Dr. Martens H2 Earnings Call Highlights

Key Points

• Dr. Martens posted a 59% rise in adjusted profit before tax to £54.2 million even as revenue slipped 1.4% on a constant-currency basis, helped by lower markdowns, higher gross margin and tighter cost control.
• The company said its consumer-first strategy is improving sales quality in the Americas and APAC, where full-price sales and average selling prices rose, while EMEA remained under pressure due to a weak and promotional market, especially in the U.K. and Germany.
• Dr. Martens continued to strengthen its balance sheet, with net debt falling and leverage ending at 1.4x EBITDA, while management outlined FY 2027 priorities including better full-price mix in Europe, new sandals, store-format changes and further brand investment.

Dr. Martens LON: DOCS reported higher full-year profit despite slightly lower revenue, as management said the footwear brand prioritized full-price sales, reduced markdown activity and continued to reshape the business around a consumer-led strategy.

Speaking at the company’s FY 2026 results presentation, Chief Executive Officer Ije Nwokorie said the strategy introduced last year was intended to move Dr. Martens “from a channel-first mindset to a consumer-first mindset” and build greater brand desire globally. Chief Financial Officer Giles Wilson said the year involved “significant change, some really tough calls, and a lot of hard work” as the company sought to improve revenue quality while maintaining cost discipline.

Profit rises as revenue edges lower

Wilson said revenue was in line with guidance, down 1.4% on a constant-currency basis. Adjusted profit before tax rose 59% on a constant-currency basis to 54.2 million pounds, and increased 61% on a reported basis to 55 million pounds.

Adjusted EBIT increased 30% to 78.7 million pounds from 60.7 million pounds, while the adjusted EBIT margin improved to 10.4% from 7.7%. Wilson said the margin improvement reflected stronger revenue quality and cost discipline, and noted that one of the company’s medium-term targets is an EBIT margin in the mid- to high-teens.

Gross margin rose 1.2 percentage points, helped by lower discounting and cost control, including freight savings. Wilson said the gross margin improvement came despite a mix shift toward wholesale, which carried a slight margin headwind. Average selling price increased 0.6%, even as the company sold a higher mix of shoes, which have a lower average selling price than boots.

The company declared a final dividend of 2.55 pence, unchanged from the prior year.

Americas and APAC show full-price progress; EMEA remains under pressure

Management emphasized that FY 2026 was focused on improving “quality” of revenue rather than volume. Wilson said the company made progress in the Americas and APAC, while EMEA remained a challenge.

• Americas: Revenue returned to growth across both direct-to-consumer and wholesale after adjusting for a one-off U.S. off-price deal in the prior year. Full-price DTC sales rose 14%, while the company reduced markdown activity. Nwokorie said U.S. wholesale off-price sales were reduced by about a third, contributing to a 23% increase in average selling price in U.S. wholesale.
• EMEA: DTC revenue fell by 24 million pounds, with full-price revenue down 13%. Wilson cited a weak consumer backdrop and a highly promotional market. Nwokorie said the U.K. and Germany would be major areas of focus in FY 2027.
• APAC: DTC revenue continued to grow, with full-price sales up 15%. Wilson highlighted strong South Korea retail performance and full-price e-commerce growth across the region.

In the question-and-answer session, Nwokorie said the promotional challenge was most pronounced in the U.K. and Germany. “That’s the completion of the pivot,” he said, adding that management was “fairly comfortable” with discounting levels elsewhere.

Balance sheet strengthens and capital framework set out

Wilson said Dr. Martens continued to reduce debt. Net bank debt fell by a further 25 million pounds and stood at just under 70 million pounds at year-end. Including IFRS 16 lease debt, net debt declined to 213.5 million pounds from 249.5 million pounds. Net debt to EBITDA finished at 1.4 times, below the company’s covenant of 3 times.

The CFO also set out a capital allocation framework. He said the company views a healthy balance sheet as net debt to EBITDA of 1.5 times or below throughout the year. Priorities include investing in the brand, capital expenditure, systems and other projects; paying a regular progressive dividend under a policy of 25% to 35% of earnings; considering strategic investments; and returning excess capital to shareholders when appropriate.

Wilson also addressed U.S. tariffs, saying the company reclassified the full cash amount incurred from unlawful U.S. tariff costs as an operating expense and adjusting item. He said Dr. Martens is seeking refunds, which would also be recognized as adjusting items in future periods.

Strategy focuses on consumers, products, markets and organization

Nwokorie said Dr. Martens had delivered against objectives across four strategic levers: consumer, product, markets and organization. He said the company’s ambition is “to be the world’s most desired premium footwear brand.”

On consumers, Nwokorie said the company has shifted from a narrow, trend-led presentation of the brand toward messages around craft, comfort and confidence. He said the company is targeting a consumer segment it calls the “craft curator,” which he described as less promotionally driven than prior target segments. He also said the company’s ReWair refurbished offering grew 73% in the U.S. in FY 2026.

On products, the CEO said new product families including Lowell, Buzz and Zebzag increased their contribution from 3% to 9% of pairs. Shoe revenue rose 19%, led by the Americas, where shoe revenue increased 32%. Boots revenue declined 8%, though Nwokorie said full-price boots and the core 1460 boot returned to growth in the U.S. Sandals revenue fell 11%, and he said a fuller recovery is expected to begin from spring/summer 2027. Bags revenue grew 15% from a small base.

On markets, Nwokorie said Dr. Martens entered Argentina, Chile, Colombia, Costa Rica, Mexico, Paraguay, Peru, Uruguay and the UAE through capital-light models. He also highlighted wholesale partnerships with multi-brand retailers, saying wholesale returned to growth in FY 2026 for the first time since FY 2023.

FY 2027 priorities include EMEA, sandals and store formats

For FY 2027, Nwokorie said the company’s priorities include improving full-price revenue mix in the U.K. and DACH region, introducing a new sandals range, launching new retail concepts in key cities and extracting benefits from the company’s revised operating model and technology investments.

Dr. Martens also outlined changes to its store strategy. Nwokorie said the company had doubled its store estate between FY 2021 and FY 2024, while retail revenue grew 50%, and that the company is now segmenting stores by role. He said beacon stores are expected to represent about 5% of the estate, brand centers about 10%, core brand stores about 70% and outlets about 15% over the next three to five years.

In response to analyst questions, Nwokorie said the company does not manufacture specifically for outlets. Wilson said the company expects the overall store count to be broadly flat over the next couple of years, with many of the planned 30 store upgrades coming from the existing estate.

Wilson said Dr. Martens has no planned price increases at present, though pricing will continue to be reviewed. He said the company is not seeing material raw material movements and expects to manage potential freight fuel surcharges within the overall cost base.

About Dr. Martens LON: DOCS

Founded in 1960, Dr. Martens is an iconic British brand with a global presence. “Docs” or “DMs” were originally produced for their durability for workers, before being adopted by diverse youth subcultures and associated musical movements. Today, Dr. Martens has transcended its roots while still celebrating its proud history. It operates in over 60 countries and employs over 3,650 people worldwide. Its operations are split across both Direct-to-Consumer and wholesale channels, and in addition to its world-renowned “1460” boot its product segments span shoes including the 1461 shoe and Adrian loafer, sandals including the Zebzag mule, Kids ranges, as well as a growing line of bags and accessories. The Company successfully listed on the main market of the London Stock Exchange on 29 January 2021 (DOCS.L) and is a constituent of the FTSE 250 index.

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