Dr Martens promises not to raise prices this year despite US tariffs

The Guardian

2 days ago

Dr Martens has vowed not to increase prices this year and will continue sourcing from Vietnam and Laos, despite the threat of cripplingly high tariffs on the south-east Asian countries, where the bulk of its shoes are made.
The British footwear brand, best known for its boots with distinctive yellow stitching, said the majority of its autumn and winter stock would be either in the market or in transit by the start of July, around the time when the 90-day pause on an array of tariffs imposed by the US is due to come to an end.
Almost two-thirds (62%) of Dr Martens footwear is made in Vietnam, and a further 31% is produced in neighbouring Laos. Both countries were previously hit with some of the highest US tariffs, after China – 46% for Vietnam and 48% for Laos – before Donald Trump's temporary pause reduced them to 10%.
Despite this, Dr Martens said it was not considering moving any of its manufacturing to other locations.
'We are really thoughtful and scenario-planning about tariffs, but they are not making us do anything crazy,' Ije Nwokorie, the company's new chief executive, told the Guardian. 'These are long-term relationships, and you support each other's business when you are going through tough times.'
Nwokorie said the company – which sells its 1460 model of leather lace-up boots for £170 – was helped by the fact that tariffs were levied on the cost of goods rather than the price they were sold for.
'We are a high gross margin business, which means we are a low cost of goods business. From a competitive point of view, there is less impact on us than companies who don't have our gross margins,' he said.
He added that keeping the prices of its shoes, boots and bags unchanged was 'sustainable for this year' but said the company would be keeping control of its costs.
Despite the threat of higher tariffs affecting its products imported into the US, Dr Martens said its sales in the country had picked up over the past year as it focused on selling footwear directly to customers through its stores and website.
On Thursday, the company reported a slump in profits for the year to the end of March – to £8.8m, down from £93m a year earlier – as it faced 'challenging macroeconomic and consumer backdrop' in several of its key markets, including the UK.
The company makes 2,000 pairs of boots a week at its Northampton factory, although this only accounts for 1% of its production. It said UK sales were 'challenging'. Nwokorie blamed this on an extended period of high levels of discounting at UK retailers, which the company is aiming to reduce.
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Nwokorie unveiled a plan to turn around the business, including by streamlining operations and tailoring marketing to different markets. He said he wanted to focus on Dr Martens' shoes, sandals and bags, alongside its boots.
The company's shares hit an all-time low in April after Trump's first tariff announcement. However, the turnaround plans seemed to please investors, and its shares rose 24% during morning trading on Thursday, making them the top riser on the FTSE 250 index.
The boot brand was originally created in 1945 by a young German army doctor, Klaus Märtens, who designed an air-cushioned sole to help his recovery from a broken foot.
They were introduced to the UK in 1960, with their sturdy design gaining popularity among postal delivery workers and factory staff before being embraced by skinheads and punks.