Dr Martens : FY24 Annual Report

MADE STRONG

DR. MARTENS PLC

ANNUAL REPORT 2024

MADE STRONG

SINCE 1960.

Reflecting on a year of challenges, we stand firm in our belief that our fundamentals remain strong. Despite macroeconomic shifts, our commitment to building on our brand has remained unwavering.

As we look forward to the year ahead, we will focus on

relentless product innovation, compelling product marketing and expanding brand engagement across our key markets. Alongside this we will be laser-focused on cost efficiency and driving savings where possible.

STRATEGIC REPORT

Highlights	1
A strong sense of purpose	2
At a glance	4
Chair's Statement	6
CEO's Statement	10
Market review	14
Our business model	16
Stakeholder engagement and
Section 172 Statement	18
Our strategy	22
Our strategy in action	24
Key performance indicators	30
Finance Review	32
Risk management and our principal risks	38
Viability assessment and going concern	44
Sustainability	46
Our TCFD disclosures	75
Non-financial and sustainability
information Statement	84

GOVERNANCE

Chair's introduction to governance	86
Governance at a glance	90
Board of Directors	92
Governance Report	96
Global Leadership Team	100
Our stakeholders	101
Our culture	106
Nomination Committee Report	108
Remuneration Committee Report	116
Remuneration Report	119
Audit and Risk Committee Report	134
Directors' Report	144

FINANCIAL STATEMENTS

Independent Auditors' Report	150
Consolidated Statement of Profit or Loss	160
Consolidated Statement of
Comprehensive Income	161
Consolidated Balance Sheet	162
Consolidated Statement of Changes in Equity	163
Consolidated Statement of Cash Flows	164
Notes to the Consolidated
Financial Statements	165
Parent Company Balance Sheet	208
Parent Company Statement
of Changes in Equity	209
Notes to the Parent Company
Financial Statements	210

ADDITIONAL INFORMATION

Five-year financial summary (unaudited)	217
First half/second half analysis (unaudited)	219
Glossary and Alternative
Performance Measures (APMs)	220
Shareholder information	222
Company information	IBC

drmartensplc.com

Dr. Martens plc

drmartensofficial

STRATEGIC REPORT

HIGHLIGHTS

FINANCIAL HIGHLIGHTS

Pairs m	Revenue £m
11.5M	£877.1M
2023: 13.8m	Constant currency: £904.7m
	2023: £1,000.3m
EBITDA1 £m	PBT £m
£197.5M	£93.0M
Constant currency: £205.7m	2023: £159.4m
2023: £245.0m

1. EBITDA - Earnings before exchange gains/losses, finance income/expense, income tax, depreciation and amortisation.

OPERATIONAL HIGHLIGHTS

Direct-to-consumer (DTC) revenue up 2%

£533.1M

Launched new brand platform

MADE

STRONG

SUSTAINABILITY HIGHLIGHTS

Planet

Sourced

93.5%

of the electricity for our EMEA and UK operations from renewable sources

Product

Launch of our authorised

REPAIR

service in the UK

TRANSFORMATION

OF OUR NORTH AMERICAN DISTRIBUTION CENTRE NETWORK

Wholesale revenues down

28%

Product

Launch of our

RESALE

platform in the USA

People

100%

of our Tier 1 and Key Tier 2 suppliers CSR audited met our high standards1

1. Audit results above 75% scoring for Tier 1, and above 70% for Key Tier 2, in line with Intertek Workplace Conditions Assessment scoring methodology.

DR. MARTENS PLCANNUAL REPORT 2024

1

A STRONG SENSE OF PURPOSE

WHAT WE'RE WORKING TOWARDS

What we stand for

Our purpose is to empower Rebellious Self Expression.

Our responsibility is to act as brand custodians. Our aim is to deliver long-term value for the business.

This is where Dr. Martens is heading. This is what we're working towards together.

What we do

The business is focused on executing its tried and tested DOCS strategy:

DIRECT-TO-CUSTOMER FIRST

We aim to build brand equity and drive margin expansion.

ORGANISATIONAL AND OPERATIONAL EXCELLENCE

We are investing in and improving our organisation, operations and IT to enable growth and unlock value.

CONSUMER CONNECTION

We are focused on acquiring new consumers and driving loyalty.

SUPPORT BRAND EXPANSION WITH B2B

We aim to manage B2B, which is made up of wholesale and distributors, holistically and purposefully to support our brand.

	AT A GLANCE P 4	OUR STRATEGY P 2 2
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STRATEGIC REPORT

Who we work for

Dr. Martens is focused on delivering sustainable and profitable growth to drive long-term value for the brand and its shareholders:

ENVIRONMENT &	OWNERS
COMMUNITIES

SUPPLIERS

OUR PEOPLE

PARTNERS CONSUMERS

  STAKEHOLDER ENGAGEMENT P 1 8

Why we do it	TOGETHER
There are three core values at the heart of
Rebellious Self Expression. They never
stand alone, but work together to support
what Rebellious Self Expression is for
Dr. Martens. Our values are:
BE YOURSELF
We want our people to do what they are
brilliant at. Being themselves is their
superpower and it's the value they bring
to work every day.
ACT COURAGEOUSLY

We want our people to try new things, let others see our successes and mistakes, so we can all learn.

SHOW YOU CARE

Our people should think like an owner to advance the brand first and collaborate across functions and regions.

SUSTAINABILITY P 4 6
DR. MARTENS PLCANNUAL REPORT 2024	3

AT A GLANCE

A GLOBAL

OUR UNIQUE DNA

Our product range is centred on our originals and made up of two groups, main-line and AMP.

MAIN-LINE

OriginalsFusionCasual

40% 36% 11%

AMP

Collabs Archive & Made In England	14XX
5%	<1%

Kids (4%)

Accessories (4%)

INVESTMENT CASE: OUR UNIQUE PROPOSITION

We believe that our competitive strengths are what set us apart and position us to succeed in a rapidly changing world.

ICONIC, GLOBAL BRAND

The unique DNA of the 1460 boot is preserved across all our products, sitting at the core of our product strategy.

BRAND-FIRSTDTC-LED STRATEGY

Our DOCS strategy is about selling to more people, through our own direct-to-consumer (DTC) channel.

SIGNIFICANT MARKET OPPORTUNITY

We are a global brand with a focus on seven priority markets

• UK, USA, Japan, Germany, Italy, France and China.

74%	15%	85%
brand awareness	average annual DTC revenue	of revenues from
	growth since FY20	priority markets

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STRATEGIC REPORT

BRAND ICON

OUR MARKETS

Our DOCS strategy is about selling more pairs of boots, shoes and sandals, to more people, through our own DTC, in our seven priority markets.

EMEA		AMERICAS

APAC

£431.8M £325.8M £119.5M

revenue	revenue	revenue
2023: £443.0m	2023: £428.2m	2023: £129.1m

Owned and operated		Owned and operated		Owned and operated
Distributors				Distributors
OWN	102	OWN	61	OWN	76
STORES	2023: 88	STORES	2023: 54	STORES	2023: 62
THIRD-PARTY	-	THIRD-PARTY	4	THIRD-PARTY	70
STORES	2023: 3	STORES	2023: 4	STORES	2023: 112
DTC MIX	+8%pts	DTC MIX	+8%pts	DTC MIX	+10%pts
	2023: +4%pts		2023: +1%pts		2023: +4%pts

  SEE MORE ONLINE

D R M A RT E N S P LC . C O M / I N V E S T O R S / I N V E S T M E N T - C A S E

APPEALING TO A BROAD	ROBUST FINANCIALS
CONSUMER BASE	The business generates a
A balanced demographic mix	strong gross margin and is
of consumers across all metrics,	highly cash generative.
including gender, age, income
level and geography.

CUSTODIANSHIP CULTURE

Dr. Martens culture has 'custodianship' at its core and we are committed to standing by our belief in leaving things better than we found them for the next generation.

43/561%	7%	FY40
male/female split	average annual revenue	Net-Zero target by FY40
	growth since FY20

1. The remaining 1% are those that don't identify as male or female.

DR. MARTENS PLCANNUAL REPORT 2024

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CHAIR'S STATEMENT

In last year's Annual Report I shared my disappointment that, whilst we'd reached £1bn of revenue, growth had been below expectations and we'd made execution mistakes which had impacted our performance.

FY24 has been another disappointing year, with a challenging consumer environment in the USA, particularly in our core boots category, combined with our brand implementation in this market not being as strong as it should have been.

At a Group level, revenue declined by 9.8% (constant currency basis) to £877.1m. Within these results there is a mixed picture regionally, with EMEA and APAC revenues broadly flat, but Americas seeing a significant step down. EBITDA of £197.5m compared with £245.0m last year. Profit was further impacted by increased depreciation and amortisation charges as a result of our ongoing investment programmes, together with significantly higher net interest charges.

The weakness in the Americas performance is in part due to the wholesale- reliant nature of this business, which has meant that widespread caution from wholesale customers has had a significant impact. I'd contrast this with our Japanese business, where DTC accounts for the significant majority of our revenue and we had a much stronger performance. As we look to FY25 and beyond, we must ensure that we build back in a more resilient and sustainable way, with the right balance

of wholesale partners and a DTC-first approach, to reduce the impact of future wholesale cycles.

DOING THE RIGHT THING

PAUL MASON, CHAIR

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STRATEGIC REPORT

Oxford Street store

As our guidance indicates, we face a tough outlook for FY25, with our USA wholesale customers not expected to fully restock this year, and inflation coming through in our operating cost base, without the usual benefit of price increases to offset at least some of this cost. This backdrop also means that there is more uncertainty around our full year outturn than is usually the case. I can assure our investors that we will look to deliver cost savings and efficiencies wherever possible, whilst protecting the brand and our future growth prospects.

We still remain very confident in the headroom for our brand in the medium to long term, and we will take a step change in our brand communications to ensure our marketing is focused on our product offering, which will be an important part of reigniting boots demand, particularly in the USA.

Governance

A few weeks ago we welcomed our new CFO, Giles Wilson, following the retirement of Jon Mortimore in March. Giles brings with him a wealth of experience, having been both CFO and CEO at John Menzies plc, and he joined us from William Grant & Sons Limited, one of the largest global spirits companies. He is an operationally focused CFO and his time in the branded spirits industry has given him good grounding in global brands. I am excited about the experience and capability he will bring to the top team.

In late 2023 we also announced that Ije Nwokorie, a Non-Executive for almost three years, would be stepping down from the Board to join the business full time as Chief Brand Officer (CBO) in February 2024. This newly created role encompasses Product, Marketing and Strategy, responsible for setting the overall brand strategy, vision and future direction. Ije is a brand visionary and experienced business leader and joined us from Apple Inc., where he was a Senior Director in Apple Retail since 2018. Prior to this Ije spent 11 years at global brand consultancy Wolff Olins, latterly as CEO.

This was another disappointing year for our business in a challenging external environment. Against this backdrop, our brand remains strong and I remain exceptionally proud of the passion and dedication of our people.

PAUL MASON

Non-Executive Chair

DR. MARTENS PLCANNUAL REPORT 2024

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CHAIR'S STATEMENT CONTINUED

WELCOME

GILES WILSON

CHIEF FINANCIAL OFFICER

We're thrilled to welcome Giles, whose extensive experience across sectors, most recently in the branded spirits industry, together with his knowledge of the public markets, will be a valuable asset to the Board.

PAUL MASON

Non-Executive Chair

  FINANCE REVIEW P 3 2

Can you tell us a little about your background?

Having qualified as a chartered accountant with PwC, I spent the early part of my career in finance roles for Gallaher Group Plc and Commercial Estates Group Limited. I then joined John Menzies plc in 2011, where I spent almost a decade, including as a main Board Director initially as CFO for four years and then subsequently became CEO.

During my time there, we dealt with a variety of business challenges, including the full Board-led strategic review of the Group, leading to raising equity via a rights issue to fund a transformational acquisition for the Aviation business, to become one of the largest global aviation services businesses

in the world; the decision and execution of the divestment of the Newspaper Distribution business to become a pure play aviation business; and finally leading the business through initial phases of Covid lockdown and securing the long-term funding through this unprecedented time. Latterly, before joining Dr. Martens, I was the CFO of William Grant & Sons Limited for four years, one of the world's largest family owned branded spirits business, owners of globally renowned brands Glenfiddich, The Balvenie and Hendricks Gin.

What attracted you to the role at Dr. Martens?

I've learnt through my career that working for great brands always gives you an advantage, and the opportunity that high-margin branded products offer. Looking at Dr. Martens,

I see an incredibly well-loved, durable brand, with strong gross margins and cash generation.

I was also attracted by how underpenetrated the brand still is in major markets globally, such as the USA and Japan.

I have enjoyed meeting people from the business and the unique culture, where people can authentically be themselves and thrive, resonated with me. Finally, I felt that my experience, particularly as a PLC CFO, would add value to the business.

What are your first priorities as you settle into the role? We know we have disappointed investors, missing our guidance several times and impacting the level of trust the market has in us. Whilst some of the reasons for this are external forces outside of our control, we need to do a better job communicating with our external stakeholders and laying out the financial metrics we're focused on delivering this year. You can read more about this in my Finance Review on page 32.

I'll also be spending time understanding the cost base and investment plans of the business, to ensure we're managing costs tightly without impacting our future growth potential.

More generally, I'm looking forward to getting to know the business, including meeting our people globally, our supplier base and our wholesale partners.

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