# Dr. Martens Q3 2023 trading statement shows revenue decline and challenging USA performance

- Link: https://www.directorstalkinterviews.com/dr.martens-q3-2023-trading-statement-shows-revenue-decline-and-challenging-usa-performance/4121139486
- Published: 2024-01-25T08:07:54+00:00
- Author: Amilia Stone

**Dr. Martens plc** (LON:DOCS) has announced its trading statement for the three
months ended 31 December 2023.

**Q3 results – at a glance**

| ** ** | **Q3** | **YTD** | 
|  | **Reported** | **CC** | **Reported** | **CC** | 
| Group revenue (£m) | 267.1 | 273.8 | 662.9 | 681.9 | 
| Change year-on-year | (21%) | (18%) | (12%) | (10%) | 
|  | ** ** |  | _ _ | _ _ | 
| By channel: change year-on-year | ** ** |  | _ _ | _ _ | 
| Ecommerce | (9%) | (8%) | (4%) | (2%) | 
| Retail | – | 3% | 7% | 10% | 
| DTC | (5%) | (3%) | 1% | 3% | 
| Wholesale | (49%) | (46%) | (27%) | (25%) | 
|  |  |  |  |  | 
| DTC mix | 77% |  | 61% |  | 
| %pts year-on-year | +12pts |  | +8pts |  | 
|  |  |  |  |  |

> _“Our Q3 performance is in line with the updated full year guidance provided in
> November. Q3 DTC revenue declined by 3% (constant currency, “CC”) and wholesale
> was down 46% CC, resulting in Group revenue down 18% CC. This was driven by a 
> weak USA performance, as expected. Trading in the quarter was volatile and we 
> saw a softer December in line with trends across the industry. 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.”_
> **Kenny Wilson, Chief Executive Officer**

**Channel Performance**

Ecommerce revenue declined by 9% reported, or 8% CC. This was driven by Americas,
where ecommerce revenues were down double-digit, with EMEA recording marginal growth
and APAC slightly down year-on-year.

Retail revenue was flat on a reported basis and up 3% CC. We achieved a double-digit
growth in APAC driven by Japan, solid growth in EMEA and declining revenue driven
by continued weak footfall in USA, as anticipated.

During the quarter we opened 13 new stores across EMEA and APAC. At the end of Q3
we had 235 own stores globally, having opened 38 stores YTD and closed seven.

Wholesale revenue declined by 49% reported, or 46% CC; significant decline was seen
in both Americas and EMEA, in line with both our expectations and the assumptions
within our FY24 guidance. Wholesale customers continue to have relatively low levels
of in-market inventory, however the timing and level of re-orders is unpredictable,
meaning that our visibility over wholesale remains weak. 

**Regional Performance**

EMEA DTC revenue grew low single-digit 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. 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% year-on-year, on both a reported and CC basis, driven by the wholesale performance.

Given the weak consumer backdrop, the performance of our Americas business was challenging,
as expected. We recorded a double-digit decline in DTC revenue, with softer ecommerce
and low footfall. Wholesale revenues broadly halved year-on-year as continued caution
from wholesale customers resulted in a weak order book. Overall, Americas revenue
was down 31% reported, or 26% CC. The new Americas leadership team continue to take
action, particularly in marketing execution and ecommerce trading capabilities, 
to drive revenue and grow the brand.

APAC recorded revenue down 8% reported, or 1% CC. Japan, our largest market in the
region, 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 guidance provided at the time of our H1 results, for full year CC revenue decline
of high single-digit percentage year-on-year, remains unchanged. All other guidance
for FY24 also remains unchanged. The appreciation of sterling since the end of H1
means that, if current FX rates persist, we anticipate a currency headwind to the
P&L of approximately £5m, together with a non-cash Balance Sheet translation charge,
also of approximately £5m.

**QUARTERLY REVENUE PERFORMANCE**

| **Year on Year Change (unaudited)** | **Q1** | **Q2** | **Q3** | **FY24 YTD** |   | 
|  | ** ** | **Reported** | **CC** | **Reported** | **CC** | **Reported** | **CC** | **Reported** | **CC** |   | 
| **Total revenue** | (11%) | (11%) | (2%) | 1% | (21%) | (18%) | (12%) | (10%)        |   | 
|  |  |  |  |  |  |  |  |  | 
| **Revenue:** | Ecommerce | 7% | 7% | – | 4% | (9%) | (8%) | (4%) | (2%) |   | 
|  | Retail | 27% | 27% | 6% | 10% | – | 3% | 7% | 10% |   | 
|  | DTC | 17% | 17% | 3% | 7% | (5%) | (3%) | 1% | 3% |   | 
|  | Wholesale^(1) | (41%) | (41%) | (5%) | (2%) | (49%) | (46%) | (27%) | (25%) |   | 
| ** ** |  |  |  |  |  |  |  |  |  |   | 
| **Region:** | EMEA | (1%) | (3%) | 14% | 13% | (15%) | (15%) | (2%) | (3%) |   | 
|  | Americas | (26%) | (27%) | (12%) | (6%) | (31%) | (26%) | (24%) | (20%) |   | 
|  | APAC | 12% | 16% | (22%) | (14%) | (8%) | (1%) | (9%) | (2%) |   |

1.         Wholesale revenue including distributor customers.

**Investor and Analyst conference call**

Kenny Wilson, CEO and Jon Mortimore, CFO will host a conference call and Q&A for
investors and analysts at 09:00 GMT on 25 January 2024. This can be accessed via
https://www.drmartensplc.com.

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