Shares in Dr Martens (LON:DOCS) flashed green after the British footwear brand flagged growth in the US and maintained FY27 guidance.
Investors were relieved as the firm insisted trading since the start of the financial year has met expectations.
Back in May, Dr Martens announced a return to profit growth for FY26. This confirmed its Levers for Growth strategy is working.
Profit growth was delivered despite a 29% drop in revenue to £764.9 million as the boot brand pulled back on clearance activity. The move was designed to improve the quality of its revenues and protect margins as part of CEO Ije Nwokorie’s turnaround strategy.
Back on track
In today’s annual general meeting (AGM) update, the boots, shoes and sandals seller insisted it is on track with its strategic objectives. These include increasing full-price sales, introducing an innovative new sandals range and launching new retail stores in key cities around the world.
‘Our largest market, the USA, continues to grow, with wholesale particularly encouraging,’ said Dr Martens. ‘Our largest Asian markets, Japan and South Korea, are both performing well,’ added the FTSE 250 firm.
Unfortunately, Dr Martens sounded less upbeat about its European markets. These are ‘performing as expected, against a challenging consumer backdrop’.
Dr Martens suffered a decline in sales from the Europe, Middle East and Africa region in FY26. The Middle East conflict impacted consumer spending towards the end of the period.
Dr Martens’ shares have lost roughly 80% of their value since the firm’s 2021 initial public offering (IPO) at 370p. But today’s update confirms the business has been stabilised. And we think the company behind the iconic 2976 Chelsea boot and Adrian loafer looks a compelling recovery story.
The business has returned to profit growth. It is weaning itself off margin-eroding discounts and paying down debt to boot.
For FY27, Dr Martens is expected to deliver a jump in adjusted pre-tax profits from £51 million to £68 million, according to the company-compiled consensus. Sales are forecast to rise from £770 million to £810 million. Investors can also expect a dividend increase from 2.49p to 2.52p.
FY28 estimates point to revenues of £850 million and an adjusted pre-tax profit surge to £83 million. If Dr Martens continues to make positive strides, then it could attract a takeover bid before too long.
Read the press release here: https://www.drmartensplc.com/investors/
