Dr Martens credits brand strength for price hikes having ‘limited impact’ on sales

Despite increasing prices, the footwear brand says it has “not seen any impact” on sales in the UK and EMEA, but the US continues to drag down its overall performance.

Dr MartensDr Martens’ sales have improved in its core markets despite increasing prices twice throughout the year, with the boot maker crediting the strength of its brand for the “limited impact” these price rises have had.

In EMEA the brand has not seen any impact on sales overall, according to its CEO Kenny Wilson, and volume sales have increased across the majority of its most important markets, including the UK. He ascribes this success to the performance of its “core icon” products.

Dr Martens revealed it would be pushing up prices last November, after a consultation with customers showed “consumers around the world see that there is more value in the Dr Martens brand than we are currently charging”, Wilson said at the time.

Overall, revenue and profit for the six months to the end of September were lower than the prior half year, mainly due to lower volume sales in the US. This was compensated for by an 11% increase in direct-to-consumer (DTC) sales globally.

The business is still struggling in the US as a result of the “increasingly difficult consumer environment”, it said. In June, Wilson admitted its execution in the US had also been “weak”, largely due to a different marketing focus in the region, which saw it move away from its core boots.

Its European marketing plan is now the template for the brand’s activity in the US, where it states it has a responsibility to “reignite” the boots market.

On a call with investors today (30 November), CFO Jon Mortimore said: “We will continue to take brand-first decisions, despite the tough trading environment that we are facing in the United States. We will not negatively impact the brand.”

He talked about the brand’s ongoing restructuring of its leadership team and supply chain in the US, which is based on re-establishing equity in the brand. “We’re continuing to invest in marketing the brand in a disciplined manner. We’re delivering new product innovation into the market,” he said. He noted, however, that “this is going to take time to ignite”.

To help on this mission, Dr Martens hired its first-ever global chief brand officer, Ije Nwokorie, earlier this month who is set to take up the role in February. Reporting to Wilson, he will oversee the global marketing, product and strategy functions and is responsible for setting the overall brand strategy, vision and direction for Dr Martens’ next phase of growth.

Wilson said Nwokorie has been tasked with making Dr Martens’ marketing “the cleanest it’s ever been in terms of communicating with customers”.

Joined up approach

Dr Martens launched its global ‘Made Strong’ campaign in October, which Mortimore described as its “major brand moment and spend”. He said it “talks to the rational and emotional truths about the Dr Martens brand and [its] wearers”, and is designed to raise brand awareness around the world and bring new consumers into the brand.

It shows Dr Martens’ commitment to marketing, Mortimore said, who also restated the business’s plan to increase marketing spend by 50 basis points of revenue each year.

While Wilson noted that Dr Martens has “always said [it doesn’t] want to become retailers; we want to be a brand-first, digital-first business” he also said the brand’s marketing activity needs to extend into both the real world and online.

In Europe, that translates to more investment in experiential and social media marketing around key launches. Mortimore explained: “We’ve supported the Made Strong campaign across Europe with events, with social media and outdoor marketing, forming the bulk of this campaign across the region.” The launch of its second flagship London store was supported by social activity, for example.

Meanwhile, its new USA marketing team has focused on key cities, launching the Made Strong campaign with an event in New York City in mid-October. While the event was attended by 1,200 people, it “most importantly” reached 22 million people on social media.

Dr Martens to emulate European marketing approach for struggling US business

Dr Martens reported revenue was down by 5% to £396m, while profit before tax declined to £26m in the half year to 30 September, which it attributed “mainly to lower volume, with pairs sold declining by 9% to 5.7 million” globally.

Overall, DTC revenue increased by 11% in the half year and now represents half of group revenues. In the UK, DTC growth rose 8% year on year, while in Europe DTC growth increased by a range from 19% in France and 22% in Germany. Italy was highlighted as a standout, with DTC performance up by more than 60%. Wilson also noted that in EMEA the brand’s wholesale business is “incredibly clean, with sales to consumers up and inventories down 20%”.

Dr. Martens to push up prices after consulting with consumers

The brand’s forecast for the rest of the year has also been dragged down by poor performance in the US. While Wilson acknowledged its poor performance last year was due to its lack of investment in marketing, he argued that its more recent performance has been dragged down by a weakness in the US boots market overall.

The brand has also been hit by unseasonably warm weather in October, he said, which led it to delay its main marketing spend for the season by a month.

That split in terms of performance was also evident in online performance. Ecommerce grew by 5%, led by growth of 19% in EMEA and Asia Pacific which grew by 18%. Wilson said these strong performances were offset by America, which declined by 10% on a constant currency basis.