The symbolic moment when bootmaker Dr Martens reached £1 billion in revenue for the first time was marred by what its boss had to admit were “mistakes” in the US.
The business said on Thursday that it had managed to only just squeak into the billion-pound league with a margin of about £300,000 as revenue rose 10%.
But profits fell, significantly, down 26% to £159.4 million before tax, the business said. Shares fell by 13% as markets opened.
This was in no small part due to the company’s bungled move of its main distribution centre on the US west coast from Portland to Los Angeles.
A series of issues came together to create serious bottlenecks at the warehouse, meaning that Dr Martens has struggled to get shoes to its wholesale customers.
The problems arose as it moved stock to the new third-party site in LA faster than planned, and it also allowed some US wholesalers to use the site, helping to overload it.
“In America, against the backdrop of a challenging consumer environment, we made operational mistakes, such as the move to our LA Distribution Centre, and how we executed our marketing campaigns and ecommerce trading,” said chief executive Kenny Wilson.
Unfavourable weather in its America region also weighed on the shoe seller. It also admitted to making mistakes in its marketing campaign.
The marketing was too heavily focused on shoes and sandals, which grew well, but not enough on boots. Boot revenue in America dropped as a result.
Dr Martens also said that, in hindsight, it had ordered too much stock for America.
But it reassured shareholders that while it might take longer to shift this stock, the excess is largely made up of black boots and shoes – the classics that it can sell later without having to put them on sale.
As the business beat the £1 billion mark for the first time, it also managed to start making more than half of its sales directly to customers, cutting out the middle man.
Direct to consumer sales increased from 49% to 52%, the business said on Thursday.
“We achieved annual revenue of £1 billion for the first time, up 10% and up 4% in constant currency,” Mr Wilson said.
“Reaching this milestone is testament to the strength of our brand, our long-standing … strategy and the hard work and dedication of our fantastic people globally.
“Direct to consumer is now more than half our revenue and the Dr Martens brand remains strong with all key metrics either ahead of, or in line with, last year.”