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Vegan Boots, DTC Growth Behind Dr. Martens Revival

On the heels of a 70 percent increase in profit and a 30 percent increase in revenue during the fiscal year ended in March, Dr. Martens and its parent company, Permira, are crediting its new “vegan” boot line and a growing emphasis on DTC sales for the brand’s renewed success.

The iconic British boot-maker, famous for its nearly-unassailable spot at the top of every punk rock wardrobe wishlist, has a way of moving in and out of the spotlight as trends and times change. At several points during the brand’s 72 years of existence, the classic Dr. Martens style has been the “it” boot for a variety of alternative and mainstream groups.

With the rise in consumer interest concerning vegan products, especially footwear, the brand has captured the fancy of consumers once again thanks to its growing line of animal product-free boots.

In an interview with U.K. publisher, The Guardian, Dr. Martens CEO Kenny Wilson said sales for the brand’s vegan range of boots had increased by “multiple hundreds of percent” since its launch. According to the publication, the line now makes up around 4 percent of Dr. Martens total sales. Additionally, because the cost of sourcing the polyurethane plastic used to replace the leather in the collection’s uppers is lower, margins on these products can be higher.

Thanks to this and its growing reliance on DTC distribution, margins at Dr. Martens improved by 3.9 percent to 57.3 percent during the fiscal year. Along with a better product mix, Dr. Martens said it started investing in “supply chain efficiencies” during the year that led to the improvement in margins and, ultimately, profit growth.

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However, direct-to-consumer revenue also played a large part in making 2018 a year to remember for Dr. Martens. According to its financial report, DTC revenue jumped by 42 percent to 199.4 million pounds ($240.43 million) for the brand in FY18, and now makes up roughly 44 percent of the 454.4 million pounds ($547.91 million) in sales the company earned during the year. Interestingly, most of this growth was spurred by its focus on “sustainable global retail growth,” a philosophy that led the brand to open 20 new stores during the year in key locations across Europe, the U.S. and Asia.

The e-commerce portion of that revenue stream was no slouch in 2018, either. Digital sales growth improved by 67 percent for a total of 72.7 million pounds ($87.66 million). This was a result of a number of what Dr. Martens called “clear strategic moves” that saw its e-commerce business reformed and re-platformed in both the Americas and EMEA along with opening up its products for full-year trading on China’s Tmall platform.

All of this adds up to a tempting opportunity for Permira, which purchased the Dr. Martens brand nearly six years ago. According to The Guardian’s report, Wilson believes the private equity firm is starting to look ahead for its chance to sell the business and rake in the profits on its 300 million pound ($361.73 million) acquisition.