The Dr Martens (LSE:DOCS) share price was the second-worst performer on the FTSE 250 yesterday (20 November), after the legendary boots, shoes and sandals maker reported its interim results for the 26 weeks ended 28 September (H1 26).
The reaction of investors was particularly disappointing given the group’s recent share price performance. In April, it recorded a 52-week low of 43p, as President Trump’s announcements on tariffs created uncertainty for the group with its Asian-focused manufacturing operation. Since then — and prior to the publication of the results — it had increased nearly 90%.
Yesterday, its share price closed at 74p, having fallen 9.5% over the course of the day. Sometimes it’s hard to believe that the group listed in January 2021 with an IPO price of 370p.
So what caused such a negative reaction? To be honest, I’m not really sure. Okay, the results weren’t amazing but I don’t think a near-10% fall’s warranted.
Crunching the numbers
The group reported a 0.8% drop in H1 26 revenue compared to the same period a year earlier. However, its adjusted loss before tax (LBT) improved by £7.2m to £9.4m. Historically, its performance has been heavily weighted to the second half of each financial year. A similar trend’s expected for FY26.
Significantly, the gross profit margin continues to rise. But at 65.3%, it’s now higher — or similar to some luxury brands. How much of this is attributable to price rises is unclear but the scope to continue charging more seems limited. In FY18, its margin was 53.4%.
Compared to a year earlier, inventory levels were £45.6m lower or, expressed another way, four weeks’ less stock is now being held. Net debt (including leases) fell from £348.7m to £302.3m over the same period.
The group’s maintained its interim dividend at 0.85p a share.
Going to plan
Most importantly, the group says it’s trading in line with current expectations. Before yesterday, analysts were expecting an adjusted profit before tax for FY26 of £53m-£60m.
This excludes any estimated impact from tariffs. The company’s now confirmed that these are likely to reduce earnings by “high single-digit” millions, although around half of this is expected to be offset by mitigating actions including “tight cost control, flexible product sourcing, and targeted adjustments to our USA pricing policy”.
To be honest, I thought the tariff impact would have been much bigger.
Green shoots
Delve a little deeper and there’s more good news. The company says it’s increased the number of “purchase occasions” (surely, purchases?) made by its customers, which has resulted in a 33% increase in footwear sales.
Across all lines, pairs sold increased by 1% to 4.7m. Also, revenue in America was up 6%.
This sounds positive to me and doesn’t appear to justify yesterday’s reaction of investors. Although it’s early days, I think there’s enough evidence of a recovery to make the stock one to consider.
Time will tell if these green shoots continue to grow. And I acknowledge there are plenty of other opportunities available to investors who are looking to buy beaten-down stocks that might have turned the corner. However, I’ve always had a bit of a soft spot for Dr Martens. That’s why I hope it can recapture some of its former glories.
