Dr Martens sees profit slip and hikes dividend by 28%
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The shares of Dr. Martens fall sharply as British bootmaker’s profits slump, but shareholders enjoy 28% dividend increase
- Dr. Martens saw earnings decline and revenue growth slow in its half-year results
- Shares of FTSE 250-listed companies are falling sharply and dividends are being increased by 28%
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Dr. Martens saw its profits decline and sales growth slow in the six months to September 30 amid a deteriorating economic environment.
Pre-tax profits for the FTSE 250-listed group shrank 5 per cent to £44.7m, while revenues rose 13 per cent to £418.6m, or 7 per cent excluding the benefit from currency movements.
The most recent revenue data compares to an 18 percent growth over the past full year, or 22 percent on a constant currency basis.
Dividend increase: Dr. Martens increased its dividend by 28%, from 1.22 pa share to 1.56 pa share
The share price of Dr. Martens fell sharply today, falling 17.36 percent or 49.73p to 236.67p in early morning trading, after falling more than 38 percent in the past year.
But as a boost to shareholders, Dr. Martens increased the dividend by 28 percent, from 1.22 pa share to 1.56 pa share.
The retailer’s underlying profit held steady at £88.8m by the end of the period.
Dr. Martens said lower profits in the period reflected a “proactive decision” of investing in new stores, marketing, people, technology and inventory “rather than focusing on short-term profits.”
Retail sales grew 38 percent to £91 million, mainly due to the ongoing recovery in traffic in the UK, continental Europe and the US as consumers increasingly returned to stores, the group said.
On sales of boots, the company added: ‘We saw continued success from our platform soles, including our Quad range.
“Platform boots that performed well with Quad soles were the Audrick, the Jetta in APAC and the Jarrick in EMEA. Within our casual range, we launched the new Boury utility boot in September ahead of AW22.”
Direct-to-consumer growth in the second quarter was slower than expected, the group said, pointing to the weaker “consumer environment” over the period.
In the nearly two months since the start of the second half, direct-to-consumer trading was “variable from week to week,” the group added.
Dr. Martens said festive sales to date have exceeded forecasts and figures from the same point a year ago.
Looking ahead, the company said, “We maintain revenue guidance of ten-year growth for the full year, based on actual currency.”
Kenny Wilson, the group’s boss, added: ‘While there are economic challenges ahead, we are well positioned for future growth.
“We will continue to drive growth investments to deliver on the DOCS strategy, primarily in new stores, marketing, people, technology and inventory.
“Reflecting our confidence in the future, balanced global earnings and strong balance sheet, the Board of Directors has decided to raise the interim dividend by 28 per cent to 1.56p per share.”
Russell Pointon, a director at Edison Group, said: ‘Despite the economic headwinds plaguing the retail industry, including rising inflation and the cost of living crisis, Dr. , but management now expects EBITDA margin to be 1-2.5 margin points lower than last year given the strength of the US dollar.
Investors will also be reassured by the board’s proposal to raise the interim dividend by 28 percent. The brand has successfully sidelined supply chain issues, with all factories open during the period and the opening of a new manufacturing base in Cambodia.
“Looking forward, Dr. Martens will aim to capitalize on the holiday season beyond the holiday season as he continues to invest in new stores, marketing and technology.”