MADE STRONG
DR. MARTENS PLC
ANNUAL REPORT 2024
MADE STRONG
SINCE 1960.
Reflecting on a year of challenges, we stand firm in our belief that our fundamentals remain strong. Despite macroeconomic shifts, our commitment to building on our brand has remained unwavering.
As we look forward to the year ahead, we will focus on
relentless product innovation, compelling product marketing and expanding brand engagement across our key markets. Alongside this we will be laser-focused on cost efficiency and driving savings where possible.
STRATEGIC REPORT
Highlights | 1 |
A strong sense of purpose | 2 |
At a glance | 4 |
Chair's Statement | 6 |
CEO's Statement | 10 |
Market review | 14 |
Our business model | 16 |
Stakeholder engagement and | |
Section 172 Statement | 18 |
Our strategy | 22 |
Our strategy in action | 24 |
Key performance indicators | 30 |
Finance Review | 32 |
Risk management and our principal risks | 38 |
Viability assessment and going concern | 44 |
Sustainability | 46 |
Our TCFD disclosures | 75 |
Non-financial and sustainability | |
information Statement | 84 |
GOVERNANCE
Chair's introduction to governance | 86 |
Governance at a glance | 90 |
Board of Directors | 92 |
Governance Report | 96 |
Global Leadership Team | 100 |
Our stakeholders | 101 |
Our culture | 106 |
Nomination Committee Report | 108 |
Remuneration Committee Report | 116 |
Remuneration Report | 119 |
Audit and Risk Committee Report | 134 |
Directors' Report | 144 |
FINANCIAL STATEMENTS
Independent Auditors' Report | 150 |
Consolidated Statement of Profit or Loss | 160 |
Consolidated Statement of | |
Comprehensive Income | 161 |
Consolidated Balance Sheet | 162 |
Consolidated Statement of Changes in Equity | 163 |
Consolidated Statement of Cash Flows | 164 |
Notes to the Consolidated | |
Financial Statements | 165 |
Parent Company Balance Sheet | 208 |
Parent Company Statement | |
of Changes in Equity | 209 |
Notes to the Parent Company | |
Financial Statements | 210 |
ADDITIONAL INFORMATION
Five-year financial summary (unaudited) | 217 |
First half/second half analysis (unaudited) | 219 |
Glossary and Alternative | |
Performance Measures (APMs) | 220 |
Shareholder information | 222 |
Company information | IBC |
drmartensplc.com | Dr. Martens plc | drmartensofficial |
STRATEGIC REPORT
HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Pairs m | Revenue £m |
11.5M | £877.1M |
2023: 13.8m | Constant currency: £904.7m |
2023: £1,000.3m | |
EBITDA1 £m | PBT £m |
£197.5M | £93.0M |
Constant currency: £205.7m | 2023: £159.4m |
2023: £245.0m |
1. EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation and amortisation.
OPERATIONAL HIGHLIGHTS
Direct-to-consumer (DTC) revenue up 2%
£533.1M
Launched new brand platform
MADE
STRONG
SUSTAINABILITY HIGHLIGHTS
Planet
Sourced
93.5%
of the electricity for our EMEA and UK operations from renewable sources
Product
Launch of our authorised
REPAIR
service in the UK
TRANSFORMATION
OF OUR NORTH AMERICAN DISTRIBUTION CENTRE NETWORK
Wholesale revenues down
28%
Product
Launch of our
RESALE
platform in the USA
People
100%
of our Tier 1 and Key Tier 2 suppliers CSR audited met our high standards1
1. Audit results above 75% scoring for Tier 1, and above 70% for Key Tier 2, in line with Intertek Workplace Conditions Assessment scoring methodology.
DR. MARTENS PLCANNUAL REPORT 2024 | 1 |
A STRONG SENSE OF PURPOSE
WHAT WE'RE WORKING TOWARDS
What we stand for
Our purpose is to empower Rebellious Self Expression.
Our responsibility is to act as brand custodians. Our aim is to deliver long-term value for the business.
This is where Dr. Martens is heading. This is what we're working towards together.
What we do
The business is focused on executing its tried and tested DOCS strategy:
DIRECT-TO-CUSTOMER FIRST
We aim to build brand equity and drive margin expansion.
ORGANISATIONAL AND OPERATIONAL EXCELLENCE
We are investing in and improving our organisation, operations and IT to enable growth and unlock value.
CONSUMER CONNECTION
We are focused on acquiring new consumers and driving loyalty.
SUPPORT BRAND EXPANSION WITH B2B
We aim to manage B2B, which is made up of wholesale and distributors, holistically and purposefully to support our brand.
AT A GLANCE P 4 | OUR STRATEGY P 2 2 | |
2 | DR. MARTENS PLCANNUAL REPORT 2024 |
STRATEGIC REPORT
Who we work for
Dr. Martens is focused on delivering sustainable and profitable growth to drive long-term value for the brand and its shareholders:
ENVIRONMENT & | OWNERS |
COMMUNITIES |
SUPPLIERS | OUR PEOPLE |
PARTNERS CONSUMERS
STAKEHOLDER ENGAGEMENT P 1 8
Why we do it | TOGETHER |
There are three core values at the heart of | |
Rebellious Self Expression. They never | |
stand alone, but work together to support | |
what Rebellious Self Expression is for | |
Dr. Martens. Our values are: | |
BE YOURSELF | |
We want our people to do what they are | |
brilliant at. Being themselves is their | |
superpower and it's the value they bring | |
to work every day. | |
ACT COURAGEOUSLY |
We want our people to try new things, let others see our successes and mistakes, so we can all learn.
SHOW YOU CARE
Our people should think like an owner to advance the brand first and collaborate across functions and regions.
SUSTAINABILITY P 4 6 | |
DR. MARTENS PLCANNUAL REPORT 2024 | 3 |
AT A GLANCE
A GLOBAL
OUR UNIQUE DNA
Our product range is centred on our originals and made up of two groups, main-line and AMP.
MAIN-LINE
OriginalsFusionCasual
40% 36% 11%
AMP
Collabs Archive & Made In England | 14XX |
5% | <1% |
Kids (4%)
Accessories (4%)
INVESTMENT CASE: OUR UNIQUE PROPOSITION
We believe that our competitive strengths are what set us apart and position us to succeed in a rapidly changing world.
ICONIC, GLOBAL BRAND
The unique DNA of the 1460 boot is preserved across all our products, sitting at the core of our product strategy.
BRAND-FIRSTDTC-LED STRATEGY
Our DOCS strategy is about selling to more people, through our own direct-to-consumer (DTC) channel.
SIGNIFICANT MARKET OPPORTUNITY
We are a global brand with a focus on seven priority markets
- UK, USA, Japan, Germany, Italy, France and China.
74% | 15% | 85% |
brand awareness | average annual DTC revenue | of revenues from |
growth since FY20 | priority markets |
4 | DR. MARTENS PLCANNUAL REPORT 2024 |
STRATEGIC REPORT
BRAND ICON
OUR MARKETS
Our DOCS strategy is about selling more pairs of boots, shoes and sandals, to more people, through our own DTC, in our seven priority markets.
EMEA | AMERICAS | |
APAC
£431.8M £325.8M £119.5M
revenue | revenue | revenue |
2023: £443.0m | 2023: £428.2m | 2023: £129.1m |
Owned and operated | Owned and operated | Owned and operated | |||
Distributors | Distributors | ||||
OWN | 102 | OWN | 61 | OWN | 76 |
STORES | 2023: 88 | STORES | 2023: 54 | STORES | 2023: 62 |
THIRD-PARTY | - | THIRD-PARTY | 4 | THIRD-PARTY | 70 |
STORES | 2023: 3 | STORES | 2023: 4 | STORES | 2023: 112 |
DTC MIX | +8%pts | DTC MIX | +8%pts | DTC MIX | +10%pts |
2023: +4%pts | 2023: +1%pts | 2023: +4%pts |
SEE MORE ONLINE
D R M A RT E N S P LC . C O M / I N V E S T O R S / I N V E S T M E N T - C A S E
APPEALING TO A BROAD | ROBUST FINANCIALS |
CONSUMER BASE | The business generates a |
A balanced demographic mix | strong gross margin and is |
of consumers across all metrics, | highly cash generative. |
including gender, age, income | |
level and geography. |
CUSTODIANSHIP CULTURE
Dr. Martens culture has 'custodianship' at its core and we are committed to standing by our belief in leaving things better than we found them for the next generation.
43/561% | 7% | FY40 |
male/female split | average annual revenue | Net-Zero target by FY40 |
growth since FY20 |
1. The remaining 1% are those that don't identify as male or female.
DR. MARTENS PLCANNUAL REPORT 2024 | 5 |
CHAIR'S STATEMENT
In last year's Annual Report I shared my disappointment that, whilst we'd reached £1bn of revenue, growth had been below expectations and we'd made execution mistakes which had impacted our performance.
FY24 has been another disappointing year, with a challenging consumer environment in the USA, particularly in our core boots category, combined with our brand implementation in this market not being as strong as it should have been.
At a Group level, revenue declined by 9.8% (constant currency basis) to £877.1m. Within these results there is a mixed picture regionally, with EMEA and APAC revenues broadly flat, but Americas seeing a significant step down. EBITDA of £197.5m compared with £245.0m last year. Profit was further impacted by increased depreciation and amortisation charges as a result of our ongoing investment programmes, together with significantly higher net interest charges.
The weakness in the Americas performance is in part due to the wholesale- reliant nature of this business, which has meant that widespread caution from wholesale customers has had a significant impact. I'd contrast this with our Japanese business, where DTC accounts for the significant majority of our revenue and we had a much stronger performance. As we look to FY25 and beyond, we must ensure that we build back in a more resilient and sustainable way, with the right balance
of wholesale partners and a DTC-first approach, to reduce the impact of future wholesale cycles.
DOING THE RIGHT THING
PAUL MASON, CHAIR
6 | DR. MARTENS PLCANNUAL REPORT 2024 |
STRATEGIC REPORT
Oxford Street store
As our guidance indicates, we face a tough outlook for FY25, with our USA wholesale customers not expected to fully restock this year, and inflation coming through in our operating cost base, without the usual benefit of price increases to offset at least some of this cost. This backdrop also means that there is more uncertainty around our full year outturn than is usually the case. I can assure our investors that we will look to deliver cost savings and efficiencies wherever possible, whilst protecting the brand and our future growth prospects.
We still remain very confident in the headroom for our brand in the medium to long term, and we will take a step change in our brand communications to ensure our marketing is focused on our product offering, which will be an important part of reigniting boots demand, particularly in the USA.
Governance
A few weeks ago we welcomed our new CFO, Giles Wilson, following the retirement of Jon Mortimore in March. Giles brings with him a wealth of experience, having been both CFO and CEO at John Menzies plc, and he joined us from William Grant & Sons Limited, one of the largest global spirits companies. He is an operationally focused CFO and his time in the branded spirits industry has given him good grounding in global brands. I am excited about the experience and capability he will bring to the top team.
In late 2023 we also announced that Ije Nwokorie, a Non-Executive for almost three years, would be stepping down from the Board to join the business full time as Chief Brand Officer (CBO) in February 2024. This newly created role encompasses Product, Marketing and Strategy, responsible for setting the overall brand strategy, vision and future direction. Ije is a brand visionary and experienced business leader and joined us from Apple Inc., where he was a Senior Director in Apple Retail since 2018. Prior to this Ije spent 11 years at global brand consultancy Wolff Olins, latterly as CEO.
This was another disappointing year for our business in a challenging external environment. Against this backdrop, our brand remains strong and I remain exceptionally proud of the passion and dedication of our people.
PAUL MASON
Non-Executive Chair
DR. MARTENS PLCANNUAL REPORT 2024 | 7 |
CHAIR'S STATEMENT CONTINUED
WELCOME
GILES WILSON
CHIEF FINANCIAL OFFICER
We're thrilled to welcome Giles, whose extensive experience across sectors, most recently in the branded spirits industry, together with his knowledge of the public markets, will be a valuable asset to the Board.
PAUL MASON
Non-Executive Chair
FINANCE REVIEW P 3 2
Can you tell us a little about your background?
Having qualified as a chartered accountant with PwC, I spent the early part of my career in finance roles for Gallaher Group Plc and Commercial Estates Group Limited. I then joined John Menzies plc in 2011, where I spent almost a decade, including as a main Board Director initially as CFO for four years and then subsequently became CEO.
During my time there, we dealt with a variety of business challenges, including the full Board-led strategic review of the Group, leading to raising equity via a rights issue to fund a transformational acquisition for the Aviation business, to become one of the largest global aviation services businesses
in the world; the decision and execution of the divestment of the Newspaper Distribution business to become a pure play aviation business; and finally leading the business through initial phases of Covid lockdown and securing the long-term funding through this unprecedented time. Latterly, before joining Dr. Martens, I was the CFO of William Grant & Sons Limited for four years, one of the world's largest family owned branded spirits business, owners of globally renowned brands Glenfiddich, The Balvenie and Hendricks Gin.
What attracted you to the role at Dr. Martens?
I've learnt through my career that working for great brands always gives you an advantage, and the opportunity that high-margin branded products offer. Looking at Dr. Martens,
I see an incredibly well-loved, durable brand, with strong gross margins and cash generation.
I was also attracted by how underpenetrated the brand still is in major markets globally, such as the USA and Japan.
I have enjoyed meeting people from the business and the unique culture, where people can authentically be themselves and thrive, resonated with me. Finally, I felt that my experience, particularly as a PLC CFO, would add value to the business.
What are your first priorities as you settle into the role? We know we have disappointed investors, missing our guidance several times and impacting the level of trust the market has in us. Whilst some of the reasons for this are external forces outside of our control, we need to do a better job communicating with our external stakeholders and laying out the financial metrics we're focused on delivering this year. You can read more about this in my Finance Review on page 32.
I'll also be spending time understanding the cost base and investment plans of the business, to ensure we're managing costs tightly without impacting our future growth potential.
More generally, I'm looking forward to getting to know the business, including meeting our people globally, our supplier base and our wholesale partners.
8 | DR. MARTENS PLCANNUAL REPORT 2024 |
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Dr. Martens plc published this content on 12 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 June 2024 08:20:01 UTC.