Business

Dr Martens profits plummet as US consumers turn their backs on bootmaker

The company said cost cuts would come from ‘organisational efficiency and design, better procurement and operational streamlining’

One cost-cutting measure is to buy less stock in the US, it said, describing inventory backlogs as being at an 'elevated' level

Alex Daniel, PA Business Reporter
Thu May 30 2024 - 08:54

Dr Martens has announced a swathe of cost-cutting plans, after the bootmaker’s bottom line was hit by plummeting demand in the US last year.

The London-listed firm hopes to save up to £25 million (€29 million) in the coming financial year, after profit fell 49 per cent to £97 million (€114 million) for the year ending March 31st.

The company said the cost cuts would come from “organisational efficiency and design, better procurement and operational streamlining”.

Dr Martens has been struggling to drive demand among US consumers, its biggest market, in recent years.

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In Thursday’s results statement, it put that down to weak consumer spending as a whole in the region describing the boots segment as “particularly challenging”.

Revenue on the continent fell by a quarter this year, mainly driven by falling sales in its wholesale business.

One cost-cutting measure is to buy less stock in the US, it said, describing inventory backlogs as being at an “elevated” level.

Dr Martens said it also recently installed several new directors across North America and South America, and said they are “still embedding”.

Meanwhile, “our marketing and trading execution during the year was not as strong as it should have been”, it added.

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In an attempt to buck the trend, the retailer plans to spend more on advertising and streamline the process of buying boots on its website.

However, it sought to temper expectations of an immediate turnaround, warning that it does not expect a recovery in its US wholesale business until late 2025 to early 2026 at the earliest.

As a result, US wholesale revenue is expected to see “double-digit” decline again next year.

Kenny Wilson, Dr Martens’ chief executive, said the results were “as expected and reflect continued weak USA consumer demand”.

“We are clear that we need to drive demand in the USA to return to growth in (financial year 2026) onwards and are executing a detailed plan to achieve this, with refocused and increased USA marketing investment in the year ahead.”

“We are also announcing a cost action plan across the Group, targeting savings of £20 million to £25 million.

“I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead.”

Mr Wilson is to step down later this year, to be replaced by Ije Nwokorie, who is currently chief brand officer at the business, before the end of the current financial year.

He was previously senior director for Apple Retail as well as chief executive of brand consultancy Wolff Olins.

Overall revenue came in at £877 million, a 12% fall on last year when it broke the £1 billion barrier for the first time. - PA

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