Dr. Martens Plc · LSE:DOCS
Dr. Martens — H1 FY25 Earnings Presentation
47 slides from Dr. Martens's earnings presentation, Nov 28, 2024
Slide 1: FY25 H1 Results
DR. MARTENS PLC FY25 H1 RESULTS 28 November 2024
Slide 2: Agenda
INTRODUCTION Kenny Wilson, CEO H1 FINANCIAL RESULTS Giles Wilson, CFO BUSINESS UPDATE Kenny Wilson, CEO BRAND UPDATE Ije Nwokorie, CBO AGENDA DR. DR.MARTENS MARTENSPLC PLCFY25 FY25H1 H1 RESULTS RESULTS 2
Slide 3: Introduction
Kenny Wilson, CEO INTRODUCTION
Slide 4: First Half in Line with Expectations
FIRST HALF IN LINE WITH EXPECTATIONS TURN AROUND USA DTC PERFORMANCE PIVOT MARKETING TO RELENTLESSLY FOCUS ON PRODUCT REDUCE OPERATING COST BASE STRENGTHEN BALANCE SHEET DR. MARTENS PLC FY25 H1 RESULTS 4
Slide 5: H1 Financial Results
Giles Wilson, CFO H1 FINANCIAL RESULTS
Slide 6: Delivering on Our Plan
DELIVERING ON OUR PLAN COST ACTION PLAN IMPLEMENTED REDUCED INVENTORY REFINANCE COMPLETED SUCCESSFULLY ON TRACK WITH FULL YEAR TARGETS DR. MARTENS PLC FY25 H1 RESULTS 6
Slide 7: H1 Results in Line with Expectations
H1 RESULTS IN LINE WITH EXPECTATIONS % change FY25 H1 FY25 H1 Constant FY24 H1 £m Reported currency Reported Reported Constant currency Pairs (m) 4.6 4.6 5.7 -20% Revenue 324.6 332.1 395.8 -18% -16% Gross Margin 207.7 213.1 254.9 -19% -16% Gross Margin % 64.0% 64.2% 64.4% -0.4pts -0.2pts Opex (174.1
Slide 8: Revenue by Channel
REVENUE BY CHANNEL % change FY25 H1 FY25 H1 Constant FY24 H1 £m Reported currency Reported Reported Constant currency Ecommerce 87.7 89.5 91.7 -4% -2% Retail 95.3 97.8 104.7 -9% -7% DTC 183.0 187.3 196.4 -7% -5% Wholesale1 141.6 144.8 199.4 -29% -27% Total 324.6 332.1 395.8 -18% -16% DTC Mix 56.4% 5
Slide 9: Revenue by Region
REVENUE BY REGION Americas 37% AMERICAS EMEA APAC Americas 36% EMEA 49% • DTC performance driven by EMEA 49% • DTC performance as expected. • DTC impacted by early Easter/sale APAC 14% Marginal growth in ecommerce timing, weaker sandals and Japan ecommerce APAC 15% (CC) offset by retail decline driv
Slide 10: EBIT Bridge: Costs Tightly Controlled
EBIT BRIDGE: COSTS TIGHTLY CONTROLLED £m Total GM (£41.8m) FY24 H1 VOLUME MIX & DEMAND NON-DEMAND D&A FY25 H1 EXCEPTIONALS FX TRANSLATION FY25 H1 EBIT ADJUSTED EBIT PRICE GENERATING GENERATING ADJUSTED EBIT AND CURRENCY OPEX OPEX CC GAINS/LOSSES DR. MARTENS PLC FY25 H1 RESULTS 10
Slide 11: Good Performance in Reducing Inventory
GOOD PERFORMANCE IN REDUCING INVENTORY INVENTORY (£m) £314.5m £257.8m £254.6m £245.4m Normal build Inventory Inventory flat despite FY25 guidance for c.£215m ahead of peak reducing through new seasonal c.£40m reduction AW season peak period product due to driven by reduced reduced purchases purchase
Slide 12: £130m Reduction in Net Debt Year on Year
£130M REDUCTION IN NET DEBT YEAR ON YEAR Net bank debt Lease liabilities £m Cash generation 478.9 (£2.7m) 369.1 359.8 348.7 271.8 11.0 (4.4 ) 12.8 (20.4 ) (24.4 ) (14.1 ) 28.4 177.5 186.8 186.8 207.1 182.3 182.3 161.9 FY24 H1 NET FY24 NET EBITDA NET WORKING PAYMENT OF NET INTEREST CAPEX FX DECREASE
Slide 13: Cost Action Plan Implemented
COST ACTION PLAN IMPLEMENTED Swift action taken in H1 Cost savings of c.£25m Around 2/3 of savings from to identify and implement in FY26, top of previous headcount reduction, resulting cost savings guidance range exceptional cost booked in H1 DR. MARTENS PLC FY25 H1 RESULTS 13
Slide 14: Refinance Completed Successfully
REFINANCE COMPLETED SUCCESSFULLY New facilities: £250m term Net leverage financial loan and £126.5m RCF No change to consensus net covenant: <3x Net finance costs expected 3 year term (3+1+1) Debt/EBITDA DR. MARTENS PLC FY25 H1 RESULTS 14
Slide 15: Business Update
Kenny Wilson, CEO BUSINESS UPDATE
Slide 16: USA Boots Market Continues to Be Weak
USA BOOTS MARKET CONTINUES TO BE WEAK USA Boots YoY Quarterly Trends FY24: boots down 17% FY25 H1: boots down 12% YoY YoY 5.9 -0.7 -1.5 -1.8 -9.4 -11.8 -12.5 -14.9 -14.6 -17.7 -18.5 3ME Mar'22 3ME Jun'22 3ME Sept'22 3ME Dec'22 3ME Mar'23 3ME Jun'23 3ME Sept'23 3ME Dec'23 3ME Mar'24 3ME Jun'24 3ME Se
Slide 17: USA Action Plan Progressing Well
USA ACTION PLAN PROGRESSING WELL WHAT WE SAID WHAT WE’VE DONE Marketing Marketing • Double-down on product marketing - icons and 4 key concepts • Led with product and ensured clarity of message • All season focus on icons • Launched ‘Boots Like No Other’ campaign • Focus on mid to lower funnel to dr
Slide 18: Lag Between DTC and Wholesale Performance
LAG BETWEEN DTC AND WHOLESALE PERFORMANCE AW25 order book revenue Performance in AW24 in Influences largely recorded in H2 FY26 DTC and end-consumer wholesale order Total wholesale revenue is a demand book for AW25 combination of order book and in-season reorders DR. MARTENS PLC FY25 H1 RESULTS 18
Slide 19: EMEA: Significant Growth Runway Ahead
EMEA: SIGNIFICANT GROWTH RUNWAY AHEAD 2 STORE APPROACH IN KEY CITIES NEW MARKETS Milan – Via Torino Milan – Corso Buenos Aires Stockholm Vienna Berlin – Mitte Berlin – Europa Copenhagen DR. MARTENS PLC FY25 H1 RESULTS 19
Slide 20: Japan: 5 Stores Opened in H1 with Strong Pipeline
JAPAN: 5 STORES OPENED IN H1 WITH STRONG PIPELINE DTC FRANCHISE Shinjuku Omiya Lumine Koenji Okinawa Takasaki DR. MARTENS PLC FY25 H1 RESULTS 20
Slide 21: Good Progress with Systems Investments
GOOD PROGRESS WITH SYSTEMS INVESTMENTS Implementation timing Benefits Customer Data • Now live across EMEA and • Single view of customer Platform (CDP) Americas regions through all DTC channels • Benefits build as more data • Enables targeted captured and utilised marketing and personalised consumer
Slide 22: Product Performance in Line with Expectations
PRODUCT PERFORMANCE IN LINE WITH EXPECTATIONS GROUP DTC PAIRS YoY growth Total DTC pairs -3% 26% 27% FLAT 30% 33% +7% 44% 40% -12% FY24 H1 FY25 H1 Boots Shoes Sandals DR. MARTENS PLC FY25 H1 RESULTS 22
Slide 23: Brand Update
Ije Nwokorie, CBO BRAND UPDATE
Slide 24: Marketing Pivot: Relentless Focus on Product
MARKETING PIVOT: RELENTLESS FOCUS ON PRODUCT PREMIUM POSITION CUTS-THROUGH ICONIC DNA SUPPORTS MARKETING OF BOTH CORE AND SEASONAL PRODUCT COMPELLING PRODUCT ATTRIBUTES DRIVE CONSIDERATION DR. MARTENS PLC FY25 H1 RESULTS 24
Slide 25: Autumn Winter Product Campaigns
AUTUMN WINTER 24 PRODUCT CAMPAIGNS DR. MARTENS PLC FY25 H1 RESULTS 25
Slide 26: July: Ambassador Soft Leather
JULY: AMBASSADOR SOFT LEATHER DR. MARTENS PLC FY25 H1 RESULTS 26
Slide 27: August: Anistone Biker Boot
AUGUST: ANISTONE BIKER BOOT Anistone Tall: £210
Slide 28: September: Maybole Square Toe
SEPTEMBER: MAYBOLE SQUARE TOE Maybole Mary Jane: £160
Slide 29: ad \
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Slide 30: October: Boots Like No Other
OCTOBER: BOOTS LIKE NO OTHER DR. MARTENS PLC FY25 H1 RESULTS 30
Slide 31: November: Winterised
NOVEMBER: WINTERISED DR. MARTENS PLC FY25 H1 RESULTS 31
Slide 32: FY25: On Track with Our Four Objectives
FY25: ON TRACK WITH OUR FOUR OBJECTIVES TURN AROUND USA DTC PERFORMANCE PIVOT MARKETING TO RELENTLESSLY FOCUS ON PRODUCT REDUCE OPERATING COST BASE STRENGTHEN BALANCE SHEET DR. MARTENS PLC FY25 H1 RESULTS 32
Slide 33: Dr. Martens Plc FY25 H1 Results
DR. MARTENS PLC FY25 H1 RESULTS 33
Slide 34: Appendix
• IR contact details • Balance Sheet • DOCS strategy • FX • FY25 guidance • Retail store estate • Sustainability • Alternative performance measures • Quarterly revenue • Cautionary statement • Earnings APPENDIX
Slide 35: Investor Relations Contact Details
INVESTOR RELATIONS CONTACT DETAILS BETHANY BARNES Director of Investor Relations Bethany.Barnes@drmartens.com Mobile: +44 7825 187465 BETH FIONDA Investor Relations Manager Beth.Fionda@drmartens.com Phone: +44 20 3995 2644 DR. MARTENS PLC FY25 H1 RESULTS 35
Slide 36: Our DOCS Strategy
OUR DOCS STRATEGY DTC FIRST ORGANISATIONAL AND CONSUMER SUPPORT BRAND OPERATIONAL EXCELLENCE CONNECTION EXPANSION WITH B2B Build brand equity and Enable growth and Acquire new customers Manage B2B holistically drive margin expansion unlock value and drive loyalty and purposefully DR. MARTENS PLC FY2
Slide 37: FY25 Guidance
FY25 GUIDANCE • Positive USA DTC growth in H2 • Inventory declining by c.£40m • Net debt declining to £310m to £330m (including lease liabilities) • USA wholesale revenue declining double digit percentage in FY25 • New store openings of around 15 (previously 25 to 30) • Depreciation and Amortisation
Slide 38: Continued Progress in Sustainability
CONTINUED PROGRESS IN SUSTAINABILITY AUTHORISED REPAIR REWAIR ALTERNATIVE MATERIALS • Operational for a year with very • Live for six months • Continue to focus on positive consumer feedback • Significant proportion of researching and developing • Looking to expand to consumers buying through more s
Slide 39: Quarterly Revenue by Channel & Region
QUARTERLY REVENUE BY CHANNEL & REGION Q125 Q225 H125 YoY Change Actual CC Actual CC Actual CC Total Revenue -17.6% -15.8% -18.2% -16.3% -18.0% -16.1% Revenue by channel Ecommerce -8.8% -7.1% -0.6% 1.6% -4.4% -2.4% Retail -9.7% -7.3% -8.3% -6.2% -9.0% -6.6% DTC -9.3% -7.2% -4.6% -2.4% -6.8% -4.6% Who
Slide 40: Earnings
EARNINGS FY25 H1 FY25 H1 FY24 H1 £m Reported Constant currency Reported Adjusted EBIT (4.3) (2.4) 39.7 Net finance expense (13.6) (13.7) (14.5) Adjusted Profit before tax (17.9) (16.1) 25.2 Exceptionals and currency gains/losses (10.8) (10.9) 0.6 Profit before tax (28.7) (27.0) 25.8 Tax credit/(expe
Slide 41: Balance Sheet
BALANCE SHEET 29 September 2024 31 March 2024 30 September 2023 Freeholds 6.7 7.0 7.4 Right-of-use assets 153.4 173.5 195.0 Other fixed assets 79.3 81.7 81.8 Inventory 245.4 254.6 314.5 Working capital2 (excluding inventory) (52.0) (30.3) (13.0) Other1 7.8 (1.5) 13.2 Operating net assets 440.6 485.0
Slide 42: FX Translation Rates
FX TRANSLATION RATES GBP/USD GBP/EUR GBP/JPY FY25 FY24 % change FY25 FY24 % change FY25 FY24 % change H1 1.28 1.26 2% 1.18 1.16 2% 195 178 10% H2 1.26 1.16 186 FY 1.26 1.16 182 FX revenue sensitivities for FY25 are as follows: for every 1%pt movement in US Dollar c.£3.5m; Japanese Yen c.£0.5m and Eu
Slide 43: Retail Store Estate
RETAIL STORE ESTATE 1 April 2024 Opened Closed 29 September 2024 EMEA: UK 35 - (1) 34 Germany 19 - (1) 18 France 17 1 - 18 Italy 12 - - 12 Spain 6 - - 6 Other 13 3 (3) 13 102 4 (5) 101 Americas: 61 1 (2) 60 APAC: Japan 43 3 (2) 44 China 9 2 (1) 10 South Korea 17 - (1) 16 Hong Kong 7 - - 7 76 5 (4) 7
Slide 44: Alternative Performance Measures
ALTERNATIVE PERFORMANCE MEASURES Metric Definition Rationale Gross Margin % Gross margin divided by revenue. Helps evaluate growth trends, establish budgets and assess operational performance and efficiencies. Exceptional costs Costs or incomes considered significant in nature and/or quantum, Exclud
Slide 45: Alternative Performance Measures (continued)
ALTERNATIVE PERFORMANCE MEASURES (continued) Metric Definition Rationale Operating cash flow conversion Operating cash flow divided by EBITDA. Used to evaluate the efficiency of a company’s operations and its ability to employ its earnings toward repayment of debt, capital expenditure and working ca
Slide 46: Cautionary Statement
CAUTIONARY STATEMENT Cautionary statement relating to forward-looking statements Announcements, presentations to investors, or other documents or Financial Conduct Authority), the Group undertakes no obligation to reports filed with or furnished to the London Stock Exchange (LSE) and update any forw
Slide 47: drmartensplc.com
drmartensplc.com Dr. Martens plc drmartensofficial