Dr Martens hits £1bn revenue for first time - but results are marred by US problems

Boot and shoe seller Dr Martens has surpassed revenues of £1 billion for the first time, but reported a significant drop in profits
Boot and shoe seller Dr Martens has surpassed revenues of £1 billion for the first time, but reported a significant drop in profits

THE symbolic moment when boot-maker Dr Martens reached £1 billion in revenue for the first time was marred by what its boss had to admit were "mistakes" in the US.

The business said on Thursday that it had managed to only just squeak into the billion-pound league with a margin of about £300,000 as revenue rose 10 per cent.

But profits fell significantly, down 26 per cent to £159.4 million before tax, the business said. Shares fell by 13 per cent as markets opened.

This was in no small part due to the company's bungled move of its main distribution centre on the US west coast from Portland to Los Angeles.

A series of issues came together to create serious bottlenecks at the warehouse, meaning that Dr Martens has struggled to get shoes to its wholesale customers.

The problems arose as it moved stock to the new third-party site in LA faster than planned, and it also allowed some US wholesalers to use the site, helping to overload it.

Chief executive Kenny Wilson said: "The honest answer is I'm disappointed about the United States, because our internal organisation was extremely good - we set a goal to become a £1 billion business and we've accomplished that.

"But we cannot shy away from the fact that we didn't deliver what we said we were going to do in the United States, and we're disappointed in that. We basically made made a couple of mistakes."

But he added that the mistakes were fixable and not long-term structural issues.

"I was (in LA) three weeks ago. At the point of the real issues that we had at the end of December, beginning of January, we were shipping 15,000 pairs a day out of Los Angeles," he said.

"That sounds like a lot. But we're actually now shipping 30,000 pairs per day out of Los Angeles. So it's actually solved."

Unfavourable weather in its America region also weighed on the shoe seller, and in addition it admitted making mistakes in its marketing campaign.

The marketing was too heavily focused on shoes and sandals, which grew well, but not enough on boots. Boot revenue in America dropped as a result.

Dr Martens also said that, in hindsight, it had ordered too much stock for America.

But it reassured shareholders that, while it might take longer to shift this stock, the excess is largely made up of black boots and shoes - the classics that it can sell later without having to put them on sale.

As the business beat the £1 billion mark for the first time, it also managed to start making more than half of its sales directly to customers, cutting out the middleman.

Direct-to-consumer sales increased from 49 per cent to 52 per cent, the business said on Thursday.

"We achieved annual revenue of £1 billion for the first time, up 10 per cent and up 4 per cent in constant currency," Mr Wilson said.

"Reaching this milestone is testament to the strength of our brand, our long-standing ... strategy and the hard work and dedication of our fantastic people globally.

"Direct-to-consumer is now more than half our revenue and the Dr Martens brand remains strong with all key metrics either ahead of, or in line with, last year."