Dr. Martens Plc · LSE:DOCS
Dr. Martens — Investor Day (July 2022)
60 slides from Dr. Martens's investor day presentation, Jul 6, 2022
Slide 1: Spotlight on Conversion Markets
SPOTLIGHT ON CONVERSION MARKETS 6TH JULY 2022
Slide 2: Agenda
2 AGENDA INTRODUCTION – KENNY WILSON, CEO FINANCIAL RECAP – JON MORTIMORE, CFO CONVERSION MARKET STRATEGY – LORENZO MORETTI, EMEA PRESIDENT KENNY WILSON OWN RETAIL EXPANSION – NATALIE SCHNEIDER, EMEA RETAIL DIRECTOR CEO WHOLESALE STRATEGY – MIKE STOPFORTH, EMEA SALES DIRECTOR ITALY EXPERIENCE SO FAR
Slide 3: Who you'll be hearing from today
WHO YOU’LL BE HEARING FROM TODAY Kenny Wilson, CEO Jon Mortimore, CFO Lorenzo Moretti, EMEA President Mike Stopforth, EMEA Sales Director Nathalie Schneider, EMEA Retail Director Giorgio Trevisan, Italy Sales Manager 3
Slide 4: Custodian mindset drives conversion decision
CUSTODIAN MINDSET DRIVES CONVERSION DECISION 4
Slide 5: EMEA and Americas are key growth drivers medium term
EMEA AND AMERICAS ARE KEY GROWTH DRIVERS MEDIUM TERM EMEA AMERICAS APAC CONVERSION MARKETS SIGNIFICANT STRONG BRAND HEALTH PRIMARY GROWTH OPPORTUNITY TO DRIVE IN JAPAN WITH ACCELERATOR DTC FURTHER, SIGNIFICANT UNDERPINNED BY OPPORTUNITY: E.G. UK GROWING IN LINE STRONG WHOLESALE FRANCHISE STORE WITH
Slide 6: Introduction to a conversion
INTRODUCTION TO A CONVERSION IMMEDIATE CONVERSION PRE CONVERSION: PRIORITIES: OCCURS AT END TRADE RECRUIT TEAM OF DISTRIBUTOR ECOMMERCE AND AND RESET CONTRACT CAN OPEN STORES WHOLESALE BASE 6
Slide 7: Why convert a market?
WHY CONVERT A MARKET? CONTROL AND VAST UNTAPPED DRIVE INVEST IN THE GROWTH PROFITABILITY BRAND OPPORTUNITY 7
Slide 8: Conversion unlocks ability to implement DOCS strategy
CONVERSION UNLOCKS ABILITY TO IMPLEMENT DOCS STRATEGY OUR GOAL IS TO HAVE THE WORLD WEAR DMs WHEN THEY HAVE THEIR MOMENT OF REBELLIOUS SELF-EXPRESSION GOALS OUR DOCS STRATEGY IS ABOUT SELLING MORE PAIRS OF BOOTS, SHOES AND SANDALS, TO MORE CONSUMERS, THROUGH OUR OWN CHANNELS, IN OUR 7 PRIORITY MARKE
Slide 9: Where we are on the journey
WHERE WE ARE ON THE JOURNEY 2019 2020 2021 REMAINING DISTRIBUTORS Contracts expire 2022 – 2025 Australia Greece, Cyprus, Romania June 2021 Indonesia May 2020 Israel Italy Sweden, Malaysia converted Denmark June 2019 Poland and Eastern Europe and Germany Norway Singapore and Philippines converted con
Slide 10: Dr. Martens has vast untapped opportunity for growth
DR. MARTENS HAS VAST UNTAPPED OPPORTUNITY FOR GROWTH Pairs/Capita (‘000s) FY20 FY22 31 32 • FY22 pairs/capita (‘000s) — Iberia 2 — Nordics 5 17 15 12 8 7 7 7 5 4 4 4 4 <1 <1 UK USA Germany Italy France Japan China (Converted FY18) (Converted FY22) (Franchise store transfer FY23) 10
Slide 11: Transforming brand presentation post conversion
TRANSFORMING BRAND PRESENTATION POST CONVERSION GÖRTZ BEFORE AFTER KADEWE 11
Slide 12: Jon Mortimore, CFO: Recap on financials
12 JON MORTIMORE CFO RECAP ON FINANCIALS
Slide 13: DTC significantly more profitable than wholesale
DTC SIGNIFICANTLY MORE PROFITABLE THAN WHOLESALE 1460 Net Revenue Per Pair By Channel (UK) DTC Wholesale Distributor UK Retail Price £149 n.a. n.a. Net Revenue c.£124 c.£50 c.£40 DTC DRIVES 2.5x REVENUE & 4x GROSS PROFIT 13
Slide 14: Conversion markets an increasing part of EMEA revenue
CONVERSION MARKETS AN INCREASING PART OF EMEA REVENUE % of EMEA revenue generated by conversion markets Italy: 62% revenue growth Iberia: 38% revenue growth Germany: 25% revenue growth 37% Germany: 56% revenue growth Germany: 88% 26% revenue growth 16% FY20 FY21 FY22 New stores in conversion 5 8 3,
Slide 15: New stores driven by conversion markets
NEW STORES DRIVEN BY CONVERSION MARKETS 14 13 12 10 9 62% 8 8 38% 56% 6 5 4 60% 2 0 FY19 FY20 FY21 FY22 Other EMEA stores Germany stores Italy stores Spain stores 15 Percentage figures are proportion of EMEA new stores from conversion markets
Slide 16: Low capital, high returning activity
LOW CAPITAL, HIGH RETURNING ACTIVITY IMMATERIAL CAPITAL STRONG RETURNS OF CAPTURE IN-MARKET OUTLAY RETAIL EXPANSION MARGIN FOR OPEX NEEDS No transaction cost At least 25% 4-wall ROS Overindex group Purchase of inventory at Leases with 5yr break marketing as % sales cost price Capex per store c.£0.5m
Slide 17: Multi-year growth opportunity
MULTI-YEAR GROWTH OPPORTUNITY • Company DTC mix of 49% • 60% milestone FY22 DTC Mix • Italy at 22% and Germany at 50% 49% 33% • Germany held back by Covid- 19 restrictions 40% • Implementation of our DOCS 33% strategy will improve DTC mix and grow profitability 30% 22% 20% 10% DTC DRIVES 0% 2.5x REV
Slide 18: Conversion markets: significant growth driver
CONVERSION MARKETS: SIGNIFICANT GROWTH DRIVER DTC PROFITABILITY MULTI-YEAR DTC MIX UPSIDE 4x OPPORTUNITY 18
Slide 19: Lorenzo Moretti: Conversion market strategy
19 LORENZO MORETTI EMEA PRESIDENT CONVERSION MARKET STRATEGY
Slide 20: EMEA leadership team
EMEA LEADERSHIP TEAM LORENZO MORETTI, EMEA MATT HILL, EMEA FINANCE MIKE STOPFORTH, EMEA NATHALIE SCHNEIDER, EMEA LYNN RITSON, EMEA DIGITAL MANU MEIJER, EMEA HEAD PRESIDENT DIRECTOR SALES DIRECTOR RETAIL DIRECTOR DIRECTOR OF MARKETING GILL REYNOLDS, EMEA TOM MALONE, EMEA HEAD HENRY SANDBACH, EMEA CLA
Slide 21: Key components of a conversion
KEY COMPONENTS OF A CONVERSION INVESTMENT IN THE BRAND WITH CUSTODIAN MINDSET DEDICATED ECOMMERCE WHOLESALE IN-MARKET COMBINED WITH RESET TEAMS RETAIL ROLLOUT 21
Slide 22: Revenue growth building blocks
REVENUE GROWTH BUILDING BLOCKS RESET WHOLESALE Clean up account base and CAPTURE THE grow from brand enhancing DISTRIBUTOR MARGIN position Immediate start in year 1 of Steady medium-term growth conversion VIRTUOUS CYCLE UNDERPINNED GROW ECOMMERCE BY ONGOING OWN RETAIL ROLLOUT INVESTMENT IN Digital-f
Slide 23: Tried and tested approach: learnings from Germany
TRIED AND TESTED APPROACH THE IMPORTANCE LEARNINGS OF HAVING A LOW EXECUTION FROM GERMANY GREAT IN- RISK CONVERSION MARKET TEAM 23
Slide 24: Product diversification: all categories grow
PRODUCT DIVERSIFICATION: ALL CATEGORIES GROW Germany Revenue by product mix • All categories have grown in 11% 10% 7% 13% absolute terms 18% 23% 30% • Reduced reliance on 32% relatively few lines • UK FY22: - Originals 49% 71% 67% 63% 55% - Fusion 31% FY19 FY20 FY21 FY22 Originals Fusion Other 24
Slide 25: Increased brand marketing
INCREASED BRAND MARKETING … ‘TOUGH AS YOU’ – LAUNCH MOMENT LEADING WITH DIGITAL VIDEO SOCIAL MEDIA PRODUCT CAMPAIGNS DIGITAL CUBE IN BERLIN HANNOVER STORE 25
Slide 26: Grows brand awareness and familiarity
… WHICH GROWS BRAND AWARENESS AND FAMILARITY GERMANY GLOBAL AVERAGE Q4 2021 Q4 2022 CHANGE Q4 2022 Brand awareness 56% 66% +10ppts 72% Brand familiarity 26% 36% +10ppts 47% Last 24m purchased 5% 8% +3ppts 8% 26
Slide 27: Munich: marketing combined with store openings
MUNICH: MARKETING COMBINED WITH STORE OPENINGS … STORES 360 APPROACH 27
Slide 28: Leading to improved brand metrics
… LEADING TO IMPROVED BRAND METRICS BRAND AWARENESS BRAND FAMILIARITY Overindex Overindex +17PPTS by 7ppts by 6ppts +16PPTS +10PPTS +10PPTS Germany Bavaria Germany Bavaria 28
Slide 29: Ecommerce boosted by store openings
ECOMMERCE BOOSTED BY STORE OPENINGS Ecommerce web sessions Rome store opens Milan store opens FY21 - Q1 FY21 - Q2 FY21 - Q3 FY21 - Q4 FY22 - Q1 FY22 - Q2 FY22 - Q3 FY22 - Q4 29
Slide 30: Tried and tested approach: learnings from Germany
TRIED AND TESTED APPROACH THE IMPORTANCE LEARNINGS FROM OF HAVING A LOW EXECUTION GERMANY GREAT IN-MARKET RISK CONVERSION TEAM 30
Slide 31: Nathalie Schneider: Own retail expansion
31 NATHALIE SCHNEIDER EMEA RETAIL DIRECTOR OWN RETAIL EXPANSION
Slide 32: Rationale for new stores
RATIONALE FOR NEW STORES PROFITABLE DRIVE STRONG BRAND ECOMMERCE FINANCIAL BEACONS TRAFFIC RETURNS 32
Slide 33: Prioritisation approach to store rollouts
PRIORITISATION APPROACH TO STORE ROLLOUTS CURRENT GERMAN STORE ESTATE TIERED APPROACH Frankfurt Stuttgart Berlin (2) Leipzig BASED ON: TIER 1 - Cologne Dortmund TARGET FIRST Dusseldorf SPEND/POPULATION DATA Hamburg Munich (2) ECOMMERCE DEMAND PRESENCE OF OTHER Bonn LEADING BRANDS TIER 2 - Nuremberg
Slide 34: In-store teams are our true brand ambassadors
IN-STORE TEAMS ARE OUR TRUE BRAND AMBASSADORS OUR BRAND EXPERIENCES CAPABILITIES Inspiring consumers through Engaging customers throughout Our retail teams, training product discovery and strong their time in store programmes and selling storytelling tools 34
Slide 35: A few of our leading stores
A FEW OF OUR LEADING STORES HAMBURG MUNICH BARCELONA 35
Slide 36: Rationale for new stores
RATIONALE FOR NEW STORES PROFITABLE DRIVE STRONG BRAND ECOMMERCE FINANCIAL BEACONS TRAFFIC RETURNS 36
Slide 37: Mike Stopforth: Wholesale strategy
37 MIKE STOPFORTH EMEA SALES DIRECTOR WHOLESALE STRATEGY
Slide 38: Transforming the wholesale account base
TRANSFORMING THE WHOLESALE ACCOUNT BASE DISTRIBUTOR APPROACH DIRECTLY RUN MINIMAL BRAND INVESTMENT ELEVATED BRAND PRESENTATION TOP SELLERS ONLY, NARROW EXPANDED AND MANAGED PRODUCT PRODUCT RANGE RANGE WIDE ACCOUNT BASE FEWER BUT BETTER STRATEGIC PARTNERS AT POINT OF CONVERSION No of accounts (k) Ger
Slide 39: Showrooms are a key platform for the brand in market
SHOWROOMS ARE A KEY PLATFORM FOR THE BRAND IN MARKET BARCELONA BERLIN STOCKHOLM DUSSELDORF MILAN 39
Slide 40: Wholesale accounts: segment to grow
WHOLESALE ACCOUNTS: SEGMENT TO GROW GERMANY EXAMPLE ACCOUNT EXAMPLE PRODUCT Contemporary boutiques & concept stores 1461 ATMOS COLLAB Premium trend-led retailers AUDRICK QUAD NEOTERIC 1460 BLACK SMOOTH Multi-brand specialty retailers 40
Slide 41: AMP wholesale experiences
AMP WHOLESALE EXPERIENCES FIRMAMENT BSTN TITOLO LISTENER SOTO 41
Slide 42: Ignite wholesale experiences
IGNITE WHOLESALE EXPERIENCES LUDWIG BECK OBERPOLLINGER KADEWE BREUNINGER 42
Slide 43: Yellow Stitch wholesale experiences
YELLOW STITCH WHOLESALE EXPERIENCES SIDESTEP TRETTER PEEK AND CLOPPENBURG ABOUT YOU GORTZ 43
Slide 44: A converted market wholesale base
A CONVERTED MARKET WHOLESALE BASE ELEVATED BRAND PRESENTATION EXPANDED AND MANAGED PRODUCT RANGE FEWER BUT BETTER STRATEGIC PARTNERS 44
Slide 45: Lorenzo Moretti: Italy experience so far
45 LORENZO MORETTI EMEA PRESIDENT ITALY EXPERIENCE SO FAR
Slide 46: The Italy journey so far
THE ITALY JOURNEY SO FAR FY22 H2 revenue growth of 122% 2020 2021 2022 Jan Dec Distributor Nov Dec May Country DM’s store contract DM’s DM’s DM’s Manager Rome ends store store store starts 1 Mar 20: First COVID opens Verona Milan Turin Lockdown Apr 1 Oct 1 Jun Sep Jan June First full DM Italy first
Slide 47: The team driving growth
THE TEAM DRIVING GROWTH GIORGIO TREVISAN, ITALY EMMA RAMELLA, RAFFAELLA FALCO, HR LEAD LETIZIA BEGHI, SENIOR ANNALISA DAL ZOTTO, DIGITAL SALES MANAGER MARKETING MANAGER CREDIT CONTROLLER TRADE & VM ASSISTANT DANIEL IZZO, RETAIL MANUEL BISSI, EXPANSION JACOPO MESISCA, KEY FRANCESCO VOLPI, TERRITORY S
Slide 48: Implementing DOCS in Italy
IMPLEMENTING DOCS IN ITALY D O C S ORGANISATIONAL SUPPORT BRAND DIRECT-TO-CONSUMER CONSUMER EXPANSION WITH & OPERATIONAL CONNECTION FIRST B2B EXCELLENCE ACQUIRE NEW WHAT BUILD BRAND EQUITY MANAGE B2B & DRIVE MARGIN ENABLE GROWTH & CONSUMERS & DRIVE HOLISTICALLY & EXPANSION UNLOCK VALUE LOYALTY PURPO
Slide 49: Using localisation to drive ecommerce
D USING LOCALISATION TO DRIVE ECOMMERCE ENHANCING PAYMENT METHODS IMPLEMENTING A/B TESTING DRIVING CONSUMER INSIGHTS Improving our Implementing A/B testing in the Tools such as “email when back in stock” give us payment methods offers us the opportunity Italian strategy allowing us to drive insight
Slide 50: Profitable brand beacons: now at five stores
D PROFITABLE BRAND BEACONS: NOW AT FIVE STORES ROME x2 VERONA TURIN MILAN 50
Slide 51: Our people make us great
O OUR PEOPLE MAKE US GREAT TURIN TEAM VERONA TEAM ROME TEAM ITALY OFFICE TEAM MILAN TEAM 51
Slide 52: The Italian consumer
C THE ITALIAN CONSUMER FOR EVERYONE… …OF ALL AGES 59% 40% 28% 32% 41% MALE FEMALE 16-34 35-44 45-60 Italian consumers skew slightly more female, younger, higher earning and more urban Italian consumers are loyal with a net intent to repurchase of 62% over the next 5-10 years DMs consumers in Italy u
Slide 53: Expanding the product range
C EXPANDING THE PRODUCT RANGE OPTIONS SOLD IN AW20: 290 AW21: 380 AW22: 515 1460 BLACK SMOOTH AW20: 40% AW21: 19% AW22: 11% Product codes to reach 50% AW20: 3 AW21: 7 AW22: 15 Product codes to reach 80% AW20 AW22 AW20: 14 1460 101 Jadon 2976 Sinclair 1461 Other AW21: 34 AW22: 66 53
Slide 54: 'Tough as You' festival
Ya ‘TOUGH AS YOU’ FESTIVAL LIVE. WORKSHOP. TALK. ASCOLTA. FAL. DIFFONDI. / FAME. SETE. AMORE é 8 16-17 OTTOBRE + 1200 ATTENDEES—2 SOLD OUT DAYS + 130 ARTISTS, TECHIES AND STAFF INVOLVED + 29EMERGING MUSIC PROJECTS MENTORED + 55M REACH CIRCOLO MAGNOLIA + 19% of ATTENDEES BETWEEN 15 - 29 y/o 38% MEN,
Slide 55: High existing brand awareness, focus on range
C HIGH EXISTING BRAND AWARENESS, FOCUS ON RANGE ITALY GLOBAL AVERAGE CHANGE SINCE Q4 2022 Q4 2022 CONVERSION Brand awareness 83% +6ppts 72% Brand familiarity 62% +7ppts 47% Last 24m purchased 12% +2ppts 8% Social media impressions include Instagram and Facebook
Slide 56: Transformed wholesale presentation
TRANSFORMED WHOLESALE PRESENTATION S BEFORE AFTER LA RINASCENTE AFTER LA RINASCENTE BEFORE BANANA MOON BARI 56 UN-AUTHORISED
Slide 57: Italy: multi-year growth opportunity
ITALY: MULTI-YEAR GROWTH OPPORTUNITY BEGAN EARLY CONFIDENTLY CUT WHOLESALE ACCOUNTS IMPLEMENTED ‘ITALY DOCS’ EXCELLENT START CONFIDENCE IN FUTURE 57
Slide 58: Kenny Wilson, CEO: Wrap up
58 KENNY WILSON CEO WRAP UP
Slide 59: Controlling the brand and driving multi-year growth
CONTROLLING THE BRAND AND DRIVING MULTI-YEAR GROWTH CONTROL AND VAST UNTAPPED DRIVE INVEST IN THE GROWTH PROFITABILITY BRAND OPPORTUNITY 59
Slide 60: Any questions?
“ANY QUESTIONS? igi