Dr Martens claims its brand is “stronger than ever”, despite a drop in profit, which it largely attributes to the “big disappointment” of its US results.
CEO Kenny Wilson told investors today (1 June) that while the company delivered a good performance in the EMEA region (including its home market the UK) and Japan for its 2023 financial year, its US sales were more lacklustre.
“Our brand is strong, our execution has been weak,” he admitted, referring to the US results.
This “weak” execution in the US was largely due to a different marketing focus in the country, he said, which saw the brand shift focus away from its core product in favour of promoting shoes and sandals.
Wilson told investors the “single biggest” difference in marketing strategy between the US and Europe businesses was that the European business allocated more media spend behind its boots.
He reiterated that Dr Martens’ strategy now it to focus primarily on its “iconic” products – it is the number one brand in the world for unprompted awareness of boots – and then innovate around that, rather than chasing after seasonal trends.
“As the number one brand in boots, our job is to keep boots relevant. Our European teams and our Japanese teams did that well; our American team didn’t,” he said. “We’ve got to learn from that.”
We always think about the long term, and we never take shortcuts.
Kenny Wilson, Dr Martens
In the US, the brand has hired a new marketing vice-president with the goal of refocusing on the boots business in mind. While the shoes and sandals businesses are growing faster than boots, Dr Martens remains primarily a boot brand.
At group level, boots revenue declined 10% in the year, largely due to the poor US performance. However, Dr Martens did reach its goal of £1bn in revenue, a 10% increase on the year prior. The company attributes this milestone to the successful implementation of its long-term DOCS strategy, as well as the strength of its brand.
Its profit after tax fell 29% to £128.9m in the year ended 31 March. The company said that due to its “poor performance” in the US, price did not offset inflation across the group.
The brand has been led by insight when making price increases. It is planning an average price increase of 6% in the autumn/winter 2023 season to offset increases in cost to the business. The research it carried out revealed consumers believe the brand represents “compelling value for money” and that it has “headroom” to make these planned price increases.
Wilson told investors the “custodian mindset” has been “the guiding principle” for how the brand implements its strategy.
“We always think about the long term, and we never take shortcuts,” he said.
In the brand’s third quarter, it saw “a highly promotional environment” among its competitors, which it “chose not to participate” in, to protect its brand.
It has also continued its keen focus on direct-to-consumer, and has been ending contracts with external online retailers in order to have more control over its sales. In its 2024 financial year it will reduce online retailer supply by four percentage points of group revenue, equivalent to around half a million pairs.
As well as protecting its brand through less discounting and focusing on DTC, being brand custodians also involves investing in Dr Martens’ long-term brand equity.
In its 2023 financial year, the brand increased its marketing spend by 0.4 percentage points of revenue. It has committed to continuing to increase marketing spend this year.
The brand is also planning to invest in a customer data platform to provide it with “a single view of the consumer, thus improving personalisation and our marketing capability”.