Hi there. Good morning in the room and good morning if you are watching on screen. I'm Kenny Wilson, the CEO of Dr. Martens, and I would like to welcome you to our H1 results review. I'll be joined today as usual by Jon Mortimore, our CFO, and we also have other representatives of our global leadership team in the room here today. We've got Geert Peeters, our Chief Operating Officer, and Emily Reichwald, our Chief Legal Counsel. We've also got Bethany Barnes, our Head of IR. If we don't cover off all of the questions in the room today, then please feel free to contact Bethany afterwards.
In terms of what we're gonna cover today, I'm gonna give a short introduction to the H1 of the year, then Jon is gonna pick up and he's gonna walk us through our financials, and then I'll come back and do a H1 strategic review of the business. If we stand right back from the H1 , Dr. Martens has had a very strong H1 to its financial year. We continue to deliver against our DOCS strategy, and this is really focused on building brand equity for the long term. Our revenue was up 24% on a constant currency basis, and this was driven by very strong performance in our direct-to-consumer business. That is drmartens.com and our Dr. Martens stores. We saw continued growth in digital and stores reopened throughout the half. We saw strengthening of performance.
What that meant overall was that our direct-to-consumer mix is actually up by six points to 40% of overall revenues, and this is exactly in line with our strategy. Conversion markets are also a very important part of our DOCS' approach. We successfully converted both Italy and Iberia in the H1 of the year. As Jon will show, we don't really get the full benefit of this in the H1 , but we will get the benefit on a full year basis, and also probably even more importantly, the true benefit comes with the multi-year effect of our conversion strategy. We're seeing that with the German market, which we converted a number of years ago.
Overall, if we look at our H1 performance and the trading that we've seen since the period end, this means that we are confident in achieving market expectations for the full year, despite all of the uncertainty that we see globally. I make no apologies for showing this slide. I do it in every presentation I make, and that's because the custodian mindset is absolutely how we run Dr. Martens on a day-to-day basis. We always focus on brand value, and we always focus on the long term. We never take shortcuts in this business. I could give you hundreds of examples of how we've used the custodian mindset to guide the business in the H1 , but I'm just gonna give a few. In the H1 , we accelerated payment to our key suppliers as they were impacted by COVID-19.
When their workforce was sent home, we wanted to ensure that they could be looked after. We increased the marketing investment behind the Dr. Martens brand. We continued to open stores in the pandemic and invest in our long-term distribution network to control the brand and the business. Finally, we continued to invest in brand protection to look after the intellectual property of the business. Before I hand over to Jon, I just wanted to remind you all of our DOCS strategy. This is what we operate against, and this is the guiding light of the Dr. Martens brand. I'll cover off our progress against DOCS in more detail in our strategic review, but just a couple of comments. On D, direct consumer acceleration, we grew DTC by six points. In terms of operational excellence, our supply chain coped.
It was agile against significant challenges of COVID-19 in Asia Pacific. On consumer connection, we continued to reach more consumers and sell more pairs. In terms of sustainable global growth, we grew, but always with a long-term approach. Those are the headlines. With that, I'm gonna hand over to my partner in crime, Jon Mortimore, who's gonna walk you through the financials.
Thanks, Kenny, good morning, everyone, and welcome to this hybrid world that we currently live in. Our H1 performance was strong. On a constant currency basis, revenue grew by 24%. It was volume-led, with our own e-com and retail growing faster than wholesale, increasing D2C mix by 6 percentage points to 40%, bang in line with the DOCS strategy. We believe we've managed the global supply chain challenges relatively well to date, with the only material impact being GBP 20 million of wholesale shipments delayed from Q2 into the H2 . Cash generation was strong, and we'll be paying our first dividend in February. Finally, we are confident in achieving market expectations and consensus for the full year with the base assumption of no material country-wide lockdowns.
The H1 performance was in line with our expectations and was broadly influenced by three main factors, global recovery from COVID, positive for demand but negative for supply, exchange headwinds, which if current exchange rates were to broadly remain as they are, will lessen through the H2 , and a return to business as usual trading patterns and activity that had associated increased discretionary spend, for example, travel, training, IT development, and particularly marketing, and was also compounded through the H1 by the annualization of PLC related costs from the H2 of last year. It's worth noting our H2 margins are typically stronger than the H1 due to the seasonality of D2C trading being stronger in H2, with D2C having higher gross margin percentages than wholesale. I'll return to the EBITDA margin story in a little bit.
Given last year was heavily impacted by COVID lockdowns, direct comparison is not on its own a good indicator of underlying performance, and a better indicator is comparison to the six-month period ended 30 September 2019, or as we've called it, last year minus one. E-commerce is more than double last year minus one, and also up 10% compared to last year, which indicates continued strength of performance through this channel, particularly as all stores are pretty much open through the period this year. Retail has steadily improved and was up 2% versus last year minus one and double last year. Wholesale was up 33% compared to last year minus one, and if the 20 million delayed shipments were included in the H1 , wholesale would have been approximately 10 percentage points better than reported.
Our full year margin expectations are unchanged, and we reiterate our medium-term journey to a 30% margin. The H1 margin story has two main elements and then some complicated noise which will mostly annualize or lessen through the H2 . First, as I previously mentioned, the H1 is typically a lower D2C trading period than H2 , such that margins in H2 are typically stronger than H1. For example, in FY 2020, H2 margins were stronger than H1 margins by +4.4 points, and in FY 2021, H2 margins were stronger than H1 by +3.2 points. Secondly, the improved D2C mix compared to last year seen in the H1 of +6.6 points is expected to continue and strengthen a little through the H2 . Finally, the complicated noise as I've called it.
This is all OpEx related and a combination of spending patterns returning to typical business as usual levels post-lockdown last year, as I said, travel, training, IT development, and again, marketing. In addition, we have also the annualization of PLC related costs. While we have experienced some inflationary costs, which are expected to continue through the H2 , the majority of the return to business as usual spending and PLC related costs will lessen and annualize in the H2 . Q2 was stronger than Q1. Good growth from all channels compared to last year minus one. E-commerce was up 94% in Q2 from an exceptionally high +155% in the Q1 . Retail strengthened from -6% to +8% as stores reopened and performance strengthened. Wholesale experienced good improvement, but has remained bumpy in terms of shipments.
Staying with retail, all stores in the U.S. were open for the period, but operated at 75% in-store customer capacity and have only very recently moved back to a more typical 100% capacity. U.K. stores opened through the end of April and are experiencing good recovery, with London lagging non-London stores and the latter having more like for like positive weeks of trading than negative. Continental Europe stores opened through May and June and are following similar recovery patterns to the U.K. experience, though very recently we've seen a little more volatility in Europe due to the worsening COVID situation. In Japan, which is our largest retail market in Asia-Pacific, our stores have recently begun to recover at an improving rate following the lifting of the state of emergency on the first of October.
In all instances, traffic still lags last year minus one, but is following an improving trend, with in-store conversion very strong. Revenue growth followed the DOCS strategy and economic model, mainly volume led, with 77% of the increase from selling more pairs of boots, shoes and sandals, being supported by improved channel mix with D2C up six percentage points to 40%, and I'll return to the margin benefit of this in a second. The other point I want to make is in relation to full price sales. In the period, we returned to pre-COVID more typical proportion of full price sales at around 90% of mix. In the prior year, during the H1 lockdown, in conjunction with our larger wholesale partners, we agreed not to ship certain seasonal styles and manage the clearance of those styles through our own websites.
This was done to support our wholesale partners and also maintain brand control. This was a one-off in the prior year and is not expected to continue. Here we look at the gross margin story. Gross margins improved by 2.7 percentage points to 61.3%. Two main drivers. Firstly, stronger D2C mix drove 2.5 percentage points of improvement in gross margin. If you recall, D2C channels, retail and e-com, have 4x the gross margin of wholesale. Secondly, net COGS, or cost of goods per pair, declined marginally by 0.4 percentage points. Despite higher inflation and a near doubling of freight costs per pair, supply chain efficiencies nearly offset the full extra cost. Note freight costs now represent approximately 4%-5% of COGS per pair.
We expect this pattern seen so far to continue through the Q3 . The seasonally much smaller Q4 representing the beginning of the spring summer 2022 season, having slightly higher inflation cost per pair, part offset by a slowly reducing freight costs and further supply chain savings as we move out of peak. A little bit of history is worth sharing for context. Whilst no one has a crystal ball and can predict exactly what would happen to the world as it came out the other side of lockdown, we knew it would not be linear, would be bumpy, and would be unpredictable. We focused on being flexible, fast to react, staying very close to the coal face, and took decisions quickly. We also understood no one had done this before and therefore it would be prudent to hold higher levels of inventory than old school optimal would suggest.
This inventory was held in our region country DCs, being close to market and able to support speed of decision making and maximize flexibility. This last decision was made easier for us given the high mix of continuity product we sell. In addition, decisions we took a couple of years before COVID to increase the geographic spread of supply across a number of countries in Asia, and also have multiple sources of supply for all key components paid dividends as it gave us some flexibility to move manufacture across the region when some of our factories were forced to close down for a period. As we began to see the supply chain challenges emerge, we quickly prioritized inventory to our own D2C channels in our priority markets.
Finally, the partnership approach and also close relationship we have with our suppliers resulted in a large share of factory floor space and priority allocation of labor as some of our factories returned to work post-lockdown. The result of all this has so far been only material impact and results being a GBP 20 million delay to wholesale shipments from Q2 into the H2 , though beneath the surface our supply chain teams have been working exceptionally hard. As you can see, Americas was the primary driver of H1 growth at +57% constant currency.
EMEA was up 12% constant currency with growth impacted by the timing of store openings through Q1 and early Q2, and also the timing of shipments into new conversion markets as we move from a distributor basis where we tend to ship in the Q1 to a direct control basis where shipments tend to be Q2 and Q3. I anticipate EMEA growth will strengthen through the H2 . Asia Pacific grew 4% constant currency as COVID trading restrictions impacted the larger markets in that region through the half. Standing back, this pattern is what I expect to see across the medium term, our growth driven by our larger Western markets. EMEA had good growth across all channels. In the period, we successfully converted both Italy and Iberia, Spain and Portugal, to a fully owned subsidiary markets.
To underpin success, we have given higher focus to the Italian opportunity with Iberia to follow a slower profile, recognizing we can't do everything at once. A few key facts for Italy. The distributors sold into approximately 1,100 accounts. We've closed 700, opened 100, sell into around about 500 accounts. Similar to Germany, this results in better product placement, merchandising and breadth of assortment. We recently opened our second store in Verona with very encouraging early trading, retail to support e-commerce and showcase the brand and product range. Across the period, as expected, volume declined by 38%. Timing of shipments I've previously explained. More excitingly, revenues were up 10% constant currency. You can see here the economics of in-market margin capture in action.
We are very pleased with both conversions in the period and are confident we are set up to unlock the multi-year growth opportunity and follow a similar growth curve to the Germany experience. Americas has seen very strong growth across all channels. Good e-commerce, very strong retail and good wholesale. Like most other brands, the U.S. has experienced the most challenging supply chain delays, exacerbated by length of delay at port. Here, approximately GBP 15 million of revenue that should have shipped in Q2 will now be shipped in H2. In the U.S., we opened a third DC on a 3PL basis in Los Angeles early in the period to underpin future growth, with particular emphasis on e-com pick-in. In Asia Pacific, Japan is our largest market and is mainly retail lead. During the period, Japan operated under a state of emergency, limiting opening hours and in-store capacity.
This was only lifted at the beginning of October. Since then, retail trading has been steadily recovering and following similar early trends to the U.K. and the U.S. China, which represents approximately 4% of global revenues, was also impacted to a small degree by COVID related trading restrictions, particularly in the malls where our third-party stores are located and also in and around Beijing. We've continued to invest in Asia Pacific region with investments in people, process and systems. Our global ERP solution, which supports both EMEA and Americas, will go live in Hong Kong over the next few weeks with Japan, South Korea and China to follow across the next 12-18 months. Before exceptional items occurred in the prior year, profit before tax was up 37% and earnings per share were up 45%.
In line with our guided progressive dividend policy, which has a payout range of between 25%-35% of earnings, we will pay our first dividend in early February. This has been calculated at the beginning of that range of 25% of half-year earnings. Operating cash generation from EBITDA was good. In line with our supplier partnership approach, we accelerated payments to certain factories who were closed due to COVID to help support their liquidity. If you recall, in the prior year, we did not cancel any purchase orders at a time when a number of companies were canceling their orders. In return, we benefited from a temporary extension of payment terms. Adjusting for these items, cash conversion of EBITDA was 60% in the half.
We have previously guided operating cash conversion of EBITDA at between 65%-75% and remain happy with that full year range. The cash position at 30 September was broadly level with the opening cash position balance sheet of GBP 113 million. This was unusually high and was primarily due to COVID impact on supply chain timing of inbound shipments. Both factory closures and difficulties in matching boots to ships or boots to containers, even. On average, we pay our suppliers on 60-day terms with start date when goods leave port. As a result of delayed leaving dates, the peak payments have been pushed from Q2 into Q3.
This is not expected to continue into next year, and I anticipate the timing of cash swing to return to more typical patterns and guidance of a cash swing of around GBP 100 million from the opening balance sheet to 30 September remains. To be clear, this is an intra-year cash swing with full year guidance of leverage, including IFRS 16 leases of around 1x remaining unchanged. Finally from me, outlook. Current trading is good. E-commerce is in line with H1 trends. Retail in aggregate has strengthened in all of our priority markets. The only exception is Continental Europe, where very recent trading is increasingly volatile due to the varied COVID related restrictions. Wholesale shipments, particularly to the U.S., are seeing a slow and gradual improvement. We are confident in achieving market expectations for our first full year as a listed company.
This is assuming that through the H2 we do not experience material countrywide lockdowns on either demand or supply side for any significant period of time. For FY 2023 and beyond, we reiterate guidance previously given. We have a volume-led strategy. Sell more pairs of boots, shoes and sandals to more people within our own channels in our seven priority markets. The economic model assumes across the medium term price funds inflation. To this end, we will be increasing our prices in EMEA and Americas from autumn/winter 2022 season. Kenny will return to this topic during his presentation. Thank you.
Great. Well, thanks very much, Jon. So what am I gonna cover in our H1 review? First of all, I'm gonna talk about our Docs strategy in some detail. Then I'm gonna talk about our product strategy, which is all about icons and innovation, and the and is really important here because our strategy is to grow our icons globally and then build beyond the icons. We've got many people who haven't bought their first pair of Dr. Martens yet with a lot of white space opportunity. We know that they will access the brand first in icons and then for those people who've already bought into Docs, we'll show you product innovation that will build beyond that.
Thirdly, our approach is digital first and direct to consumer first, so that's where we place our emphasis, but we do wanna support this with high quality wholesale, which builds the brand globally. I'm not gonna walk through all the detail of our DOCS strategy 'cause I know we've shared it with you many times, but this is tried and tested and it's working. It's a very consistent approach now that we've been using for multiple years, and DOCS is working for us in every market where we've implemented it. It's our guiding light, and we work extremely hard to make sure that all of our colleagues across the business really understand DOCS and they also understand how that they contribute to D, O, C or to S.
Jon has talked with you a little bit about supply chain under O, operational excellence, and where I'm gonna focus my time then will be on the D, the C and the S. Firstly, though, before I go into the strategy, I wanna talk about the team which delivers this strategy, our global leadership team. I've always said that the team that gets you from A to B is not the team that then moves you from B to C. However, what we have with our global leadership team is we've got a group of seasoned industry executives, and we've got that really nice balance now between people who've been with DOCS for a number of years, like Jon and myself, and some people who also bring in a fresh perspective. I'm gonna talk about the new additions to the team this year. I'm gonna start with Adam Meek.
Adam joined us officially on the 1st of December as our new Chief Product Officer. Adam has taken over from Darren Campbell. The two of them did a full handover during the middle of November to the end of the month and the first week in December, and Darren departed last week. Adam joins us from Canada Goose, where he recently set up their new footwear line, and prior to that, he was senior vice president of product for Sperry, so he understands a brand with iconic product. Prior to that, he has footwear experience predominantly from Nike. The second new addition to the team is Jennifer Somer. Jen joined us in middle November as our new Americas President. She also is a seasoned apparel and footwear executive. Her most recent job was at Deckers.
For the last six years, Jen has been global general manager of the UGG brand. Then finally, when we did our full year results round about June, we told you about Sue Gannon. Sue joined us as our new Chief Human Resources Officer in June, and she joined us from Netflix. S, sustainable global growth. Jon Mortimore talked about the fact that we've got seven key priority markets, and strategically this is where the team prioritize their time and prioritize the resources of the business. This is where we've got the biggest growth opportunity for Dr. Martens, and this is where we want to win. As we've said before, in the short to medium term, our growth will come from our Americas region and our EMEA region. If I talk briefly about all three, Americas, as you've just heard from Jon Mortimore, had a very good H1 .
However, if we look more broadly looking forward, we see that Americas has huge opportunity for direct to consumer acceleration in the years ahead, and that will be supported by strong wholesale growth. For EMEA, there's four markets that we really focus on. Always the most important of those will be the U.K. Dr. Martens is a British brand, and we have to show up absolutely at our best in the U.K. This is our home market, and positioning is incredibly important. In the U.K. and France as we look forward, we'll be driving growth through direct to consumer acceleration, again supported by quality wholesale.
For Germany and Italy, those are all about the multi-year opportunity that conversion affords us, and I'll come back and talk about conversion markets. Finally, in the Asia Pacific region, this is our smallest region right now. Long term, this has big opportunities for Dr. Martens. Japan is currently our biggest market in Asia Pacific. Beyond the end of the period, we've actually started to see Japan recover as the country has opened up from the state of emergency and vaccination has improved, and we see real and significant opportunities for growth with our direct-to-consumer business in Japan. In China, as we've told you before, we've not implemented the full DTC strategy yet, so we trade on Tmall, and we trade through franchise stores.
However, we've appointed a new in-country general manager, Olga Wu, and Olga's role will be to help us to build the foundations for the full implementation of DTCs in the years ahead. Just to give you a little bit of an indication about Olga's background, again, she's from our industry. She has 12 years at Timberland, three of those as Timberland's country general manager for China. Moving into consumer connection and starting with our product strategy. We've told you before that 50% of the people who know we make boots don't know we make shoes at all. What an incredible opportunity. 50% of the people who know we make boots don't know we make shoes.
Last year, we celebrated 60 years of our iconic boot, the 1460, and this year it was the opportunity to celebrate 60 years of the 1461, which is our three-eye shoe, our second most important icon. Strategically, though, this was really about getting the focus on the shoe business and building awareness with consumers. The great news is that with the focus the regions have put on this, we've grown pairs of the 1461 by 44% globally in the H1 of this year. The way that we've done that is really through product innovation and marketing.
I'm not gonna walk through all of the examples on the slide there, but you see our Iced Sole in the 1461. You see some great collaborations that we did with CLOT and with atmos. You see kids' 1461s in white and obviously the classic black smooth. From a strategic standpoint, what this is really about is keeping the icons fresh for consumers. I've talked a little bit about our icons. Let's talk about product innovation. We had hoped that more of you would've been able to be in the room. Obviously, with changing guidelines, that's not the case. I don't know if the cameraman can focus in there on my left and your right to actually show some of our product innovation.
We launched two very big programs this year, important programs for the brand in 2021, Quad Neoteric and Tarian. They both launched after the half year, but I'm very pleased to say that they're off to a great start. Quad Neoteric is our next generation of Fusion products. Fusion are the amped up Dr. Martens, the ones with the platform soles, and it, the new Quad Neoteric program still got that towering look, but the difference here is it's very light, so consumers can get a new two-piece sole and very soft upper. It's for the person who wants to buy into that Quad look but in a much lighter and softer way, but it's still got all that classic DOCS DNA. Tarian is our newest innovation in our casual business, and this is really designed to appeal to the sneaker-wearing male.
It's a reworked version of an original 1460 in casual. It's kind of like a rugged utility boot, and again, it's still got that core DOCS DNA because what's important to us is you should be able to see someone across the street and go, "Oh, that's a pair of Dr. Martens." These are just two great examples of our product innovation, but fundamentally what we're trying to achieve is continued focus on our icons and building out through product innovation. The last thing I wanted to talk about in terms of product is sandals. Sandals is a relatively small part of Dr. Martens' business today, but it's a huge growth opportunity. In the H1 of this year, we're up 45%.
While we're number one in boots in most markets in the world, we're actually outside the top 10 in sandals, so there's a real opportunity to grow awareness. Clearly, the market leader at the moment is Birkenstock. Building our sandals business enables us also to generate more revenue in the H1 of the year, which has historically been the smaller H1 for Dr. Martens. As you can see from the photos on the screen, we're driving innovation in product here, and the idea is all about DOCS sandals with attitude. Once again, we wanna have that point of differentiation in our product relative to the competitors. To build brand heat in this category, we've also executed strong collaborations in the H1 with brands like Suicoke, the Japanese sandal experts, and X-girl.
As we look forward in the years ahead, this is a category that you will start to see Dr. Martens really build out its business. Staying with consumer connection but moving on to marketing, as Jon shared, our marketing investment in the brand continues to increase by 50 basis points per annum and will do going into the future. In the H1 of this year, because it's an unusual H1 , our marketing spend was actually up 72%. One of our key marketing activities is our Tough As You initiative. We launched this a number of years ago now as a marketing campaign, but it's actually evolved, and it's now a way of empowering and inspiring underrepresented and emerging creatives. It ties really nicely with our DE&I strategy.
We've launched a Tough As You year-long mentorship program in all of our regions, and really what this is about, it's about enlisting the support that we can do as a brand from big names, so people like Grammy-nominated singer-songwriter Mahalia, who's from the Leicestershire area, for those of you who know, Ivor Novello-nominated rapper Kojey Radical. Through this mentorship program, what we're really doing is we're looking to provide creative opportunities for young artists. Our role as a brand is to amplify these underrepresented communities. So what I'd say is watch this space in terms of how we're gonna take this project forward, and Jon and I will continue to update on this in the months ahead. Still on marketing, the brand is also highly active on social media, where we've got really high engagement rates to our competitors.
We're not the brand with the biggest followers, but when people get into Dr. Martens, they're really highly engaged as part of our community. I'm not going to go into detail on all of the four examples here. The first on the left as you look at it, is a partnership that we did with Lazy Oaf to launch a collaboration with them on Instagram, where we developed an augmented reality lens. The second example is from work we've been doing with the Nova Twins, and this is about giving a voice to underrepresented people of color talent in music. I think the most interesting examples though are numbers three and four, which are on TikTok, which is a platform we really got into this year, which is very important for a youth audience.
Really what we focused on here, the first, where you see the pair of boots, this is building on the Learn on TikTok trend. The example here is how to lace up your Dr. Martens to get different looks from your DOCS just by changing out the laces. We've also had real success with taking care of your Dr. Martens, and also one of the unique properties of the brand, which is around breaking in your DOCS. The last example is about how we've brought the Tough As You campaign that I just talked about onto TikTok. Here we partnered with Blaine from the Mystery Jets, and Blaine was actually someone who featured in our very first Tough As You campaign. He's a disabled artist himself, and he worked with us to highlight accessible music venues for deaf and disabled audiences.
Inspiringly, this received more than 750,000 views and incredibly positive engagement. It shows what's inspiring to the DOCS community. Still within consumer connection is sustainability. This is a really crucial element of our strategy, and not just because it's the right thing to do, but also we know that sustainability really matters to the people of Dr. Martens, and it really matters to our consumers. We announced our first sustainability report with our year-end results, and over the last few months, what we've been working on is building really detailed roadmaps, identifying the metrics and the KPIs to track our progress on what we shared with you at the year-end. Also, as part of our net zero commitment by 2030 pledge, we've committed to a 1.5 degree Celsius trajectory with the Science Based Targets initiative.
By aligning our net zero strategy to a warming limit of 1.5 degrees Celsius, we can do our little bit as a brand to prevent the most severe impacts of climate change. Now, for me personally, the bit that's really inspiring is the innovative development work that we're doing against our most ambitious target, and that is to make all of our products from sustainable materials by 2040. We said before, we don't know how to do that right now, but at our last sustainability steering committee last week, we saw some really innovative work that teams have been going through. We saw Dr. Martens made out of mushroom leather, which was just amazing. They look very different obviously to current DOCS. We saw Dr. Martens made out of recycled leather, and there's people in our teams now wearing trialing those.
From a sustainability standpoint though, the current Dr. Martens product, one of the great things about it is it's incredibly durable. If you look after a pair of DMs, you know, they can last you more than 10 years. The challenge for these new materials, like a mushroom leather or a recycled leather, is how we actually make those as sustainable as the existing Dr. Martens. Finally, within consumer connection, I want to provide an update on our pricing plans as we look forward, and Jon mentioned this at the end of his presentation.
If I take you back a little way, back in 2018, the year I joined the business, we did a piece of pricing work globally with a strategic partner, and really what came out of that study was that we were underpricing DOCS, and we were able to increase the prices. In that modeling, they said we might actually lose a tiny little bit of volume. It was kind of less than 2%. Now, the reality of what happened was we increased our prices, and alongside of that, we actually grew volume as we know. With the same consultancy, we redid this work in summer in our seven most important priority markets around the world. What that demonstrated is that brand value is higher than current pricing.
It also suggested that this time with the same modeling, that we will be able to raise price without any loss in volume. Therefore, we're very confident in putting through price increases for autumn/winter 2022. To give you an example of how those price increases are gonna flow through, if we take the 1460, our most important product, in the United States, we'll be raising consumer prices by $20, in the U.K. we'll be raising by GBP 10, and in Europe we'll be raising by EUR 10. Obviously, our pricing architecture will raise accordingly. In the U.S., if we put the 1460 up $20, we'll move all boots up $20.
We actually just did a recent small scale test over the holiday in the USA, where we increased the price on Jadon, which is our number one product in Fusion, and once again, our volumes actually went up. We are very confident about our price increases. In terms of Asia Pacific, it's the only market where prices will remain unchanged next year, and that's because the prices in Asia are already significantly higher than the Western world. As an example, with the price increases that we'll put through in the United States, Japan will still be 28% above the USA. Moving from consumer connection onto direct consumer acceleration. Digital remains our most important channel. This is a digital-first strategy supported by stores. Our e-commerce performance remains very strong on a two-year basis, and it's driven fundamentally by three key factors.
The first of those is investment in platforms. We continue to invest in developing the Hybris platform, which we run our Western markets on, both EMEA and the U.S., and next year we will look to bring Japan onto the Hybris platform. We'll continue to invest in our digital teams. We've told you before that we have a central technology team which builds out the sites, and we've got digital trading teams market by market. We've increased digital headcount this year by 20% year on year, and we will continue to invest in caliber people in digital, and we will also increase the number of people in the digital side of our business. Finally, we're working to continually improve our sites.
We've launched a much more agile way of working this year in both our EMEA region and our Americas region, and we've increased significantly the number of A/B tests that we perform. This is a bit like the marginal gains concept that British Cycling talked about. When you take all these little small improvements that you make on the site, they actually add up to quite significant improvements in conversion. The most startling one for me personally when we were in the steering group on this is just making a small change in our search bar to, "What can we help you find?" actually improved our conversion. Moving on to retail, we've said repeatedly we don't want to be retailers at Dr. Martens.
However, we're very clear that the right stores in the right global cities help to support our website, so we are committed to opening stores. As Jon said earlier, we've had a really encouraging start to retail reopening globally. One of the things we know is that trying on a pair of Dr. Martens is a very tactile experience, and having the opportunity to meet our store teams and hear them talk to you about the product is super important, and we actually learned some really important lessons during the pandemic. When we locked down last year, you know, our sales were really strong online. When the stores reopened, we noticed that we actually started to sell a lot more softer leather products again.
It's kind of really obvious that people go into stores, they try the product on, and they say, "I wanna buy these." That gives us opportunities to broaden out the assortments in store, but it also tells us that we've still got more work to do to communicate more effectively on our websites. Throughout the pandemic, we've continued to open the right stores in the right locations, and on a full year basis this year, we'll open 20-25 stores. Ironically, one of the benefits of what's happened in the last 18 months during the pandemic is that we've actually been able to secure some great retail locations that we couldn't before because of the changing economics. If you look on the right-hand side of the slide, you'll see Munich. We've opened two stores in Munich in the last 6 months.
The reality is we couldn't get into Munich before. An example from the Americas, you see NorthPark Center, bottom left, in Dallas, and again, that was a center we weren't previously able to access. Concession markets. It's something that both Jon and I have talked about because it's a really important part of our strategy. First and foremost, this is about brand control. This is about controlling our own destiny and really building the equity of the Dr. Martens brand. Also, as Jon said though, it gives us big financial benefit, and I'm really happy with the progress we're making in Italy and Spain, having had the opportunity to be in both Milan and Rome very recently. Some of the things that we've done, we've reset wholesale in both markets, so Italy is now trading in less than half the doors the distributor was trading from.
Spain is trading from 20% of the doors that the distributor is trading from. We've cleaned up those markets, and we've focused on the right doors that we want to be in, and we'll grow the business on a full year basis. We've started to invest in retail, which is an important part of the DOCS strategy. In Italy, we've already opened two stores, in Rome and in Verona, and on December 22nd, we'll open our first store in Milan. In Spain, we've opened 1 store so far in Barcelona. The results are incredibly encouraging, and therefore, we will roll out more stores in the Spanish market. Jon mentioned the fact that we also broaden out our product assortments.
To give you some idea of scale, versus what the Italian distributor did, we're selling almost 5x the breadth of product, and probably even more importantly for me, we have reduced our dependency on the 1460 significantly in that market. A distributor tends to sell a lot of the easiest things. We're selling 20% less 1460s than the distributor. Overall, we're also investing in the brand, so our marketing investment, especially in Italy, is really starting to push the brand forward. The last thing I'd say here is the success of Germany makes us extremely confident that this is a multi-year play for Dr. Martens, and Italy and Iberia are on track. Finally, moving to S, sustainable global growth. I just wanted to mention briefly quality wholesale. The strategy for Dr. Martens in wholesale is extremely clear.
This is about working with fewer partners, fewer doors, but the right doors. With the right partners, what we want to do is also to build branded space. As you're aware, the United States is our biggest wholesale market, so I'm just gonna give you some examples here from the USA. These are equally applicable to our EMEA region, which also has a sizable wholesale business. On the left of the slide, you see Journeys. This is just an average Journeys that I've picked out, not the best one, for example, in New York. What you really see is implementation of branded space, use of our iconic colors in black and yellow. What this does is it wins space for the Dr. Martens brand all year round, and it signals our brand to consumers. In the middle, you have Bodega in L.A.
This is an opinion leading store, AMP or energy, whatever different industries call it, and what we're trying to do with our AMP accounts right now is to broaden out the product assortment, get more of our Made in England product, more of our collaborations, more of our archive. Then finally, the last example is from Nordstrom, one of our key accounts in the United States, and this is a partnership that you see in the photography that we did with them in their New York store, where we claimed a space which is called Center Stage. You basically walk into the store, and it's the first thing that hits you. Consumers were able to buy from an enlarged Dr. Martens pop-up space on that ground floor.
We launched it on the 15th of October, and we launched it with a New York City band called Sunflower Bean, where they came, they played live, as you see in the pictures there, and Nordstrom beamed that via social media to their consumers, and we did the same on DM social channels. Just a little bit of a flavor there of what we're trying to do to upgrade our presence of the brand across our wholesale partners. Bringing it all together, as Jon said, we are confident in our numbers for the balance of this year. I think probably equally more importantly, we're confident in our future. We're confident that the DOCS strategy is not delivering just now, but the things that we are putting in place will ensure that the Dr. Martens brand will continue to deliver in the years ahead.
In the first six months of this year, our revenue is up 24% in constant currency, driven by the strong direct to consumer performance, which is on strategy. We're doing exactly what we said we would do. We've proven that we can convert key markets. We've taken back Italy, we've taken back Iberia, and these markets, along with others, like Germany and the Nordics, will provide multi-year growth for the Dr. Martens brand. Overall, we think we've had a strong H1 , and we're very confident in achieving market expectations for the full year, despite all of the challenges that are out there. With that, I will shut up and Jon and I are happy to take questions from within the room and also on the Webex.
Morning, everyone. I'm Kate Calvert here from Investec. A couple of questions on the supply chain to kick off with. First of all, could you give some more color on the learnings you've taken away from the supply chain issues in the H1 ? Is there anything different you're going to do going forward as a result? The sort of related question on the supply chain is, with Vietnam being closed for three months and lead times, are you anticipating any issues with stock in FY 2023 at any point?
Okay. Why don't I kick it off, Kate, and we've also got Geert, our Chief Operating Officer in the room, so Jon and I can relieve ourselves of the duty given he's closer to the detail. I think in terms of some of the learnings that we've had from this year, for sure, the fact that our product collection is focused, you know, on 75%-80% continuity has been a massive advantage because our product is non-seasonal. I think one of the other learnings is about agility and flexibility. You know, Geert set supply chain up over the last 3.5 years where we diversified the countries in which we produce Dr. Martens.
Therefore, like most brands, we were heavily impacted by the closures in Vietnam, but we've been able to switch into other markets, which has been phenomenal. I'll throw it over to Geert given he actually does the job.
Yeah. Building on what you said, Kenny. I mean, the first element that would come to mind is the diversification. The fact that we have factories across multiple countries, most of our suppliers have factories across two countries, which again helps from a risk mitigation and flexibility point of view. We also have our top 15 to top 20 products sourced across multiple factories. Again, if something would happen with one factory, we can still have continuity of supply because we source it in at least four or five other factories. Diversification is definitely a key learning. We were already building on that strategy prior to COVID. We will obviously continue to build on that and go even beyond.
The second element I would call out is the supplier relationship. We have already long lasting and long-term relationships with our suppliers. What we noticed once COVID hit, we went from quarterly supplier conferences where we meet top to top, and we went to monthly and even every two weeks because we felt that open dialogue, communication, understanding from both sides what was going on was really key. The fact that we were able, as Jon explained, to tell suppliers we were not going to cancel POs, I mean, I could see an immense relief for the suppliers because they saw continuity of their cash flow. At the same time, they helped us with extended payment terms. This year we saw the reverse.
When they had to close, we were able to help them. Again, that very intense close long-term relationship is something that is great that we were already building on that, but that's something we will continue to build on going forward. Also, again, referring to the point that Kenny made on sustainability, we clearly know what we want to do, but in order to get there, we know we rely on our partners and our suppliers to get there. Again, having close relationships with suppliers that are long-term focused and at the same time continue to focus on diversification of the supply base, both tier one, which are the factories that make our product, but also tier two, the component suppliers.
Making sure that we have tanneries for our top leathers that are not single sourced, but dual or triple sourced, the same on our outsoles. Building that network that is agile, responsive, allows us to scale fast, and again, operate depending on what's happening, we can go left to right very quickly. That has clearly paid off, but we know we need to do more going forward to be even more ready for whatever might hit us in the future.
Yeah. Just a couple of little builds. Firstly, I think a key learning is old school levels of optimal efficiency for inventory. We're learning what they are. It's gonna be higher going forward because that gives you flexibility to react. Just secondly, in terms of our estimates for this year, as I've said, our current estimates for the H2 of the year base assumption being no major lockdowns, current lead times remain. They don't need to improve. What we're currently seeing just keeps going and we're confident in expectations.
Cool. Another question in the room.
Morning. Ben Hunt from Investec. The $20 on the boots, the price you're adding to them, which is probably gonna be quite good for margins, how does that compare historically? Clearly there's gonna be a bit of inflation in the market anyway. What's your rough intuitive feeling to how that's gonna compare versus peers in the market?
Well, Kenny can comment versus the market. As Kenny said earlier on, though, we carried out
Research on consumer propensity to pay and what they thought Dr. Martens were worth. That the increase of $20 was bang in line with what people were prepared to pay for Dr. Martens or thought Dr. Martens cost. From a perception point of view, perception is $20 higher, taking the U.S. example. Historically, the last price increase we put through in the U.S. would have been spring, summer 2019, which is about $10. Before that it was, I think, about 18 months before that, another $10. Again, previously it's been $10, but not for a couple of years. It's based on propensity to pay.
Yeah. Relative to the competition, because obviously most brands have gone out now and communicated their price list for autumn/winter 2022. You know, some people are raising prices by $10. The stronger brands are raising prices by this sort of level, by $20. I think the really encouraging thing is we've had no pushback from our wholesale partners. As I mentioned earlier, we executed a trial this holiday season where we took our most popular Fusion product, Jadon, and we raised the prices and both ourselves and our wholesale partners actually saw increased sell-through. To Jon's point, the research gave us real confidence because the consumer actually thinks they're paying more for Dr. Martens than they actually are. There's more brand value there than we're currently charging on pricing.
We do feel confident about this.
I agree. Just secondly, on the step up in marketing, which is more a function of back to business as usual, but if you could give us any color on where the sort of focus has been from the top of the funnel down to the bottom would only be interesting.
Yeah, I mean, we've got two big goals in marketing. The first is building awareness of the Dr. Martens brand. If you take our, you know, the market we've been in the longest, the U.K., we've got 93% brand awareness. Most people here in the U.K. know Dr. Martens, but if you go to Germany, that number's in the 60s. There's a job to do to build knowledge of just Dr. Martens. The second thing that we need to build is product range awareness. It was quite surprising to us that, you know, when we found out that stat I quoted earlier, you know, 50% of the people who know you make boots don't even know you make shoes.
We ran a campaign where we focused on, you know, six of our most iconic products to build range awareness. You know, the other thing is when people buy brands, they buy two things. They're buying the product itself, but they're buying the intangibles. If you take something like our Tough As You campaign, that's all about communicating what Dr. Martens stands for and what it believes in and the initiative around Tough As You, where we're empowering young creatives. People are really engaging with that in our community. Our marketing is a combination of build awareness, build product range, build brand equity.
Hi there. Thank you for the presentation. It's Karina Shooter from Goldman Sachs. I have two questions. So firstly, building on the earlier supply chain question, could you just give us an update on where Vietnam production is at the moment, and also the situation at the US ports? I know in the update you said you expected it to continue, but are you seeing any easing? Secondly, thank you for the update in terms of the global leadership team, and particularly Adam Meek joining as CPO. Could you give us an update on your search for the other roles that are ongoing at the moment, including the CMO role that you split into after Darren's departure? Thank you.
Yeah, no problem. In terms of Vietnam, we're on a steadily improving situation. You know, Geert gives us an update every day on how we're doing, but all of our factories are open in Vietnam and they're back now at 80% of capacity. The reason why they're not back at 100% of capacity is the fact that many workers went back up to the north. I didn't realize before all this, Vietnam is actually a really long country, so people went up to the north and a lot of them haven't, you know, come back to the south yet. We think post the Vietnamese holiday that will further improve. It's an improving situation in Vietnam.
I think it's been widely reported in terms of the Biden administration putting pressure on the ports in the United States and again, we see an improving situation through US ports. If you want more detail, I'm sure we can build on that. In terms of the global leadership team, yeah, Adam Meek joined us as Chief Product Officer and we're really pleased with that appointment. We're also really pleased with the handover between Darren Campbell and Adam Meek. That's been seamless. In terms of the Chief Marketing Officer, there's no real news to report at this stage. I mean, we've said all along that, you know, we want quality individuals on our global leadership team, and we haven't yet found the person that is the right person to be the CMO of the Dr. Martens brand.
You know, I've shown today some great examples of the work that's being done in the marketing arena. We've really got some strong people, both within our central marketing team here in London, but the vice presidents of marketing in the three regions, and I've given them my commitment that we'll only hire a CMO when they're an absolute A player like the rest of the global leadership team. In terms of other positions, we're not looking for any other leadership appointments. The only one outstanding now is the CMO because everything else is fully complete.
Anything on the Web, on the Webex?
Any questions on the Webex? I can see someone nodding, so that looks like a positive thing.
Yes. Good morning, everyone. I'd like to go back to China for a second. You highlighted the fact that the country is still under disruption from the pandemic. Is there anything else that you can tell us from the current situation that you see and what you expect in the H2 in terms of, and what you've got in the pipeline in terms of building up brand awareness and applying all the marketing tools that you have shown us during this presentation? Second question is on your capital allocation. There is a sense that deleveraging is coming very fast. Yet the dividend payout seems to be quite small. What do you have in terms of use of cash plan for, if not for FY 2022, but definitely for FY 2023?
My last question is on H2 margins. There's a certain confidence that margins in the H2 will improve. What can go wrong, if anything, that could actually disrupt this outlook that you have given us today? Thank you.
Thank you, Doriana. So on China, we're not giving out any country-specific detail on any markets, not just China. I think probably the most important thing that I would say is the appointment of Olga Wu as our new general manager in the Chinese business. We felt that in order to make the decisions that we're gonna need to make around a full implementation of DOCS, which obviously involves building out our web presence, building out company-owned stores, those types of things, further investment in marketing. We wanted a really seasoned general manager of the sort of level of our global leadership team.
As I said earlier, you know, Olga's got considerable experience from Timberland China, and we believe that we've now got someone with the seniority and presence day to day in that country who can look at exactly how we are gonna implement the DOCS strategy there. There'll be more to follow on that in terms of the update. Do you wanna take the two financial questions, Jon Mortimer?
I'll do the financial. If I do the margin one first, Doriana, the H2 margin story. I think in terms of the story I've told, if you look back typically over the past couple of years and pretty much forever, the H2 of the year is stronger D2C, which D2C has got 4x the gross margin than wholesale. Last year, H2 was three points stronger, H2 versus H1, the year before, four points. There is a natural improvement in margin in H2 versus H1 because of the seasonal nature of our business. Secondly, there is a pile of complicated noise around OpEx I described. The PLC costs annualize out, the return to business usual costs slowly normalize through the H2 .
In terms of rather than what could go wrong, what do you need to take a view on to come up with your full year expectation? It would be around the continued improvement in D2C mix, the plus 6 points, does that continue or not? And also one's view on inflation. That's so that in terms of what can go on and what could go right, they're the two you can take a view on. We're confident in the expectations as they currently stand in relation to H2. Regarding your capital allocation and leverage question, the first point I'd make is the business in a typical year, we'd have a GBP 100 million roughly cash swing at the half year.
I think the way to look at leverage is rather than a point in time at the year end, which is when we typically have our strongest cash balance, just from natural timing. It's what's the average leverage through the year is probably a better indicator of financial strength or in terms of capital allocation. You go to capital allocation, we've said as through the IPO process and again at the year end, our primary use of cash is invest in the business to grow the business. After that, we have said our dividend policy is a progressive dividend policy with a range of 25%-35% payouts. After that, we'll need to wait and see where we end up.
Again, similar to the inventory question, I think coming out of the in the post-COVID world for a while anyway, having surplus cash or a non-optimal balance sheet is a good thing when it comes to inventory, when it comes to cash, because we don't know what we don't know.
Yeah. Can I just clarify? Is Olga Wu an addition to the current leadership structure in Asia, or is she a replacement?
is an upgrade on the old country manager we had. We went from a country manager in China to a full general manager, much higher level. Replacement in that sense, and she reports into Derek Chan, who is the president of Asia Pacific.
As a reminder, if you wish to ask a telephone question, please signal by pressing star one on your telephone keypad. We will take our next question from Edouard Aubin of Morgan Stanley. Please go ahead.
Yeah. Hi, guys. Apologies for the technical issue earlier. So three quick ones I think for me. The first one, sorry, on current trading. Given that in Q3, you're gonna benefit from the timing shifts, you know, from the supply chain, you have Japan reopening, you have the change in distribution in Southern Europe, wouldn't it be logical to assume that kind of on an underlying two-year stack basis, you're gonna see further sequential acceleration in top line growth? I guess, you know, the Q3 is in the bag already, so you should have a good view. The second question is on OpEx.
You had a top line beat in H1 and little flow through to the bottom line, and based on your guidance, it looks like it's gonna be the same for the full year. Jon Mortimore, if you could please elaborate a little bit more on the kind of cost inflation, OpEx inflation on wage, rent, digital, shipping. You know, what's kind of the biggest delta in percentage and the biggest impact and as you kind of alluded to that, but what's kind of permanent and what's kind of temporary to the extent you can know? Sorry, last question for Kenny Wilson.
You know, at the time of the IPO, you know, on the brand heat, at the time of the IPO, the big debate was about cyclicality and so on and so forth because you went through ups and downs in the past. What's your confidence level that the brand heat is stronger than ever today? I don't know if you can share with us some metrics you track, for example, on digital or maybe some anecdotal conversation with wholesalers, which maybe want more of your product than you give them to sell. Thank you.
If I start with the current trading question, what we said current trading by channel, if you think about it, current trading for retail is continuing to improve, and that's on a last year minus one stack. I would envision that should all things being equal, continue to improve. That obviously won't continue to improve forever. I think the key watch-out would be that would take a little bit of the froth off maybe continental Europe and to keep an eye on the COVID situation there 'cause our recent performance in the last few weeks has been bumpy, as I said. With regard to e-commerce, we are trading in line with the H1 , positive. On a two-year view, things are up significantly. I think it's what, nearly double.
One would see that probably continue through a H2 . There's no reason why not, which is what we said. Wholesale is a tricky one 'cause it is notoriously bumpy. Shipments, even before a pandemic are lumpy and bumpy on a quarterly basis. All I can say is, I think we're happy with full year guidance and full year market expectations for the full year for this year. In relation to OpEx and inflation, I think the largest inflation we've seen is in freight costs, where, as I said, freight costs per pair have more than doubled. We've virtually offset the vast majority of that, if not all of that with supply chain efficiencies. Freight will continue to be high.
We anticipate through Christmas and probably through to post Chinese New Year when things should begin to soften as demand just normalizes. They'll still remain high, I think, for a while yet. With regard to OpEx inflation, yes, we are seeing OpEx inflation. You can look at government data for all of our key markets to see what inflation's running at, and that's what we're roughly seeing. I think that underlying OpEx inflation is gonna be around for a while yet. That's why one of the reasons that we are moving our prices up in the autumn and winter season next year.
On your third question around historically the brand being cyclical, I mean, I think that, you know, we said at IPO and we still believe this to be correct, that the Dr. Martens brand has always been strong. Maybe some of the decisions that were taken to manage the brand weren't the best, hence why, you know, we had such a cyclical pattern over the number of years. In terms of your question around confidence level, we're very confident as we look forward. At the year end, we will give you an update on our latest brand study. We haven't got all the numbers in yet. We do a very big study across all of our markets once a year.
By the time we get to our full year results, we'll be able to give you the detail on that. We do sort of dips into some of the markets during the year and all of the indications there are positive. To your point on wholesale, Ed, and I know you guys, you know, check in with retailers yourselves, we're getting extremely good reactions to our autumn winter 2022 range, which is obviously a big part of financial year 2023. We're very confident in the medium term guidance we've given that we'll have the order base there. Obviously, direct to consumer will be what it will be. The direct to consumer trends continue to strengthen, so that gives us confidence there. Then in terms of people searching for Dr. Martens globally, the numbers there continue to look strong.
Probably the other important leading indicator is if we look at the number of new consumers signing up on our database globally, that continues to grow as well. All of the indicators mean that we remain confident in our medium term guidance that the brand demand is there for the business.
Glad to hear. Thank you.
At this time, we have not received any further telephone questions. I will now hand the conference back to Mr. Kenny Wilson for any additional or closing remarks.
Oops. Cardigan stuck to me there. It always goes wrong at the end. No further remarks from us other than to say, you know, we've done what we said we would do. We've delivered against our DOCS strategy. We've had a strong H1 of the year, and we remain confident that we will meet market expectations exactly as we said that we would do back at the time of our IPO. Thanks so much for joining us today, whether in the room in real life or on the screen, we really appreciate it. Thank you very much.