5 days ago
Dr Martens returns to growth as bootmaker pledges to stamp out costs
Dr Martens shares soared more than 20 per cent on Thursday after the iconic bootmaker revealed it expects to return to profit this year.
The retailer, which has struggled for momentum over the last two years, outlined plans to cut costs and scale back discounting in its key markets, including the US and Europe.
Dr Martens revealed an annual profit slump as sales came under pressure and it cautioned over ongoing falling revenues in Britain.
The footwear group reported pre-tax profits of £8.8million for the year to 30 March, down from £93million the previous year, after seeing sales fall 10 per cent.
On an underlying basis, the group's pre-tax profits fell sharply to £34.1million from £97.2million.
The company said sales to consumers in the US returned to growth in the second half of the year and had continued to increase, but revealed revenues had remained lower since the year-end 'due to a challenging market'.
It added that unfavourable foreign exchange rates would see it take a hit to group sales and profits of around £18million and £3million respectively this year.
However, Dr Martens said it expects its underlying profit to rise 'significantly' over the financial year ahead, with analysts expecting a jump to between £54million and £74million.
Dr Martens shares rose 21.77 per cent or 13.05p to 73.00p on Thursday, having fallen over 13 per cent in the last year.
On curbing discounts, the group said: 'As we look forward into FY26, we will reduce discounting in Americas and EMEA, across both our own ecommerce channel and through wholesale, with the aim of driving full price sales.'
The group flagged uncertainty over the impact of higher tariffs, but said it was holding off from price rises for the the remainder of 2025.
Its stock is already in the US market for the spring and summer season and either there or on its way for the autumn and winter months.
Dr Martens said: 'We do however recognise that there is continued macroeconomic uncertainty and the full outcome of tariffs is still unknown, and we will monitor this closely through the year and take action as appropriate.'
The Northamptonshire-based company outlined new plans for growth alongside its results, with aims to attract new shoppers and hold off from discounts in EMEA and the Americas.
Annual figures showed sales sales fell 11.4 per cent over the year, although retail lifted 1 per cent in the final six months of the period.
In the Europe, Middle East and Africa (EMEA) region, sales fell 11 per cent, with direct-to-consumer difficulty amid a highly promotional market, particularly in Britain, the group said.
The company, whose yellow-stitched boots have been a retro mainstay for decades, has been in the doldrums in recent years, with declining revenues exacerbated by the cost-of-living crisis.
It listed on the London Stock Exchange in 2021, and has since issued a slew of profit warnings and replaced its chief executive.
Many of Dr Martens' recent problems have come from steep declines in sales in the US, but new chief executive Ije Nwokorie said the group had stabilised in the past year.
He said: 'Our single focus in 2024-25 was to bring stability back to Dr Martens.
'We have achieved this by returning our direct-to-consumer channel in the Americas back to growth, resetting our marketing approach to focus relentlessly on our products, delivering cost savings and significantly strengthening our balance sheet.'
Nwokorie, previously the firm's head of marketing before taking on the top job from Kenny Wilson on 6 January, said: 'I am laser-focused on day-to-day execution, managing costs and maintaining our operational discipline while we navigate the current macroeconomic uncertainties.'
Russ Mould, investment director at AJ Bell, said: 'Dr Martens is on the front foot with a strategy that seeks to kick out the troubles of old and return the business to profitable growth.
'This should shift the market's focus from earlier problems in the US and a sharp drop in earnings to a business intent on regaining its power.
'Having a plan is a good start, but the proof will be in the execution. It has laid out ambitions to get back on top. Turning those dreams into reality might not be easy.
'Fundamentally, it's all down to marketing and product innovation. Dr Martens needs to convince the consumer they need its products – get that right, and it could reclaim its crown in the footwear market.
'The brand still has considerable strength, the business just needs to be more creative at the front end and agile at the back end.'
