Dr. Martens plc reported its performance for its fiscal third quarter ended December 31 was in line with the updated full-year guidance provided in November. Group revenue reportedly declined 18 percent in constant-currency terms (CC), or a reported currency decline of 21 percent to £261.7 million. The result was said to be driven by a weak U.S. performance, as expected.
“Trading in the quarter was volatile and we saw a softer December in line with trends across the industry,” the company said in a Trading Statement. “Whilst the consumer environment remains challenging, we are taking action to continue to grow our iconic brand and invest in our business. We remain confident in our product pipeline for AW24 and beyond.”
DTC revenue declined by 3 percent CC and wholesale was said to be down 46 percent CC.
E-commerce revenues were said to be down in double-digits for the quarter, with EMEA posting marginal growth and APAC slightly down year-on-year. Retail revenue was flat on a reported basis and up 3 percent CC. During the quarter Dr. Martens opened 13 new stores across EMEA and APAC.
The company said it achieved double-digit DTC growth in APAC driven by Japan, solid growth in EMEA and declining revenue driven by continued weak footfall (foot traffic) in the U.S., as anticipated.
At the end of Q3, the company had 235 owned-retail stores globally, after opening 38 stores and closing seven year-to-date.
Wholesale revenue declined by 49 percent in reported terms, or falling 46 percent CC. A significant decline was reportedly seen in both the Americas and EMEA, in line with both the company’s expectations and the assumptions within its FY24 guidance.
The company said wholesale customers continue to have relatively low levels of in-market inventory; however, the timing and level of re-orders is unpredictable, meaning that its visibility over wholesale remains weak.
Regional Performance
EMEA DTC revenue reportedly grew low single digits in Q3, with a weaker October, impacted by abnormally warm weather conditions, a strong November and a softer December.
“We saw a good DTC performance in our continental European conversion markets, with a slightly softer result in the UK in line with industry trends,” the company reported. “EMEA wholesale declined significantly as planned, due to both the reduction of sales to etailers, together with differences in the phasing of some orders.”
Overall EMEA revenue declined by 15 percent year-on-year, on both a reported and CC basis, driven by the wholesale performance. Given the weak consumer backdrop, the performance of the company’s Americas business was said to be challenging, as expected.
Dr. Martens posted a double-digit decline in DTC revenue, with softer e-commerce and low footfall (foot traffic). Wholesale revenues broadly halved year-on-year as continued caution from wholesale customers resulted in a weak order book.
Overall, Americas region revenue was down 31 percent as reported, or 26 percent CC. The new Americas leadership team reportedly continues to take action, particularly in marketing execution and e-commerce trading capabilities, to drive revenue and grow the brand. APAC recorded revenue down 8 percent reported, or down 1 percent CC. Japan, the company’s largest market in the APAC region, was said to have delivered “good growth overall,” with the relative DTC and wholesale performance driven by the transfer of 14 franchise stores at the end of FY23.
Outlook
The company said the guidance provided at the time of its H1 results, for full-year constant-currency revenue decline in the high single digits year-over-year, remains unchanged. All other guidance for FY24 also remains unchanged. The report said the appreciation of pound sterling currency since the end of H1 reportedly means that “if current FX rates persist, we anticipate a currency headwind to the P&L of approximately £5 million, together with a non-cash Balance Sheet translation charge, also of approximately £5 million.”
Image courtesy Dr. Martens
