Dr. Martens, the iconic footwear brand, continues to excel in both Europe and America, with an optimistic outlook for its future growth. In its latest trading update for the three months ending in December, the company reported strong performance driven by robust e-commerce sales and successful retail store trading.

One of the key highlights was the exceptional growth of direct-to-consumer (DTC) revenues, which increased by an impressive 33% compared to the same quarter in 2020. These DTC revenues accounted for 64% of the total revenue mix, showcasing the brand’s strategic focus on higher-margin channels. CEO Kenny Wilson emphasized the company’s long-term approach and proactive management in response to the evolving Covid-19 landscape. By prioritizing DTC channels, Dr. Martens is confident in meeting market expectations for the full year.

In terms of numbers, the company’s overall revenue for the third quarter rose by 11% year-on-year to £307 million, or a 15% increase on a constant currency basis. Compared to two years ago, revenue has surged ahead by 21%. For the year to date, revenue is running 14% higher at £676.9 million, or 20% higher on a constant currency basis. These figures represent an outstanding 30% increase compared to 2019.

The standout performer has been the e-commerce sector, with a remarkable 16% year-on-year revenue increase and a staggering 85% increase compared to two years ago. In the year to date, these figures stand at 13% and 97% respectively. However, the retail stores have also demonstrated impressive performance, with Q3 revenue soaring by 72% compared to the previous year and by 16% compared to two years ago. This achievement is particularly noteworthy as many businesses are still struggling to attain pre-pandemic levels of in-store performance. For the year to date, retail store revenue is up by 81% compared to the previous year and 9% compared to two years ago.

While Dr. Martens has shifted its focus towards strengthening its own e-commerce operation and directly operated stores, it has experienced a decline in wholesale revenue, which fell by 14% in the quarter compared to the previous year and by 10% compared to two years ago. However, for the year to date, wholesale revenue is down by just 1% compared to the same period last year and up by 15% compared to two years ago.

Regionally, the company witnessed robust growth in the EMEA region, with a 40% increase in revenue (45% on a constant currency basis). This growth can be attributed to strong e-commerce performance, the recovery of retail stores, and a successful wholesale operation. Italy, in particular, experienced excellent revenue growth after transitioning to a directly operated model. In the Americas, Q3 saw solid performance with a 4% increase (6% on a constant currency basis), primarily driven by strong DTC sales, partially offset by wholesale. APAC revenues, however, were impacted by renewed Covid-19 restrictions across the region, resulting in a 28% decline (24% on a constant currency basis). Weakness in distributor markets, particularly in Australia and China, played a role in this decline.

Dr. Martens acknowledged that physical stores experienced strong in-store conversion rates and improved footfall. Unfortunately, the emergence of the Omicron Covid variant and increased trading restrictions in December disrupted these positive trends. Nonetheless, the company had a very successful DTC peak trading period and anticipates quieter trading months in February and March. It remains confident in meeting market expectations for its first full year as a listed business, barring any significant impact from Covid-19 in Q4.

Helpful Links:
1. Dr. Martens Official Website
2. Financial Times Article: Dr. Martens Reports Strong Performance in Third Quarter