Dr. Martens Plc · LSE:DOCS
Dr. Martens — FY2024 Earnings Presentation
39 slides from Dr. Martens's earnings presentation, May 30, 2024
Slide 1: FY24 Results
DR. MARTENS PLC FY24 RESULTS 30 MAY 2024
Slide 2: Agenda
OVERVIEW Kenny Wilson, CEO FINANCIAL RESULTS Giles Wilson, CFO BUSINESS UPDATE Kenny Wilson, CEO AGENDA DR. MARTENS PLC FY24 RESULTS 2
Slide 3: Overview
Kenny Wilson, CEO OVERVIEW
Slide 4: Overview
OVERVIEW FY24 FY25 FY26 USA PERFORMANCE TAKING ACTION IN A BACK INTO GROWTH DISAPPOINTING YEAR OF TRANSITION DR. MARTENS PLC FY24 RESULTS 4
Slide 5: Financial Results
Giles Wilson, CFO FINANCIAL RESULTS DR. MARTENS PLC FY24 RESULTS 5
Slide 6: First Impressions
FIRST IMPRESSIONS PRODUCT OPPORTUNITY FINANCIALS Iconic brand and product Headroom in key markets Strong gross margin Incredible heritage Headroom in product range Highly cash generative Democratic appeal Further long-term growth Operational (de)leverage opportunities Cost efficiencies opportunity D
Slide 7: Summary Financials
SUMMARY FINANCIALS % change £m FY24 FY23 Actual Constant currency Pairs (m) 11.5 13.8 -16.7% Revenue 877.1 1,000.3 -12.3% -9.8% Gross Margin 575.2 618.1 -7% Gross Margin % 65.6% 61.8% +3.8%pts Opex (377.7) (373.1) -1% EBITDA 197.5 245.0 -19% EBITDA Margin % 22.5% 24.5% -2.0%pts EBIT 122.2 176.2 -31%
Slide 8: Depreciation and Amortisation
DEPRECIATION AND AMORTISATION £m FY24 FY23 FY22 FY21 Amortisation 5.8 8.4 4.7 4.4 • Amortisation – predominantly IT projects • Depreciation – fixtures and fittings Depreciation 15.2 13.6 9.5 9.0 predominantly in stores 21.0 22.0 14.2 13.4 • IFRS 16 depreciation – stores c.55%, DCs c.35% and other c.
Slide 9: Revenue by Channel
REVENUE BY CHANNEL % change Revenue £m FY24 FY23 Actual Constant currency Ecommerce 276.3 279.0 -1% 1% Retail 256.8 241.7 6% 10% DTC 533.1 520.7 2% 5% Wholesale1 344.0 479.6 -28% -26% Total 877.1 1,000.3 -12% -10% DTC Mix 61% 52% +9%pts Owned stores 239 204 Wholesale accounts (k) 1.6 1.9 1 Includes
Slide 10: Revenue Bridge
REVENUE BRIDGE Americas 43% AMERICAS EMEA APAC Americas 37% EMEA 44% • Weak consumer spending and • Solid DTC performance • Good DTC performance EMEA 49% APAC 13% challenging boots segment • Decline in wholesale driven by • Wholesale impacted by transfer of APAC 14% • Widespread wholesale customer s
Slide 11: EBIT Bridge
EBIT BRIDGE £m FY23 FY23 EBIT MARGIN MIX & SUPPLY CHAIN FY24 EBIT FX FY24 FX OPEX D&A OTHER EBIT EXCL .FX VOLUME PRICE SAVINGS EXCL. FX EBIT DR. MARTENS PLC FY24 RESULTS 11
Slide 12: Cash Flow Bridge
CASH FLOW BRIDGE £m Net bank debt Lease liabilities Cash generation £88.1m 175.2 175.2 135.9 182.3 152.4 152.4 FY23 NET PAYMENT OF NET WORKING NET INTEREST & RETURNS TO INCREASE IN FY24 NET EBITDA LEASE CAPEX FX IFRS 16 LEASE DEBT CAPITAL & SBP TAX PAYMENTS SHAREHOLDERS DEBT LIABILITIES LIABILITIES
Slide 13: Cost Base
COST BASE FY24 total spend: £750m COGS Continued execution of successful supply chain strategy 40% Regional Opex FY26 benefits from excess USA inventory storage costs rolling off (exc. IFRS 16 rent 33% and inc. royalties) Focus of cost action plan 10% Group Support FY24 flattered by no incentivisati
Slide 14: Cost Action Plan
COST ACTION PLAN Targeting £20-25m on a full year basis - organisational Full benefit in FY26 Further details and progress efficiency and design, better FY25 net benefit likely to be update provided at H1 results in procurement and operational immaterial November streamlining DR. MARTENS PLC FY24 RE
Slide 15: Outlook
OUTLOOK KEY FY25 TARGETS H1 FY25 GUIDANCE FY25 FINANCIAL GUIDANCE Positive USA DTC growth in H2 Group revenue decline of New own store openings 25 to 30 around 20% Inventory declines by c.£40m Depreciation & Amortisation Wholesale revenue decline of £75m to £80m around a third Net debt declines to £
Slide 16: Dividend
DIVIDEND FY24 FUTURE INTENTIONS The Board’s intention is to hold the FY25 dividend flat in absolute terms, Final dividend of 0.99p before returning to an earnings payout in-line with policy (25% to Total FY24 dividend of 2.55p 35%) from FY26 onwards. equating to 35% earnings payout Formulaic approac
Slide 17: Business Update
Kenny Wilson, CEO BUSINESS UPDATE DR. MARTENS PLC FY24 RESULTS 17
Slide 18: Summary
SUMMARY FY24 FY25 – year of transition FY26 – back to growth • USA wholesale decline • Boots in growth USA performance • Focus on product marketing • USA in growth disappointing • USA DTC action plan • Lower cost base • Cost action plan • IT systems start to deliver • Reduction in inventory results
Slide 19: Continued Growth in EMEA Conversion Markets
CONTINUED GROWTH IN EMEA CONVERSION MARKETS GERMANY ITALY 17% >10% 29% >20% Revenue CAGR EBITDA CAGR Revenue CAGR EBITDA CAGR Revenue Revenue FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 FY20 FY24 FY20 FY24 DTC mix 38% 56% DTC mix 17% 42% Pairs per Pairs per Capita 7 11 Capita 7 10 Brand Brand
Slide 20: Japan: Significant Growth Runway Ahead
JAPAN: SIGNIFICANT GROWTH RUNWAY AHEAD JAPAN STORES CENTRED AROUND TOKYO & OSAKA Top ten cities in Japan CAGR SAPPORO by population 5 YEAR 2 YEAR DTC stores Revenue 7% 14% EBITDA 5% 11% Osaka stores 7 DTC MIX Store presence since Tokyo stores 2017 FY20 FY24 20 37% 75% SAITAMA TOKYO Store presence si
Slide 21: Boots, Shoes and Sandals
BOOTS, SHOES AND SANDALS GROUP REVENUE CAGR 9% 35% 14% 25% 16% 23% 12% 66% 72% FY19 FY24 Boots Shoes Sandals DR. MARTENS PLC FY24 RESULTS 21
Slide 22: FY24: USA Boots Market Challenging
FY24: USA BOOTS MARKET CHALLENGING USA Footwear YoY Quarterly Category Trends FY24: boots down 17% 11.7 8.1 8 5.9 3.6 -0.7 -1.5 -1.8 -1.6 -3.6 -4.7 -5.6 -7.8 -9.4 -12.5 -14.9 -17.7 -18.5 3ME Mar'22 3ME Jun'22 3ME Sept'22 3ME Dec'22 3ME Mar'23 3ME Jun'23 3ME Sept'23 3ME Dec'23 3ME Mar'24 Total Dr. Ma
Slide 23: USA Brand: Focus on Consideration
USA BRAND: FOCUS ON CONSIDERATION AWARENESS AND FAMILIARITY FLAT YoY NET CONSIDERATION FOR LAST 24 MONTHS +5% PURCHASERS NET CONSIDERATION FOR THOSE FAMILIAR -8% BUT NOT PURCHASED DR. MARTENS PLC FY24 RESULTS 23
Slide 24: What Will Be Different – All Markets – in FY25
WHAT WILL BE DIFFERENT – ALL MARKETS – IN FY25 • A shift from brand storytelling focused on culture to product marketing • With the product as hero, we will lead AW24 marketing with boots • We will focus on broadening consumer appeal • We will lead with our icons and support innovation DR. MARTENS P
Slide 25: FY25: USA Action Plan to Drive Desire & Demand for Our Boots
FY25: USA ACTION PLAN TO DRIVE DESIRE & DEMAND FOR OUR BOOTS MARKETING DIGITAL WHOLESALE • Double-down on product • Improve the quality of our • Focus actions on driving marketing PDPs (product detail pages) boots sell-through in store - Icons and 4 key concepts • Drive more qualified traffic • All
Slide 26: AW24 Marketing Calendar
AW24 MARKETING CALENDAR ICONS ALWAYS ON CORE ICON FOCUS SOFT LEATHER RIGGER SQUARE TOE WINTERISED SEASONAL JUL AUG SEP OCT NOV DR. MARTENS PLC FY24 RESULTS 26
Slide 27: Summary
SUMMARY FY24 FY25 – year of transition FY26 – back to growth • USA wholesale decline • Boots in growth USA performance disappointing • Focus on product marketing • USA in growth • USA DTC action plan • Lower cost base • Cost action plan • IT systems start to deliver • Reduction in inventory results
Slide 28: Dr. Martens Plc FY24 Results
DR. MARTENS PLC FY24 RESULTS 28
Slide 29: Appendix
• IR contact details • Earnings • DOCS strategy • Balance Sheet • Sustainability • FX • Quarterly revenue • Cautionary statement • Regional performance APPENDIX
Slide 30: Investor Relations Contact Details
INVESTOR RELATIONS CONTACT DETAILS BETHANY BARNES BETH CALLUM Director of Investor Relations Investor Relations Manager Bethany.Barnes@drmartens.com Beth.Callum@drmartens.com Mobile: +44 7825 187465 Phone: +44 20 3995 2644 DR. MARTENS PLC FY24 RESULTS 30
Slide 31: Our DOCS Strategy
OUR DOCS STRATEGY DTC FIRST ORGANISATIONAL AND CONSUMER SUPPORT BRAND OPERATIONAL EXCELLENCE CONNECTION EXPANSION WITH B2B Build brand equity and Enable growth and Acquire new customers Manage B2B holistically drive margin expansion unlock value and drive loyalty and purposefully DR. MARTENS PLC FY2
Slide 32: Making Strides in Sustainability
MAKING STRIDES IN SUSTAINABITY AUTHORISED REPAIR REWAIR GENIX NAPPA Successful launch of Launched ReWair in the Sold our first products made Authorised Repair in the UK, USA which allows from reclaimed leather in partnership with The Boot consumers to buy second- following our partnership with Repai
Slide 33: Quarterly Revenue by Channel & Region
QUARTERLY REVENUE BY CHANNEL & REGION Q124 Q224 H124 Q324 Q424 H224 YoY Change Actual CC Actual CC Actual CC Actual CC Actual CC Actual CC Total Revenue -11.0% -11.2% -2.2% 1.3% -5.4% -3.5% -20.5% -17.9% -12.9% -9.8% -17.3% -14.5% Revenue by channel Ecommerce 7.3% 6.8% 0.1% 3.8% 3.3% 5.1% -9.3% -7.6
Slide 34: Regional Performance
REGIONAL PERFORMANCE Revenue % change £m FY24 FY23 Actual Constant currency EMEA 431.8 443.0 -3% -3% Americas 325.8 428.2 -24% -20% APAC 119.5 129.1 -7% 1% EBITDA % change £m FY24 FY23 Actual EMEA 140.8 146.1 -4% Americas 64.4 100.1 -36% APAC 31.7 33.8 -6% EBITDA Margin % change % FY24 FY23 Actual E
Slide 35: Earnings
EARNINGS £m FY24 FY23 % change EBITDA 197.5 245.0 -19% Depreciation & amortisation (72.3) (54.2) -33% Impairment - (3.9) -100% Other gains 1.2 - 100% FX gains/ (losses) (4.2) (10.7) 61% EBIT 122.2 176.2 -31% Net finance expense (29.2) (16.8) -74% Profit before tax 93.0 159.4 -42% Tax expense (23.8)
Slide 36: Balance Sheet
BALANCE SHEET 31 March 2024 31 March 2023 Freeholds 7.0 7.4 Right-of-use assets 173.5 144.1 Other fixed assets 81.7 78.8 Working capital2 224.2 216.3 Other1 (1.4) 5.2 Operating net assets 485.0 451.8 Goodwill 240.7 240.7 Cash 111.1 157.5 Bank Debt (288.6) (296.8) Unamortised bank fees 2.3 3.4 Lease
Slide 37: FX Translation Rates
FX TRANSLATION RATES £/$ £/€ £/¥ FY24 FY23 % change FY24 FY23 % change FY24 FY23 % change H1 1.26 1.22 3% 1.16 1.17 -1% 178 163 9% H2 1.26 1.19 6% 1.16 1.14 2% 186 163 14% FY 1.26 1.21 4% 1.16 1.16 0% 182 163 12% DR. MARTENS PLC FY24 RESULTS 37
Slide 38: Cautionary Statement
CAUTIONARY STATEMENT Cautionary statement relating to forward-looking statements Announcements, presentations to investors, or other documents or reports filed with or furnished to the London Stock Exchange (LSE) and any other written information released, or oral statements made, to the public in t
Slide 39: drmartensplc.com
drmartensplc.com Dr. Martens plc drmartensofficial