Despite reporting a pre-tax loss, analysts remain optimistic about the future growth prospects of Dr Martens as it implements cost-cutting measures and reshuffles its leadership team.
The Northamptonshire-headquartered boot manufacturer announced this morning that its profit before tax had turned into a loss, with a deficit of £28.7m in the 26 weeks ending September 29, compared to a profit of £25.8m in the first half of last year, as reported by .
Despite this, its share price rose nearly 12 per cent in early trading. Revenue dropped by 18 per cent, from £395.8m last year to £324.6m this year, which was less than the company's anticipated 20 per cent decline.
Wholesale revenue fell 29 per cent, direct-to-consumer revenue decreased by nine per cent and e-commerce dropped by four per cent. Revenue in the Americas saw the largest decrease, down 22 per cent, while revenue in Europe, the Middle East and Asia (EMEA) fell 16 per cent and Asia-Pacific revenue declined by 12 per cent.
Dr Martens stated that its cost-saving plan will yield £25m in the next financial year, at the upper end of previous guidance. CEO Kenny Wilson said: "We remain confident in our ability to deliver on our plans and the targets we set for 2025."
He added: "As we shared in May, this is a year of transition and we have made good progress with our four main objectives: pivot our marketing to a relentless focus on our product, turn around our USA direct-to-consumer performance, reduce our operating cost base and strengthen the balance sheet."
"We have delivered a significant reduction in both inventory and net debt, together with successfully refinancing our debt facilities. The early success of our new product ranges provides a strong foundation as we enter the important peak trading period and as I prepare to hand over the reins to Ije in the new year," he said.
Ije Nwokorie, the company’s chief brand officer, is set to become Dr Martens’ chief executive from 6 January 2025.
"After a difficult multi-year period, we believe Dr Martens may be nearing the bottom of its earnings cycle in 2024-2025," RBC capital analysts said.
"[A] new CEO and CFO brings [a] new approach, which on the back of depressed sentiment and earnings expectations offers the prospects of a better outlook for the business."
The new cost saving program signals real intention from management to right-size the business which we have been waiting for.
"The outlook for boots demand remains difficult to predict near term, even if we do acknowledge the brand value."
Overall, we anticipate the technical boots segment is likely outperforming casual boots given changing consumer habits around outdoor pursuits and hiking particularly in the US," RBC said. Analysts added that longer-term growth prospects "remain healthy".
