Dr Martens' turnaround gathers pace as annual profit jumps 61%
Annual Performance and Strategic Initiatives
Profit Growth and Market Reaction
May 19 (Reuters) - Dr Martens reported a 61% jump in annual earnings on Tuesday and forecast "strong profit" growth this fiscal year as the British bootmaker's strategy of cutting discounts and improving margins appeared to be paying off.
Shares in Dr Martens, known for its lace-up chunky boots, rose more than 9% in early trade, after annual profit rebounded from a 65% decline in the previous year.
CEO Strategy and Operational Changes
That marked progress in CEO Ije Nwokorie's strategy of pulling back on discounting prices and offering promotions across its consumer and wholesale channels.
Cost-Cutting and Inventory Management
The company has also cut inventory and debt as part of a turnaround and cost-cutting drive, after high costs and weak U.S. wholesale demand dented sales and profits. The pressure worsened last year as U.S. tariffs forced the company to absorb additional costs.
Financial Results Overview
Annual adjusted pre-tax profit surged 61.3% to 55 million pounds ($73.78 million) for the year ended March 29, beating analysts' estimates of 51 million pounds, although revenue fell 2.9% to 764.9 million pounds.
Dr Martens' shares have gained more than 20% in the past 12 months on signs its results would improve.
Product Performance and Revenue Breakdown
The bootmaker - which also sells sandals, bags and accessories - said shoes were the standout performer in the year, with revenue rising 19% across models including the 1461 Shoe, Adrian Tassel Loafer and Mary Jane, now accounting for 31% of group revenue compared to 26% a year earlier.
Analyst Insights and Market Outlook
"Beyond the current year, we see ongoing profit recovery and growth potential," Berenberg analysts said in a note.
Direct-to-Consumer Strategy in the U.S.
Dr Martens also said full-price direct-to-consumer revenue in its largest market, the United States, rose 14%, as the company reduced its reliance on discounted sales to wholesale partners.
($1 = 0.7454 pounds)
(Reporting by Yamini Kalia in Bengaluru; Editing by Mrigank Dhaniwala and Susan Fenton)
