK remains the company’s biggest market, with Germany its fastest growing.

In the Asia-Pacific region, sales grew just 7% due to slower growth in Japan, the company’s largest market in the area, due to it having a higher number of stores there. They were closed due to the pandemic for large parts of the year.

Another major market in the region – China – saw revenues up 46%.

The majority of Dr Martens’ global growth came from online sales, where revenues from its website now account for 30% of all sales.

By comparison, sales in physical stores were down 40% to £99.7 million.

The company’s wholesale business saw growth of 18% to £437.9 million as it focused on having fewer relationships but with “quality partners”.

This saw strong growth from online-only retailers which sell Dr Martens products and “robust trading” in the US.

In the UK, the company shut down three stores, leaving 34 in total, but said trading was strong enough to be able to pay back £1.3 million claimed under the Government’s furlough scheme.

Mr Wilson said: “Within three months we could see the strength of Dr Martens.com and we realised that we could pay all of our employees in full without taking Government support.

“At the board, myself and CFO said we believe we should repay the money and it just felt like the right thing to do.”

Looking forward, the boss said he expects to see a continuation of the shift to online, although not at the same growth levels.

He added: “We keep telling our organisation that this will not be a straight line return to business as usual and normality, and I think we expect there will be challenges in different countries around the world. I don’t think anybody truly knows yet what’s going to happen with the pandemic.”