What Dr. Martens (DOCS) Said on Its H1 Earnings Call

Key Points

• First-half revenue fell 9.2% at constant currency to £292.4 million, as boot revenue dropped 20%. Management attributed much of the weakness to hot weather in Europe and expects boots to remain a headwind for the rest of fiscal 2027.
• Adjusted EBIT swung to a £2.8 million loss from a £3.1 million profit, but gross margin improved 80 basis points to 65.4% as pricing and cost controls partly offset lower sales.
• Management said the year is weighted toward the second half, making upcoming peak-trading weeks important. Dr. Martens is also rolling out consumer-focused changes, including a new e-commerce platform, marketing campaign and redesigned stores.

Dr. Martens LON: DOCS reported a 9.2% decline in first-half revenue at constant currency as weak boot sales and unusually hot weather weighed on trading, particularly in the U.K. and continental Europe.

The footwear company said revenue for the first half of fiscal 2027 was £290.4 million on a reported basis, or £292.4 million at constant currency. Adjusted earnings before interest and tax swung to a reported loss of £2.8 million from a £3.1 million profit a year earlier, although stronger gross margins and cost controls softened the effect of lower sales.

Management said the business remains weighted toward the second half and that the coming trading weeks will be important to its full-year performance. The company plans to provide a further update toward the end of January.

Boots Drive Revenue Decline

Chief Financial Officer Giles Wilson said the revenue shortfall was driven largely by Europe and was “nearly all” attributable to boots. He said the effect of the hot summer could not be fully quantified, but it had significantly affected sales in Europe and, to a lesser extent, the U.S.

Boot revenue fell 20% year over year, while shoe revenue rose 1% and sandal revenue increased 5%. Wilson said revenue per pair increased across all product categories, reflecting pricing and product mix.

Boot volumes fell to 1.9 million pairs from 2.6 million in the first half of fiscal 2025. Over the same period, shoe volumes increased to 1.8 million pairs from 1.4 million, while sandal volumes remained at about 0.5 million pairs.

Ije, who led the presentation and whose full name and role were not provided in the transcript, said core black smooth boots remained under pressure, even as some newer or differentiated products performed well. Crazy Horse boot sales rose 30%, while Made in England boot pairs increased 20%, Ije said. Management expects boots to remain a headwind for the rest of fiscal 2027.

Wilson described wholesale trading as resilient, while direct-to-consumer sales were softer in several markets. He also noted that some wholesale shipments made in the first half last year had shifted into the second half this year.

Margins Improve Despite Lower Sales

Reported gross margin rose to 65.4%, up 80 basis points from a comparable prior-year figure adjusted for the reclassification of retail outbound freight costs. Wilson said higher average selling prices, pricing discipline and lower costs helped offset a less favorable channel mix.

Adjusted loss before tax was £13.7 million on a reported basis. The company declared an interim dividend of 0.85 pence per share, in line with its stated policy.

Net bank debt was £158.9 million at the half-year point, broadly flat from a year earlier. Wilson said the increase from the financial year-end reflected the seasonal buildup of inventory ahead of peak trading. Including lease liabilities, total net debt was £310.8 million.

Asked about costs, Wilson said a portion of the first-half savings was linked to variable expenses, while a significant proportion reflected fixed-cost reductions from earlier actions. He said some savings would moderate in the second half as the company brings new employees into its operating model.

Wilson also said gross margin should remain “pretty resilient” for the year, although some first-half benefits would slow. U.S. price increases will no longer provide a year-over-year comparison benefit in the fourth quarter, he said.

Transformation and Peak Trading

Dr. Martens is shifting from a distribution-led approach toward what management calls a consumer-first strategy. Initiatives include a refreshed global marketing platform, a new e-commerce site, redesigned stores and a broader product range.

The “With Bouncing Soles” campaign launched on September 22. Ije said initial engagement was encouraging but cautioned against placing too much weight on the first 30 days of results. The company also began rolling out its new e-commerce platform in August and September, with some short-term disruption expected as it settled in.

The company has introduced its new Spring/Summer 2027 sandals range to wholesale partners, with management describing the early response as encouraging. It has also opened or reopened redesigned Brand Centres in Paris, New York and Munich, with a Los Angeles location scheduled to open shortly after the call.

Management said its medium-term objectives remain unchanged: profitable growth above the relevant footwear market, a mid-to-high teens EBIT margin and strong cash conversion. Achieving those goals requires a return to revenue growth, the company said.

About Dr. Martens (LON:DOCS)

Dr. Martens is an iconic British footwear brand founded in Northamptonshire, England. Its first silhouette, the 1460 boot - named after the date it was produced - rolled off the production line on 1st April 1960. Originally chosen by workers for their air-cushioned comfort and durability, "Docs" or "DM's" were later adopted by musicians and subcultural pioneers who took them from the street to the global stage. Over six decades later, Dr. Martens operates in more than 60 countries and employs around 3,600 people.

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