Dr. Martens shares fall 15% as first-half losses widen and outlook remains uncertain
Key Facts
Dr. Martens shares fell 15% by 08:15 GMT on November 12 after the company reported that its adjusted pre-tax loss for the first half of fiscal 2027 widened to £13.7 million from £9.4 million in the corresponding period. The investor response came amid weak sales and an uncertain outlook for the rest of the year. Management said November, December and early January would be crucial to the full-year result. It added that the range of possible full-year revenue and pre-tax profit outcomes was wide.
Performance declined in the second quarter compared with the first, pressured by a hot summer and continued falling demand for boots, particularly in European markets. The company said resilient sales of short boots and sandals were not enough to offset lower boot sales. It also cited the impact of planned changes to its direct-to-consumer offer and described first-half performance as disappointing. These factors combined weakness in a core product category with changes in how the company sells to customers. As a result, the company's main channels recorded lower revenue during the period.
Direct-to-consumer revenue fell 12.8% at constant currency to £156.6 million in the first half, while business-to-business revenue declined 4.7% to £135.8 million. The decline in the direct-to-consumer channel was steeper than in the business channel, and the company attributed its continued weakness to boot sales. It said group revenue in October showed an improvement compared with September, which it described as very weak. But October revenue remained broadly in line with the second quarter's annual rate of decline, which was in the mid-teens. The monthly improvement therefore came from a very weak September base and has not yet changed the broader downward trend.
Gross margin was unchanged year on year at 65.3%, as the company said cost discipline, control of the cost of goods and selling prices offset the impact of channel mix. But the stable margin did not prevent adjusted profitability losses from worsening. The adjusted pre-tax loss was £13.1 million at constant currency, while adjusted earnings before interest and tax showed a loss of £2.8 million, compared with a profit of £3.1 million in the previous first half. The pre-tax loss was £8.5 million, against £11 million in the corresponding period. The results reflect a divergence between preserving gross margin and pressure on earnings elsewhere in the accounts.
Net debt including leases was £310.8 million in the first half, compared with £302.3 million a year earlier. The company declared an interim dividend of 0.85 pence per share, unchanged from the corresponding period. For annual comparison, first-half fiscal 2026 revenue was £322 million, down 0.8% on a reported basis from the first half of fiscal 2025. In that period, the company reported an adjusted pre-tax loss of £9.4 million, compared with a loss of £16.6 million in the earlier period. The comparison highlights the company's shift from a limited revenue decline then to a larger fall in the current first half.
The company maintained its fiscal 2027 guidance for its store estate to remain broadly stable over the next two years, and estimated depreciation and amortisation at about £70 million and net finance costs at about £24 million. As of November 11, analyst consensus for full-year revenue was £777 million, within a range of £763 million to £790 million. Consensus for adjusted pre-tax profit was £65.7 million, within a range of £61.9 million to £71.8 million. Management said Black Friday, the run-up to Christmas and post-Christmas discounting would be crucial milestones in November, December and early January. It said these weeks would largely determine the year's outcome, with a wide range of possible revenue and pre-tax profit results remaining.