UPDATE: Dr. Martens (LSE:DOCS) shares plummeted 9.5% yesterday, marking it as the second-worst performer on the FTSE 250 following the release of its interim results for the 26 weeks ended September 28. This sharp decline comes despite a nearly 90% surge in share price earlier this year, raising eyebrows among investors.
The company’s share price closed at 74p after the announcement, a stark contrast to its initial IPO price of 370p in January 2021. Investors were left puzzled as the reported interim results, while not stellar, did not appear to justify such a significant drop.
Dr. Martens reported a 0.8% decrease in revenue compared to the same period last year. However, there was a noteworthy improvement in its adjusted loss before tax, which contracted by £7.2 million to £9.4 million. The group emphasized that its performance traditionally strengthens in the second half of the fiscal year, and it expects a similar trend for FY26.
One bright spot is the gross profit margin, which has risen to 65.3%, comparable to some luxury brands. However, the company faces challenges, including potential impacts from tariffs, which it estimates could reduce earnings by “high single-digit millions.” The firm is implementing cost controls and flexible pricing adjustments to mitigate these effects.
Despite these challenges, Dr. Martens noted a 33% increase in footwear sales due to more frequent purchases by customers. Overall, pairs sold increased by 1% to 4.7 million, with revenue in the U.S. rising by 6%. Analysts had previously projected an adjusted profit before tax for FY26 between £53 million and £60 million.
The company has maintained its interim dividend at 0.85p per share, signaling confidence amid this volatility. As Dr. Martens navigates these turbulent waters, market watchers are keen to see if the company can sustain its recovery momentum.
Investors are urged to monitor upcoming developments closely, as the potential for recovery remains, despite yesterday’s negative market reaction. With numerous opportunities for investors seeking undervalued stocks, Dr. Martens could still hold appeal for those willing to take a chance.
Time will tell if these early signs of recovery will materialize into a robust turnaround for this iconic brand.
