46 slides from Dr. Martens's earnings presentation, Jun 17, 2021
Slide 1: Full Year Results FY21
FULL YEAR RESULTS FY21 17TH JUNE 2021
Slide 2: Agenda
AGENDA Introduction – Kenny Wilson, CEO Financials – Jon Mortimore, CFO Review of the year – Kenny Wilson, CEO
Slide 3: Brand Custodian Mindset Delivering Strong Results
BRAND CUSTODIAN MINDSET DELIVERING STRONG RESULTS 3
Slide 4: Custodian definition
noun A person who is responsible for protecting or taking care of something or keeping it in great condition.
Slide 5: Introduction to Dr. Martens
INTRODUCTION TO DR. MARTENS Iconic brand and iconic Direct to consumer led model, Track record of sustainable product driven by ecommerce and and profitable growth Broad appeal supported by stores as Significant headroom for profitable brand beacons global growth Consumers love their Docs 5
Slide 6: Agenda
AGENDA Introduction – Kenny Wilson, CEO Financials – Jon Mortimore, CFO Review of the year – Kenny Wilson, CEO
Slide 7: Financial Overview: Year Ended 31 March 2021
FINANCIAL OVERVIEW: YEAR ENDED 31 MARCH 2021 7
Slide 8: Group Performance Summary
GROUP PERFORMANCE SUMMARY % change Constant • Continued volume-led (£M) FY21 FY20 Actual currency growth Pairs (m) 12.7 11.1 14% 14% • Margin expansion largely via Revenue 773.0 672.2 15% 16% accelerated supply chain efficiencies Gross Margin 470.5 401.5 17% 18% OPEX (243.4) (217.0) (12%) (13%) - PL
Slide 9: Revenue Performance by Channel
REVENUE PERFORMANCE BY CHANNEL (£M) FY21 FY20 % change • Very strong ecommerce Ecommerce 235.4 136.4 73% • Retail decline due to Covid- Retail 99.7 165.2 (40%) 19 restrictions DTC 335.1 301.6 11% • Quality wholesale growth Wholesale* 437.9 370.6 18% and continued to focus on brand enhancing and larg
Slide 10: Revenue Bridge
REVENUE BRIDGE • Volume represents 95% of revenue growth Price increase c. 2.5% DTC 43% £m DTC 45% Incremental pairs on Wholesale FY20 revenue / pair 57% Wholesale 55% Pairs (m) 11.1 1.6 12.7 DTC mix 45% (2%) 43% 10
Slide 11: Gross Margin Bridge
GROSS MARGIN BRIDGE 470.5 • Gross margin up 1.2%pts • Mainly supply chain efficiencies Inflation c. 2.2% • Price funds COGS £m inflation 401.5 Incremental pairs on FY20 revenue / pair 59.7% - +1.1 (0.3) (0.8) +1.0 +0.2 60.9% 11
Slide 12: Supply Chain Efficiencies
SUPPLY CHAIN EFFICIENCIES FY21 FY20 Gross savings (£m) 40 17 % Revenue 5.2% 2.6% ▪ Supply chain efficiency target achieved a lot earlier than anticipated: mainly due to cross cost comparison between factories, and duty optimisation from country of origin ▪ Raw material cost headwinds from SS22 and i
Slide 13: EMEA Performance
EMEA PERFORMANCE (£M) FY21 FY20 % change • Very strong ecommerce, with retail negative Revenue 335.6 287.9 17% • Opened 9 stores and closed 3 EBITDA 115.3 92.4 25% • Wholesale* accounts increase, by 82 accounts to 1,044, due EBITDA Margin 34.4% 32.1% +2.3 pts to Nordics conversion Own stores 68 62 +
Slide 14: Germany Case Study
GERMANY CASE STUDY RATIONALE Revenue by product category ▪ Directly control the brand Germany ▪ Implement DOCS strategy revenue +56% ▪ Broaden assortment and range ▪ Own in-market margin Germany revenue +88% 30% PERFORMANCE 23% ▪ Year of conversion: FY20 (from AW19) ▪ Closed c.200 accounts out of c.
Slide 15: Americas Performance
AMERICAS PERFORMANCE • USA least impacted by (£M) FY21 FY20 % change Covid-19 restrictions • Very strong ecommerce, Revenue 295.8 252.2 17% with retail negative EBITDA 91.9 75.4 22% • Opened 6 stores and closed 1 EBITDA Margin 31.1% 29.9% +1.2 pts • Focus on larger and Amp Own stores 34 29 +5 wholes
Slide 16: APAC Performance
APAC PERFORMANCE (£M) FY21 FY20 % change • Largest market is Japan; this Revenue 141.6 132.1 7% was most impacted by Covid- 19 restrictions EBITDA 39.7 35.5 12% • Mainly retail: own stores EBITDA Margin 28.0% 26.9% +1.1 pts and franchise stores Own stores 33 31 +2 • Second-largest market is China: r
Slide 17: Earnings
EARNINGS (£M) FY21 FY20 % change • PBT grew 34% EBITDA3 224.2 184.5 22% • Exceptionals all IPO related Depreciation & amortisation1 (35.0) (29.5) (19%) • Cash cost of £27m, FX gains/ (losses) 3.8 (0.5) N/A compared to guidance of £30m-£35m Operating profit3 193.0 154.5 25% Finance expense – Prefs (2
Slide 18: Operating Cash Flow and Capex
OPERATING CASH FLOW AND CAPEX (£M) FY21 FY20 EBITDA1 224.2 184.5 • Very good cash conversion Change in working capital 28.5 (20.6) • Timing of inventory Capex (18.6) (21.9) purchases and payment Operating cash flow1 234.1 142.0 normalisation post % conversion 104% 77% Covid-19 • Focus on trade debto
Slide 19: Cash Flow Bridge
CASH FLOW BRIDGE • In line with guidance IPO funds flow £m New financing 300 Repay – bank debt (93) – preference shares (341) Exceptionals (27) Own resources 161 • Net gearing1 1.2x Wholesale • New debt £300m (€ 57% denominated), with £200m working capital facility £m Wholesale 55% • Five year bulle
Slide 20: Guidance
GUIDANCE H1 FY22 FY22 MEDIUM-TERM ▪ Increase in operating costs ▪ High-teens revenue growth ▪ Mid-teens revenue growth including c.£5m of discretionary spend which ▪ 20 to 25 new own stores ▪ Targeting a 40% ecommerce was deferred through FY21 mix (of Group revenue), and ▪ Annualisation of Plc and L
Slide 21: Agenda
AGENDA Introduction – Kenny Wilson, CEO Financials – Jon Mortimore, CFO Review of the year – Kenny Wilson, CEO
Slide 22: Our Essence
OUR ESSENCE * Meaning we do things in our ow! unique, disruptive way and unite with those who want to do the san
Slide 23: We're on a Journey
WE’RE ON A JOURNEY 20 YEARS AGO 10 YEARS AGO TODAY GLOBAL TIMELESS BRAND, ICONIC PRODUCT, BROAD CONSUMER APPEAL Family owned Family owned Professionalising Manufacturing led Wholesale led Digital first – DTC led Limited brand control Limited brand control Wholesale clean-up Prolific product range Pr
Slide 24: Product Strategy: Originals at the Epicentre
PRODUCT STRATEGY: ORIGINALS AT THE EPICENTRE ORIGINALS COLLABORATIONS2 57% 1% 1460 Curated projects to connect SANDALS1 6% The core of the product strategy, with informed consumers Expanding our offering with 43% informing the aesthetics of a sandal collection that stays all other categories true to
Slide 25: Our 'Brand Love' Formula
OUR ‘BRAND LOVE’ FORMULA EXCEPTIONAL Consumers love and value Dr. Martens for its #1 NPS BRAND heritage, quality and self-expression LOVE & AWARENESS Across 7 core markets “DEMOCRATIC” Appeal across genders, ages and walks of life 49% APPEAL Accessible for everyone, everywhere Female1 Consumers come
Slide 26: Our DOCS Strategy
OUR DOCS STRATEGY OUR PURPOSE IS TO EMPOWER REBELLIOUS SELF-EXPRESSION GOALS OUR RESPONSIBILITY IS TO ACT AS BRAND CUSTODIANS, ALWAYS FOCUSING ON LONG-TERM VALUE THIS IS WHERE DR. MARTENS IS HEADING. THIS IS WHAT WE’RE WORKING TOWARDS TOGETHER D O C S DTC OPERATIONAL CONSUMER SUSTAINABLE ACCELERATIO
Slide 27: DTC Acceleration: Controlling Our Own Destiny
DTC ACCELERATION: CONTROLLING OUR OWN DESTINY D ECOMMERCE: REVENUE UP 73% RETAIL: REVENUE DOWN 40% FY21 PERFORMANCE FY21 PERFORMANCE ▪ 13 directly-controlled .com local country sites ▪ Retail impacted by Covid-19 ▪ Strong performance of regional trading teams ▪ 18 new store openings ▪ DC picking opt
Slide 28: Quality Wholesale: Revenue per Account Up 15%
QUALITY WHOLESALE: REVENUE PER ACCOUNT UP 15% S WHOLESALE: PARTNER RELATIONSHIPS DISTRIBUTORS: SUCCESSFUL CONVERSIONS FY21 PERFORMANCE FY21 PERFORMANCE ▪ Continued rationalisation and elevation of ▪ First full year of Germany post conversion and wholesale base successful conversion of Nordics ▪ Whol
Slide 29: Operational Excellence: 12.7M Pairs, Up 14%
OPERATIONAL EXCELLENCE: 12.7M PAIRS, UP 14% O SUPPLY CHAIN: STRONG AVAILABILITY FY21 PERFORMANCE ▪ Benefits from move to multi-country sourcing and country diversification ▪ New third-party DC in New Jersey opened ▪ Efficiencies achieved ahead of plan FY22 FOCUS ▪ Building capacity and capability to
Slide 30: Campaigns: Connecting with Consumers Old & New
C CAMPAIGNS: CONNECTING WITH CONSUMERS OLD & NEW Dr. Martens have always united with disruptive people who want to do things their own way. This initative is a powerful articulation of rebellious self- expression DEMOCRATIC BRAND Diverse and inclusive authentic Dr. Martens wearers to inspire others
Slide 31: Highly Engaged Social Community
C HIGHLY ENGAGED SOCIAL COMMUNITY LEADING SOCIAL ENGAGEMENT ▪ Almost 9 million Instagram and Facebook followers globally ▪ Leading Instagram engagement, more than double nearest peers ▪ Launch of TikTok to great reception: over 1 million likes within the first 8 weeks 31
Slide 32: Our Sustainability Journey
C OUR SUSTAINABILITY JOURNEY Our journey: FY21 key achievements: • Principles of durability & timeless design • >98% leather from medal-rated tanneries • 2019 launched first sustainability strategy • Invested in our team and capability • 50% recycled plastic into heel loops • Gap & materiality analy
Slide 33: Sustainability Targets
C SUSTAINABILITY TARGETS 2028 2030 2040 100% packaging made from Achieve net zero 100% products sold have a recycled/sustainably sourced sustainable end of life option Remove fossil-based material chemicals from our products All footwear made from Zero waste to landfill across sustainable materials,
Slide 34: Vast Global Opportunity: Priority Markets
VAST GLOBAL OPPORTUNITY: 7 PRIORITY MARKETS S 34
Slide 35: Potential Headroom for Growth
POTENTIAL HEADROOM FOR GROWTH S LOOKALIKE MODELLING HEADROOM FOR GROWTH: SAME BRAND, SAME PRODUCT, SAME STRATEGY OVERVIEW £0.4bn £1.5bn £0.5bn £0.4bn £0.5bn £0.5bn £2.7bn >£6bn 1 169.8 CONSTRUCTING THE LOOKALIKES MODEL 10.7x 2 57.5 QUANTIFYING 7.6x LOOKALIKES 57.6 82.3x 3 12.8 12.1 11.7 9.9 3.1x 10.
Slide 36: Brand Custodian Mindset Delivering Strong Results
BRAND CUSTODIAN MINDSET DELIVERING STRONG RESULTS 36
Slide 37: Appendix
APPENDIX ¢ IR CONTACT DETAILS ¢ FY22 TECHNICAL GUIDANCE ¢ EBITDA BRIDGE ¢ EXCEPTIONAL CHARGES ¢ BALANCE SHEET * PRODUCT: HIGHLY PROFITABLE BOOT * 1460: BIRTH OF AN ICON ¢ EXCEPTIONAL BRAND LOVE AND AWARENESS ¢ DEMOCRATIC APPEAL
Slide 38: IR Contact Details
IR CONTACT DETAILS Bethany Barnes Director of Investor Relations Bethany.Barnes@drmartens.com Mobile: +44 7825 187465 38
Slide 39: FY22 Guidance
FY22 GUIDANCE • • • • • • • • • • • 39
Slide 40: EBITDA Margin Bridge
EBITDA MARGIN BRIDGE • EBITDA1 margin up 1.6%pts, mainly gross margin improvement 1 Before exceptionals of £80.5m related to IPO 40
Slide 41: Exceptionals: All IPO Related
EXCEPTIONALS: ALL IPO RELATED £m • Exceptional charge of £81m IPO Bonus for all (Inc. NI) 49 IFRS2 charge 12 • Net cash cost of £27m, compared to guidance of Fees 20 £30m-£35m 81 Funded by: - EBT1 sale of shares 42 - IFRS2 non-cash charge 12 - Company cash 27 81 1 Employee Benefit Trust 41
Slide 42: Balance Sheet
BALANCE SHEET (£M) 31 MARCH 2021 31 MARCH 2020 Freeholds 6.1 6.0 Right-of-use assets 77.4 82.0 Other fixed assets 46.6 43.2 Working capital 25.5 69.6 Deferred tax 7.2 7.4 Operating net assets 162.8 208.2 Goodwill 240.7 240.7 Cash 113.6 117.2 Bank debt1 (281.6) (94.3) Lease liabilities (84.8) (88.4)
Slide 43: Product: Highly Profitable Boot
PRODUCT: HIGHLY PROFITABLE BOOT ICONIC 1460 BOOT 1460 Net Revenue By Channel (UK) (£) DTC Wholesale UK Retail Price 149 n.a. Net Revenue c.124 c.50 Revenue per pair from distributors c.£40 43
Slide 44: 1/4/1960: Birth of an Icon
1/4/1960: BIRTH OF AN ICON WHAT MAKES THE 1460 A TRUE ICON… …LIKE FEW OTHER CLASSICS $3.5bn £ 0.8bn $1.8bn $3.9bn £2.3bn ➢ Invented perfectly six decades ago ➢ Legendary cult status ➢ Immediately recognisable ➢ Beyond fashion trends €1.4bn ➢ Canvas for self-expression Last FY Revenue1 44
Slide 45: Exceptional Brand Love and Awareness
EXCEPTIONAL BRAND LOVE AND AWARENESS #1 #1 #1 #1 #1 #1 #1 +61% +24% +50% +37% +26% +193% +29% 93% 75% 66% 82% 80% 72% 63% 67% 82% 62% 67% 65% 71% 83% Source: Third party consumer survey on the footwear market. Note: Analysis refers to L24M purchasers unless otherwise stated; 1 Refers DM NPS vs. aver
Slide 46: Democratic Appeal
DEMOCRATIC APPEAL TO TALK TO EVERYONE; YOU NEED TO TALK TO SOMEONE BULLSEYE OF THE CONSUMER STRATEGY . . . . . WHILE SPEAKING TO A HUGE BROADER AUDIENCE ALTERNATIVE EXPRESSIVE STYLISH COMFORT 46