Dr Martens released its preliminary annual results on Thursday, along with a strategy update from CEO Ije Nwokorie. And it emphasised how FY25 met its earlier guidance and profit before tax (PBT) actually managed to come in at £34.1 million, ahead of consensus analysts’ expectations of £30.6 million.
The company has been under huge pressure in recent periods as its seemingly unstoppable progress came to a halt, its share price fell, its US ops were hit by distribution centre issues and its CEO stepped aside.
So where do we start? Let’s take a quick look at the strategy update. In a major pivot, the company is moving away from its fairly narrow focus on boots and DTC to a broader approach that targets everyday wearers and embraces shoes, sandals and bags more than it has in the past. It’s not losing sight of its boots heritage, of course, and DTC remains important. But there will be a strong mix of DTC and wholesale, depending on the needs of each individual market.
We’ll look at that in more detail later, but for now, let’s dive into those FY25 results. The 52 weeks to the end of March saw revenue down 10% at £787.6 million — or down 8% constant currency (CC). This was in line with guidance and came “against a challenging macroeconomic and consumer backdrop in several of our core markets”.
DTC revenue was down 4% (-2% CC) and wholesale was down 20% (-18% CC), as expected. Within DTC, retail revenue was down 6% (-3% CC) and e-commerce was down 3% (-1% CC).
Regionally, EMEA revenue fell 11% (-10% CC) driven by UK weakness, with Americas revenue down 11% (-10% CC), and APAC falling 4% (but rising 1% CC), with a “good performance” in Japan and China.
Adjusted PBT of £34.1 million (or £40.3 million CC) excluding exceptional costs, impairment of non-financial assets and currency losses, was down from £97.2 million a year ago. Exceptional costs of £17.9 million were incurred.
The company saw a significant reduction in both inventory and net debt, both ahead of guidance, with inventory down £67.2 million to £187.4 million and net debt (including leases) down £110.3 million to £249.5 million.
As for current trading, following the delivery of DTC growth in the Americas in H2 last year, underlying trading in this market “has continued this positive momentum”. EMEA performance “remains mixed, with the UK continuing to see revenue decline due to a challenging market”. But APAC continues to “perform well”.
Prices and tariffs
The company said “we will reduce discounting in [the] Americas and EMEA, across both our own e-commerce channel and through wholesale, with the aim of driving full-price sales. We have a positive Autumn/Winter wholesale order book in EMEA and the USA order book is currently broadly in line with last year, before the benefit of any in-season re-orders”.
It expects foreign exchange headwinds for FY26 to impact revenue by around £18 million and PBT by £3 million. But it expects FY26 adjusted PBT to show “significant year-on-year growth”.
And it’s not planning to raise prices on the back of US tariffs. However, it acknowledged the “continued macroeconomic uncertainty and the full outcome of tariffs is still unknown”.
The US is a key market but it said “we are a truly global brand that is sold in more than 60 countries around the world. In the USA, the entirety of the SS25 stock is in the market, and by the start of July the majority of AW25 will be either in the market or in transit. We generate strong product gross margins, which is helpful given that tariffs are charged on cost, not retail price. We will continue to assess the situation carefully, but can confirm that for SS25 and AW25 we will be keeping average prices unchanged in the market”.
New strategy
The CEO said the “single focus in FY25 was to bring stability back to Dr Martens. We have achieved this”.
He added that the new strategy “will increase our opportunities by shifting the business from a channel-first to a consumer-first mindset. We will give more people more reasons to buy more of our products, whether that’s our iconic boots and shoes, newer product families such as Zebzag and Buzz, or adjacent categories such as sandals, bags and leather goods. And we will tailor distribution to each market, blending DTC and B2B, optimising brand reach and ensuring a better use of capital”.
He added that its previous strategy “delivered strong historic growth in revenues and raised brand awareness across new and existing markets”. But as consumer trends evolved into other footwear categories, “our narrow focus on boots failed to take full advantage of our strong shoes, sandals and leather goods offering — and our focus on a DTC-first approach led to a loss of coverage and responsiveness in our wholesale offering, restricting growth and reducing consumer touch points. This resulted in reduced customer acquisition, elevated inventory levels, increased use of clearance channels, and a significant increase in capital intensity and operating cost base”.
Acknowledging the brand’s strengths, strong operational base, high gross margin, strong cashflow and world-class team, he said it has “a significant untapped market opportunity, with our current retail sales value of c.£1.3 billion representing just 0.7% of the total relevant market for our 15 largest markets”.
The new strategy “represents a fundamental shift” for the firm and comes with the “ambition is to establish Dr Martens as the world’s most-desired premium footwear brand”.
Over the medium term it “expect[s] to deliver sustainable, profitable revenue growth above the rate of the relevant footwear market”.
To do that it will engage more consumers “with product, grounded in comfort, craft and confidence”; deliver a seamless omnichannel experience tailored to each consumer; and build post-purchase engagement to increase purchase frequency and consumer spend.
On the product front, it aims to drive more purchase occasions; reinforce the premium positioning of its icons through “elevated collections”; manage hero product families to “optimise newness across diverse wearing occasions”; extend its offer in sandals, bags and other adjacent categories; and “innovate to enhance comfort, lightness and sustainability”.
It will also expand B2B through long-term product and marketing partnerships with top-tier accounts; build a “differentiated DTC footprint to elevate the brand; aligning operating models to each market”; and “enter new growth markets with capital-light distribution models”.
It has already started executing the new strategy such as implementing its Customer Data Platform, “so our teams have much greater ability to present and sell the right product to the right person”. In Product, it has launched a new product family, ‘Buzz’, “which has quickly become one of our bestsellers, and will be a core product family for future seasons”.
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