Iconic bootmaker Dr Martens has halved shareholder payouts and unveiled plans to slash its costs by up to £25million, after seeing its annual profits crash.
Dr Martens primarily blamed weak US consumer demand and problems at its wholesale business there for its pre-tax profits tumbling 41.7 percent to £93million. For the 12 months to the end of March, its revenues slipped 12.3 percent to £877.1million, while its net debt rose from £69.2million to £357.5million.
Outgoing chief executive Kenny Wilson said that 2023/24 was a “challenging year” for the bootmaker and in response, it is halving its full year dividend to 2.55p per share, a payout worth £24.5million to its shareholders.
At the same time, he said that plans to slash £20-25million from its cost base through streamlining its operations, making efficiency gains and better procurement. Dr Martens expects to see benefits of its cost cutting plan emerge in its 2025/26 financial year, along with its return to growth.
Wilson warned that 2024/25 will be a transitional year for Dr Martens and for it to return to growth, it will have to turn around the performance of its US business. It plans to do that by increasing spending on and the quality of its marketing there, as well improve its digital performance in the US.
“I am confident that the actions we are taking as we enter this year of transition will put us in good shape for the years ahead,” he said.
Dr Martens issued its fifth profit warnings in just under a year and a half in April, alongside news that Wilson will leave the company after six years as chief executive.
Adam Vettese, eToro analyst, said that for long suffering Dr Martens investors, who have seen its shares lose 80 percent of their value since its 2021 flotation, the results were “grim”.
“The firm has announced a raft of cost cutting measures and it seems they do need to pull themselves up by the bootstraps to get out of this financial quagmire,” he said. “Consumers have been under pressure in this higher inflation environment and with their punchy ticket price, a pair of Docs is probably one of the first luxuries to make way. The numbers would back this up.”
