Dr. Martens announced its half-year results on Thursday, revealing a significant decline in revenue and losses. The footwear brand also confirmed that Ije Nwokorie will take over as CEO on January 6, 2024, replacing Kenny Wilson. The results indicate that the company may face a challenging period under new leadership.
For the six months ending September 30, Dr. Martens reported a revenue drop of 18% at actual exchange rates, or 16% in constant currency, bringing total sales to £324.6 million. However, the share of revenue from direct-to-consumer (DTC) sales increased, rising to 56.4% from 49.6%.
Despite this shift, DTC revenue fell by 7% (or 5% in constant currency), while wholesale revenue dropped 29% (27% in constant currency), which was in line with the company’s expectations. Within DTC, retail sales were down 9% (7% in constant currency), and e-commerce sales declined by 4% (2% in constant currency).
The company posted an adjusted EBIT loss of £4.3 million, compared to a £39.7 million profit during the same period last year. Adjusted profit before tax also showed a £17.9 million loss, a sharp contrast to the £25.2 million profit reported last year. Unadjusted pre-tax profit was a £28.7 million loss, down from a £25.8 million profit in the previous year. The results were further impacted by exceptional charges of £9.2 million, largely due to a cost-saving initiative.
Despite the poor financials, Dr. Martens stated that the results were in line with expectations. The company had already forecast a 20% decline in revenue, so the actual 18% drop was not as severe as anticipated.
Regional Performance
Dr. Martens’ performance varied across different regions. In EMEA (Europe, the Middle East, and Africa), revenue fell 16% at actual and constant currency rates. DTC revenue in the region dropped 8%, while wholesale sales were down 23%. The company noted that Q1 in EMEA was particularly weak, especially in retail, but performance improved in Q2, with positive growth in DTC pairs.
In the Americas, revenue dropped by 22% (20% in constant currency), driven by a 4% decline in DTC revenue and a more substantial 34% drop in wholesale sales. However, Dr. Martens remains optimistic about DTC growth in the second half of the year.
APAC (Asia-Pacific), the company’s smallest region, saw a smaller revenue decline of 7% (constant currency), with DTC revenue up by 4%, while wholesale revenue fell by 24%. Dr. Martens highlighted strong performance in Japan, which remains a key growth market for the brand.
Cost-Saving Actions and Future Outlook
The company also reported progress on its cost-saving measures, which are expected to generate up to £25 million in savings by FY26, exceeding previous guidance.
Looking ahead, Dr. Martens remains optimistic about trading for the second half of the year. The company noted that all regions have seen positive results since the start of the Autumn/Winter 2024 season, driven by strong DTC sales of new products supported by the company’s revamped marketing approach.
The company’s guidance for FY25 remains unchanged, though it expects a currency headwind of around £18 million to revenue and £6 million to pre-tax profit.
Outgoing CEO Reflects on Results
Outgoing CEO Kenny Wilson expressed confidence in the company’s ability to meet its goals for FY25, despite the challenges faced in the first half of the year. He highlighted progress in four key areas: refocusing marketing efforts on products, improving DTC performance in the U.S., reducing operating costs, and strengthening the company’s balance sheet.
Wilson pointed to the early success of new product campaigns, which have led to strong sales, particularly in the U.S., where the company aims to return to positive DTC growth. He also noted that Dr. Martens has successfully reduced inventory and net debt, while refinancing its debt facilities.
As Wilson prepares to hand over the reins to Ije Nwokorie in January, he expressed confidence that the brand’s new product range will provide a solid foundation for the important peak trading period ahead.
Related topics:
