Dr. Martens Says Recovery in the U.S. Could Take Longer Than Expected Due to Wholesale Challenges

Dr. Martens said a difficult consumer environment in the U.S. could mean a longer road to improved results in the challenged region.

The British footwear company in a Thursday regulatory filing announced some financial results for the first six months of the year. CEO Kenny Wilson said in a statement that sales in the U.S. have been challenged due to “weakness in wholesale” amid an “increasingly difficult consumer environment.”

“We have strengthened the Americas leadership team and they are taking action, including refocusing marketing and improving our e-commerce trading capabilities,” Wilson said. “It is likely, however, that given the challenging backdrop it will take longer to see an improvement in USA results than initially anticipated.”

More recently, the company said there have been some positives signs in DTC sales in the region over Black Friday. However, the brand said its U.S. wholesale business is overall challenged by “widespread macro-economic caution amongst our wholesale customers resulting in a weaker order book than in prior years.”

“Wholesale customers have low in-market inventory levels of our products and therefore we can expect them to re-order, however the timing and level of these re-orders are unpredictable, reducing visibility in our wholesale business,” the company said.

In July, Dr. Martens said focusing on performance in the Americas would be a “No. 1 priority” for fiscal year 2024 after revenues in this region dropped compared to the prior year, due to wholesale challenges.

Even with the current challenges in the U.S. market, the brand said it is still confident in its ability to continue to grow.

For the first half of the year, Dr. Martens’ overall revenue was down five percent, which was largely driven by a slowdown in the U.S. wholesale market. DTC revenue was up nine percent, retail revenue was up 15 percent and e-commerce revenue was up 3 percent. Wholesale revenue was impacted by the slowdown in the U.S. as well as “strategic decisions to reduce volumes into EMEA e-tailers and exit of the China distributor,” the company said.

EMEA revenue was up nine percent and America revenue was down 18 percent.

Looking ahead, Dr. Martens said warmer weather across its regions impacted sales in the second half of the year during the fall, but sales in EMEA and APAC have improved in recent weeks. The company expects full-year revenue to decline in the high single-digit percentage year-over-year. The company also withdrew its prior guidance of high single-digit revenue growth in fiscal year 2025, though it said its medium term expectations are still in place, “underpinned by the significant white-space growth opportunity and our iconic brand and product range.”

Dr. Martens earlier this month appointed Ije Nwokorie, a non-executive director of the company, to the newly created role of chief brand officer and also appointed Giles Wilson as CFO.