Despite a pre-tax loss from Dr Martens, analysts have remained positive on its future growth prospects as it cuts costs and shakes up its leadership team.
The boot-maker told markets this morning that profit before tax swung into the red, with a loss of £28.7m in the 26 weeks ended September 29, from a profit of £25.8m in the first six months of last year.
Revenue fell by 16 per cent, from £395.8m last year to £324.6m this year. The company had expected a 20 per cent decline.
Wholesale revenue fell 29 per cent, while direct-to-consumer revenue fell nine per cent and e-commerce fell four per cent.
Revenue in the Americas fell the most, down 22 per cent, while revenue in Europe, the Middle East and Asia (EMEA) fell 16 per cent and Asia-Pacific revenue fell 12 per cent.
Docs said its cost-savings plan will deliver £25m in the next financial year, at the top end of previous guidance.
Chief executive officer Kenny Wilson said: “We remain confident in our ability to deliver on our plans and the targets we set for 2025.”
“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.
“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”.