Shares in Dr. Martens PLC (LON:DOCS) surged 25% on Thursday after the company delivered a stronger-than-expected full-year update, signalling a potential turning point as it moves towards stabilisation and future growth.
The iconic British footwear brand reported adjusted pre-tax profits of £34.1 million for the year to March, around £2 million above consensus estimates and in line with forecasts from Peel Hunt.
FY25 RESULTS HEADLINES
· Delivered on all four objectives set at the start of the year:
1. Americas direct-to-consumer channel (“DTC”) back into growth in H2
2. Marketing approach reset to relentlessly focus on product
3. £25m of annualised cost savings delivered – the top end of guidance
4. Balance sheet significantly strengthened ahead of target
· Group revenue of £787.6m, down 8% CC and 10% reported, in line with guidance (FY24: £877.1m) against a challenging macroeconomic and consumer backdrop in several of our core markets
· Adjusted PBT of £34.1m or £40.3m CC (FY24: £97.2m)
· Reported PBT (post exceptionals and adjusting items) of £8.8m (FY24: £93.0m)
· Strong cash generation, driven by inventory reduction, leading to significant decrease in net debt to £94.1m excluding lease liabilities (FY24: £177.5m), or £249.5m including leases (FY24: £359.8m)
· Refinance completed successfully, securing a new £250.0m term loan together with a £126.5m RCF
· Final dividend of 1.70p proposed, taking the total dividend to 2.55p, as previously guided
While revenue declined 10% year-on-year to £788 million, investors were buoyed by the company’s improved cash performance. Net debt was reduced to £94.1 million—roughly £40 million better than anticipated—driven by a £70 million reduction in inventory levels. Wholesale stock has now returned to more normal levels, and the order book for autumn/winter 2025 is showing growth in Europe and the Middle East, with signs of stabilisation in the US.
Dr. Martens has also refined its strategic focus, shifting attention away from sales channels and towards product and consumer engagement. The company aims to return to mid-to-high teen EBIT margins over time, underpinned by £25 million in annualised cost savings.
Though profit forecasts for FY26 may soften slightly, Peel Hunt sees a base level of £58 million as achievable—suggesting a company now moving in a more focused and disciplined direction.
