Dr Martens shares rise despite £28.7m loss

The bootmaker Dr Martens reports early signs of a recovery despite having fallen into a loss as a decline in revenues put pressure on its bottom line.
The FTSE 250 retailer reported a pre-tax loss of £28.7 million for the 26 weeks to September 29, down from a profit of £25.8 million during the same period last year.
The half-year results were largely in line with expectations and shares in Dr Martens rose as much 13 per cent to 65½p.
• Dr Martens needs a boot, not a marketing redesign
Kenny Wilson, the outgoing chief executive, said Dr Martens had reported “encouraging signs but I caveat it by saying the big weeks are ahead of us” as the retailer gears up for the festive period.
Revenues fell 18 per cent to £324.6 million, slightly better than a forecasted 20 per cent decline. Sales in the group’s Americas market slipped 22.3 per cent to £114.7 million compared with the same period last year.
“We feel good about the progress we’re making in the United States …We believe that we’re on track to deliver direct-to-consumer growth in America in the second half of the year,” Wilson said.
The Northampton-based business said it had completed its £25 million cost reduction plan with an estimated two thirds of savings coming from about a hundred job cuts.
Earlier this year the retailer announced alongside the latest profit warning that Wilson, who has led the company since 2018, would stand down as chief executive. Ije Nwokorie, the chief brand officer, would take up the role on January 6.
Shares in Dr Martens debuted at 370p in January 2021 and quickly topped 500p a share. Those gains have been wiped out following five profit warnings in three years after problems in America, including a slowdown in sales as consumers reduced spending and supply chain problems at its distribution centre in Los Angeles.
The company also contended with an attack from an activist investor this year over concerns about the group’s “deeply discounted” valuation. Marathon Partners Equity Management said the business had become “stranded and orphaned” in the public markets. Shares in Dr Martens have fallen more than 30 per cent since the start of 2024.
Wholesale orders, which make up more than 40 per cent of Dr Martens’ total revenue, declined by 29 per cent during the six-month period to £141.6 million, in line with expectations. There was also slight weakness in its direct-to-consumer channels as online revenue declined by 4.4 per cent during the period.
The business said the increase in employers’ national insurance contributions would result in less than £2 million in additional costs. “It’s annoying, it’s a bit irritating but it doesn’t have a material effect on Dr Martens numbers,” Wilson said.
Dr Martens was started by Klaus Martens, a German soldier, who developed an air-cushioned rubber sole to support his foot after a skiing accident in 1945. The Griggs family in Northamptonshire acquired the licence for the product and built the business producing work boots sporting its signature yellow stitching.
Piral Dadhania, an analyst at the investment bank RBC Capital Markets, said: “After a difficult multi-year period, we believe Dr Martens may be nearing the bottom of its earnings cycle in 2024-25. 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.”