Shares of Dr. Martens fell sharply as British bootmaker’s profits plummeted – but shareholders enjoyed a 28% dividend increase
- Doctor. Martens saw earnings shrink and revenue growth slow in its half-year results
- FTSE 250 listed company stocks fall heavily and dividend increases by 28%
Dr. Martens saw its profits shrink 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 fell 5 percent to £44.7 million, while sales rose 13 percent to £418.6 million, or 7 percent excluding the benefit of currency movements.
The most recent revenue data compares to a growth of 18 percent over the previous full year, or 22 percent on a constant currency basis.
Dividend increase: Dr. Martens increased its dividend by 28%, from 1.22 Pa per share to 1.56 Pa per share
Dr Martens’ share price fell sharply today, falling 17.36 percent, or 49.73 pence, to 236.67 pence in morning trading, after falling more than 38 percent in the past year.
But to give shareholders a boost, Dr. Martens increased the dividend by 28 percent from 1.22 Pa per share to 1.56 Pa per share.
The retailer’s underlying profit held steady at £88.8m at the end of the period.
Dr. Martens said the lower earnings in the period reflected a “proactive decision” to invest in new stores, marketing, people, technology and inventory “rather than focusing on short-term profits.”
The group said retail sales rose 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.
Speaking of sales of the shoes, the company said: ‘We saw continued success from our platform soles, including our Quad range.
Platform boots that performed well with four soles included the Audric, the Jetta in APAC and the Jeric in EMEA. Within our casual range, we launched the new Boury utility boot in September ahead of the AW22.”
Direct-to-consumer growth in the second quarter was slower than expected, the group said, pointing to a weaker “consumer environment” during the period.
The group said that in the second half of the nearly two months, direct-to-consumer business “varyed from week to week.”
Dr. Martens said festive sales were ahead of forecasts to date and numbers for the same point a year ago.
Looking ahead, the company said, “We maintain revenue guidance of teens growth for the full year on a real currency basis.”
Group boss Kenny Wilson said: “While there are economic challenges ahead, we are well positioned for future growth.
“We will continue to pursue growth investments primarily in new stores, marketing, people, technology and inventory to deliver on the DOCS strategy.”
“Reflecting our confidence in the future, balanced global earnings and strong balance sheet, the Board of Directors has decided to increase the interim dividend by 28 percent to 1.56 pence per share.”
Russell Pointon, a director at Edison Group, said: “Dr. Martens maintains its high teen sales growth for the rest of the year despite retail economic woes, including rising inflation and the cost of living crisis. However, management 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 resolved supply chain issues, with all factories open and a new manufacturing base opened in Cambodia during this time.
Looking ahead, Dr. Martens are trying to capitalize on the approaching holiday season by continuing to invest in new stores, marketing and technology.”
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