Dr. Martens posts decline in H1 sales and profit

Dr. Martens first half revenue was down 5 percent or 3 percent constant currency, driven by weakness in USA wholesale.

The company’s DTC revenues rose 9 percent or 11 percent constant currency to 50 percent mix, while retail revenue was up 15 percent or 17 percent constant currency and ecommerce increased 3 percent or 5 percent on a constant currency basis.

The company said strategic supply chain savings drove both a gross margin improvement of 2.8 percent pts to 64.4 percent and resulted in EBITDA margin performance ahead of guidance Pre-tax profit was down 55 percent to 25.8 million pounds.

“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. Given the challenging backdrop it will take longer to see an improvement in USA results than initially anticipated,” said Kenny Wilson, the company’s chief executive officer in a statement.

Dr. Martens said wholesale revenue for the period was impacted by planned strategic decisions to reduce volumes into EMEA etailers and exit of the China distributor, together with a weaker USA wholesale performance than previously anticipated.

Revenues in EMEA were up 9 percent or 8 percent constant currency with a strong performance in Japan DTC, up 41 percent constant currency. America revenue was down 18 percent or 15 percent in constant currency driven by wholesale.

The company opened 25 new stores globally and launched an omnichannel offer in the UK, with positive initial results.

The company added that trading in the second half to date has been mixed, with the start of the Autumn/Winter season impacted by warm weather across all three regions and weaker traffic overall.

Dr. Martens expects that full year revenue will decline by a high single-digit percentage year-on-year, on a constant currency basis. Assuming this revenue outturn, Dr. Martens expects FY24 EBITDA to be moderately below the bottom end of the range of consensus expectations, with PBT also impacted by 5 million pounds higher net finance costs in addition to this lower EBITDA.

Given macroeconomic uncertainty, the company is withdrawing previous guidance of high single-digit revenue growth in FY25, while medium-term expectations remain unchanged, underpinned by the significant white-space growth opportunity.