Wednesday, February 28, 2024

Profits and revenues drop at Dr. Martens in first half results

Northamptonshire shoe brand Dr. Martens has seen a “mixed trading performance” in the first half of the year, according to its CEO.

Results for the six months to 30 September 2023 show a dip in revenue to £395.8m, in comparison to last year’s £418.6m, primarily driven by weakness in USA wholesale.

Pre-tax profits, meanwhile, halved to £25.8m from £57.9m, which the company said reflects EBITDA performance together with higher depreciation and amortisation as a result of continued investment into IT projects, DCs and new stores.

Kenny Wilson, Chief Executive Officer, said: “We saw a mixed trading performance in the first half of the year. We made good progress with our strategic priorities, continuing to invest in the business and our people to drive sustainable long-term growth.

“During the period we focused on controlling the controllables: we delivered significant supply chain savings, successfully transformed our North America distribution network, opened 25 new stores, and launched a Dr. Martens UK repair service.

“The DOCS strategy of brand control and prioritising more profitable sales via our own stores and websites continued to deliver, with Direct to Consumer (DTC) revenues up 11% in constant currency, representing half of Group revenues.

“We saw a continued strong DTC performance in EMEA and APAC. In the USA, where there is an increasingly difficult consumer environment, our results have been more challenged, led by weakness in wholesale.

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

“Notwithstanding the clear challenges we face in the USA market we remain very confident in our iconic brand and the significant growth opportunity ahead of us.

“I am delighted that I’ll be joined by Giles Wilson as Chief Financial Officer and Ije Nwokorie as Chief Brand Officer in the new year, bolstering our leadership team.

“I would like to take this opportunity to thank the dedicated and passionate people of Dr. Martens for their exceptional hard work in H1 and their continued support as we enter the busiest period of the year.”

Trading in the second half to date has been mixed, the business noted, with the start of the Autumn/Winter season impacted by warm weather and weaker traffic overall. However, in both EMEA and APAC, the business says it has seen improved trading in more recent weeks.

Dr. Martens added: “There is a large part of the financial year still ahead of us, however, given the backdrop, we expect that full year revenue will decline by high single-digit percentage year-on-year, on a constant currency basis.

“Assuming this revenue outturn, we expect FY24 EBITDA to be moderately below the bottom end of the range of consensus expectations, with PBT also impacted by c.£5m higher net finance costs in addition to this lower EBITDA.

“Given macro-economic uncertainty, we are withdrawing our previous guidance of high single-digit revenue growth in FY25. Our medium-term expectations are unchanged, underpinned by the significant white-space growth opportunity and our iconic brand and product range.”

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