Dr Martens to widen range and cut discounts in quest for profits

Times

2 days ago

The boss of Dr Martens has pledged to ween the struggling bootmaker off discounting, push into new markets and promote other product lines and as it looks to return to profit growth this year.
The FTSE 250 retailer said its previous narrow focus on its boots, which accounts for roughly half of the group's total sales, 'failed to take full advantage' of its shoes, sandals and leather goods offering, adding that its direct-to-consumer approach 'led to a loss of coverage and responsiveness in our wholesale offering'.
Ije Nwokorie, who succeeded Kenny Wilson as chief executive at the start of the year, told shareholders he plans to shift the business from a 'channel-first to a consumer-first mindset'.
'The strategy that the business had … broke growth in boots, built awareness around the world, but the market shifted away from boots,' he said.
Online sales of shoes, mules and sandals grew last year, while sales of its boots, known for their yellow stitching, declined at its shops.
He added that his strategy was not 'rocket science', but was about 'broadening our focus to give people more reason to buy our products'. 'We need to become a business that is no longer reliant on any single market, product or channel,' he said.
Nwokorie did not expand on what markets he planned for Dr Martens to move into, but said expansion would take place in the year ahead. The company also planned to reduce discounting across its ecommerce and wholesale channels as it aimed to drive full price sales.
Nwokorie's turnaround plans were unveiled alongside the group's full-year results.
Dr Martens said sales to consumers in the US returned to growth in the second half of the year and continued to increase, but cautioned that UK revenues remained lower since the year end 'due to a challenging market'.
Revenues in the year to the end of March fell 10 per cent to £787.6 million, down from £877 million a year earlier. Adjusted pre-tax profit dropped 64 per cent to £34.1 million, which was above the City's forecasts of £30.6 million. Inventory reduction helped lower net debt, excluding lease liabilities, to £94.1 million, down from £177.5 million a year ago.
For the present financial year, management expects to deliver profits in line with market expectations of £54 million to £74 million.
The Northamptonshire bootmaker has been facing persistent challenges in America, its largest market, including a slowdown in sales as consumers reduced spending and supply chain problems at its distribution centre in Los Angeles. That episode forced the brand to lease temporary third-party warehousing.
Shares in the heritage brand, which have fallen more than 80 per cent since listing in 2021 after the company issued multiple profit warnings, were up 15p, or 25 per cent 11¼p, to 75p in afternoon trading as the market reacted to its turnaround pledge. Analysts at Investec believed the strategy 'should unlock a material profit growth story' and its financial targets were realistic.
Despite uncertainty around President Trump's tariff regime, Nwokorie said there were no plans to shift production from the US at this point.
Dr Martens has shifted its supply chain away from China and expects to produce 62 per cent of its autumn/winter collection in Vietnam, where imports into the US face tariffs of up to 46 per cent. Before the possible tariff introduction, the company said most of its autumn/winter collection would be in transit or in the US by the start of July.
Nwokorie said: 'We've looked at different scenarios, but we're dealing with the reality in front of us and we feel confident about our ability to ride these waves,' adding that the company would keep average selling prices for its spring/summer and autumn/winter collections unchanged in the US market.
Ije Nwokorie: a 'visionary brand storyteller'
While not one of the biggest names in the retail community, Ije Nwokorie has demonstrated to industry observers and City analysts that he knows the power behind the British heritage brand.
News of his appointment as chief executive of Dr Martens, announced last April, did not come as too much of a surprise to the market, with some in the City speculating that Nwokorie's appointment as chief brand officer in November 2023 was part of a wider succession plan.
As part of the newly created chief brand officer post, Nwokorie was responsible for setting the 'overall brand strategy, vision and direction for the next phase of Dr Martens' growth' — not a bad idea for the retailer that has failed to replicate the influence and sales of its sturdy boots in America that it has in Britain.
The former Dr Martens boss Kenny Wilson, who Nwokorie replaced, has described his successor as a 'visionary brand storyteller' whose passion for the bootmaker makes him 'the ideal person to lead the next era'.
Nwokorie, who took up his post in February last year, was a senior director at Apple Retail, where he worked from January 2018.
He has been on the Dr Martens board since January 2021, when it listed its shares on the London Stock Exchange, amid booming demand for its shoes. Before that, Nwokorie had spent 11 years at Wolff Olins, the global brand consultancy, where he rose to become chief executive.
As part of Nwokorie's hopes to drive a brand refresh, he has been quick to up the ante in his leadership team. Last week he announced that Carla Murphy would join the group as chief brand officer from Adidas, where she served as the footwear giant's global senior vice-president. Murphy, who starts in July, will be responsible for looking after Dr Martens' brand, its 'most important asset', Nwokorie said.