Dr Martens Issues Cautious Outlook, CEO to Step Down

Footwear company Dr. Martens provided a trading update Tuesday, alongside its outlook for the next financial year. The company said its full-year 2024 results are expected to be in line with guidance and consensus expectations. However, it issued a cautious outlook for the upcoming fiscal year 2025 (FY25), particularly concerning its USA wholesale business.

According to the company's press release, direct-to-consumer (DTC) sales turned around in the fourth quarter (Q4), with high single-digit year-on-year growth compared to a 3% decline in the previous quarter. This growth was driven by strong performance in EMEA (Europe, Middle East, and Africa), steady outcomes in the USA, and significant success in APAC, particularly Japan. Group wholesale in Q4 also performed in line with expectations.

Looking ahead to FY25, Dr. Martens Plc outlined several challenges and planning assumptions. The company anticipates a double-digit decline in USA wholesale revenue year-on-year, based on finalised Autumn/Winter orders that are significantly lower than the previous year. The impact of this decline on profitability is estimated to be around £20 million.

Moreover, the company foresees single-digit inflation in its cost base and intends to invest further in talent retention and incentivisation, amounting to an estimated £35 million year-on-year headwind in profit before tax (PBT). Ongoing challenges in the USA wholesale market also necessitate continued investment in additional inventory storage facilities, repeating the £15 million in additional costs incurred in FY24.

Kenny Wilson, CEO of Dr. Martens Plc, acknowledged the challenging outlook for FY25, particularly in reigniting demand for boots in the USA market. Wilson emphasized that the company is focused on its action plan to boost demand, but he cautioned against assumptions of immediate improvement.

“The nature of USA wholesale is such that increased customer confidence could significantly enhance our business performance, but we are not banking on this occurring in FY25,” Wilson stated.

Wilson reiterated confidence in the company's DTC-first strategy and highlighted the strength of the brand and product pipeline, providing assurance for future growth beyond the transitionary challenges of FY25.

In a separate release on Tuesday, Dr Martens announced that Wilson had decided this would be his final year as CEO of the company.

As part of a succession plan, DOCS said Ije Nwokorie, currently Chief Brand Officer, will succeed Wilson as CEO, with Ije becoming CEO before the end of the current financial year.