TIDMDOCS
RNS Number : 1350V
Dr. Martens PLC
30 November 2023
30 November 2023
Dr. Martens plc
First half results for the six months to 30 September 2023
Strategic progress despite challenging USA backdrop
"We saw a mixed trading performance in the first half of the
year. We made good progress with our strategic priorities,
continuing to invest in the business and our people to drive
sustainable long-term growth. During the period we focused on
controlling the controllables: we delivered significant supply
chain savings, successfully transformed our North America
distribution network, opened 25 new stores, and launched a Dr.
Martens UK repair service. The DOCS strategy of brand control and
prioritising more profitable sales via our own stores and websites
continued to deliver, with Direct to Consumer ("DTC") revenues up
11% in constant currency, representing half of Group revenues.
We saw a continued strong DTC performance in EMEA and APAC. In
the USA, where there is an increasingly difficult consumer
environment, our results have been more challenged, led by weakness
in wholesale. We have strengthened the Americas leadership team and
they are taking action, including refocusing marketing and
improving our ecommerce trading capabilities. It is likely,
however, that given the challenging backdrop it will take longer to
see an improvement in USA results than initially anticipated.
Notwithstanding the clear challenges we face in the USA market we
remain very confident in our iconic brand and the significant
growth opportunity ahead of us.
I am delighted that I'll be joined by Giles Wilson as Chief
Financial Officer and Ije Nwokorie as Chief Brand Officer in the
new year, bolstering our leadership team. I would like to take this
opportunity to thank the dedicated and passionate people of Dr.
Martens for their exceptional hard work in H1 and their continued
support as we enter the busiest period of the year."
Kenny Wilson, Chief Executive Officer
% change % change
GBPm H124 H123 Actual CC(2)
------ ------ ---------
Revenue 395.8 418.6 -5% -3%
DTC revenue mix 50% 43% +7%pts
EBITDA(1) 77.6 88.8 -13%
EBITDA margin 19.6% 21.2% -1.6%pts
Profit Before Tax 25.8 57.9 -55%
Profit After Tax 19.0 44.7 -57%
Basic EPS (p) 1.9 4.5 -58%
Dividend per share (p) 1.56 1.56 -
------------------------ ------ ------ --------- ---------
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation and amortisation
2. Constant currency applies the same exchange rate to the FY23
and FY24 results, based on FY23 budgeted rates
-- H1 revenue down 5% (3% constant currency (CC)), primarily
driven by weakness in USA wholesale
o DTC revenue up 9% (11% CC) to 50% mix. Retail revenue up 15%
(17% CC) and ecommerce up 3% (5% CC)
o Wholesale revenue impacted by planned strategic decisions to
reduce volumes into EMEA etailers and exit of the China
distributor, together with a weaker USA wholesale performance than
previously anticipated
o Regional shape of performance in line with expectations, with
good growth in EMEA (revenue up 9% or 8% CC), a strong performance
in Japan DTC (revenue up 41% CC) and America revenue down 18% (15%
CC), driven by wholesale
-- New marketing brand platform "Made Strong" launched, with
high impact city activations in New York, London and Tokyo
-- 14XX capsule collection unveiled, the first step of a faster
pace of product innovation, driving brand energy. Strong product
pipeline for AW24
-- Opened 25 new own stores globally
-- Successful rollout of omnichannel offer in UK, with positive
initial results. Rollout across core EMEA markets in 2024
-- Transformed our North America distribution network with
automation of LA DC, expansion of New Jersey DC and relocation of
Canadian DC to Toronto
-- Launched Authorised Repair service to UK consumers in October
-- Strategic supply chain savings drove both a gross margin
improvement of 2.8%pts (to 64.4%) and resulted in EBITDA margin
performance ahead of guidance
-- Profit before tax was down 55% to GBP25.8m, reflecting the
EBITDA performance together with higher depreciation and
amortisation as a result of continued investment into IT projects,
DCs and new stores
-- Interim dividend held flat year-on-year and GBP50m buyback programme progressing well
Current trading and guidance
Trading in the second half to date has been mixed, with the
start of the Autumn/Winter season impacted by warm weather across
all three regions and weaker traffic overall. However, in both EMEA
and APAC, we have seen improved trading in more recent weeks. We
expect trading for the remainder of the full year in these two
regions to be broadly in line with previous expectations.
In the USA, the consumer environment has become more challenging
in recent months. Although we have seen some encouraging signs in
very recent DTC trading, including over the Black Friday weekend,
we expect that it will take longer to see a material improvement in
USA performance than initially anticipated. The most challenging
part within our USA business is wholesale, with widespread
macro-economic caution amongst our wholesale customers resulting in
a weaker order book than in prior years. Wholesale customers have
low in-market inventory levels of our products and therefore we can
expect them to re-order, however the timing and level of these
re-orders are unpredictable, reducing visibility in our wholesale
business.
There is a large part of the financial year still ahead of us,
however, given the backdrop, we expect that full year revenue will
decline by high single-digit percentage year-on-year, on a constant
currency basis. Assuming this revenue outturn, we expect FY24
EBITDA to be moderately below the bottom end of the range of
consensus expectations, with PBT also impacted by c.GBP5m higher
net finance costs in addition to this lower EBITDA *.
Given macro-economic uncertainty, we are withdrawing our
previous guidance of high single-digit revenue growth in FY25. Our
medium-term expectations are unchanged, underpinned by the
significant white-space growth opportunity and our iconic brand and
product range.
*Sell-side consensus FY24 EBITDA range GBP223.7m to GBP240.0m
and PBT range GBP128.7m to GBP148.0m.
Detailed technical guidance is on page 12.
Enquiries
Investors and analysts
Bethany Barnes, Director of Investor Relations
Bethany.Barnes@drmartens.com
+44 7825 187465
Beth Callum, Senior Investor Relations Analyst
Beth.Callum@drmartens.com
Press
H/Advisors Maitland +44 20 7379 5151
Clinton Manning +44 7711 972662
Katharine Spence +44 7384 535739
Gill Hammond, Director of Communications +44 7384 214248
Presentation of interim results
Kenny Wilson, CEO and Jon Mortimore, CFO will be presenting the
H124 results at 09:30 (UK time) on 30 November 2023. The
presentation will be streamed live and the link to join is
https://www.drmartensplc.com . A playback of the presentation will
be available on our corporate website after the event, at
https://www.drmartensplc.com/investors/results-centre .
About Dr. Martens
Dr. Martens is an iconic British brand founded in 1960 in
Northamptonshire. Produced originally for workers looking for
tough, durable boots, the brand was quickly adopted by diverse
youth subcultures and associated musical movements. Dr. Martens has
since transcended its working-class roots while still celebrating
its proud heritage and, six decades later, "Docs" or "DM's" are
worn by people around the world who use them as a symbol of
empowerment and their own individual attitude. The Company listed
on the main market of the London Stock Exchange on 29 January 2021
(DOCS.L) and is a constituent of the FTSE 250 index.
Cautionary statement relating to forward-looking statements
Announcements, presentations to investors, or other documents or
reports filed with or furnished to the London Stock Exchange (LSE)
and any other written information released, or oral statements
made, to the public in the future by or on behalf of Dr. Martens
plc and it group companies ("the Group"), may contain
forward-looking statements.
Forward-looking statements give the Group's current expectations
or forecasts of future events. An investor can identify these
statements by the fact that they do not relate strictly to
historical or current facts. They use words such as 'aim',
'ambition', 'anticipate', 'estimate', 'expect', 'intend', 'will',
'project', 'plan', 'believe', 'target' and other words and terms of
similar meaning in connection with any discussion of future
operating or financial performance. In particular, these include
statements relating to future actions, future performance or
results of current and anticipated products, expenses, the outcome
of contingencies such as legal proceedings, dividend payments and
financial results. Other than in accordance with its legal or
regulatory obligations (including under the Market Abuse
Regulation, the UK Listing Rules and the Disclosure and
Transparency Rules of the Financial Conduct Authority), the Group
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
The reader should, however, consult any additional disclosures that
the Group may make in any documents which it publishes and/or files
with the LSE. All readers, wherever located, should take note of
these disclosures. Accordingly, no assurance can be given that any
particular expectation will be met and investors are cautioned not
to place undue reliance on the forward-looking statements.
Forward-looking statements are subject to assumptions, inherent
risks and uncertainties, many of which relate to factors that are
beyond the Group's control or precise estimate. The Group cautions
investors that a number of important factors, including those
referred to in this document, could cause actual results to differ
materially from those expressed or implied in any forward-looking
statement. Any forward-looking statements made by or on behalf of
the Group speak only as of the date they are made and are based
upon the knowledge and information available to the Directors on
the date of this report.
BUSINESS REVIEW
We achieved a lot in the first half of FY24 and our DOCS
strategy continues to drive results. We delivered a good
performance in EMEA, with growth well-balanced across our home UK
market and our core continental Europe markets, as we continue to
benefit from the multi-year growth opportunity from converting
markets from distributor to directly-operated. In APAC, Japan
accounts for the vast majority of our profits and here we saw a
strong DTC performance, following the successful integration of the
recently transferred 14 Japanese franchise stores.
At our full year results in June, we discussed the execution
issues that had impacted our FY23 USA performance, and the actions
that the new Americas leadership team were taking to address these.
Since then, those actions have been completed, and the team have
refocused the marketing plan and better allocated spend to ensure
boots messaging is at the core. While it is still early days,
reaction to our New York launch of the Made Strong brand platform
and 14XX collection were very encouraging. We have also implemented
a number of website upgrades, the majority of which went live on
1(st) November. Again, there is more to come but this was an
important step in improving our website trading capability.
Over recent months, however, the consumer environment in the USA
has evolved and become more challenging. We are seeing a weaker
boots market in the USA overall, which is exacerbating the
macro-economic factors. We have also had to contend with warm
weather in October, impacting the Autumn/Winter season. Our busiest
period is still ahead of us and we will continue to take action to
reignite the USA boots category and meet the challenge of the
prevailing conditions.
Our USA wholesale business was impacted both by the planned
reduction of orders to two large USA customers, together with
deeper inventory destocking than previously anticipated across our
customer base, driven by macro-economic uncertainty. Throughout, we
have adopted a long-term mindset, ensuring that the wholesale
channel inventory position is managed down in line with sales. At
the end of October, the average inventory position of our top ten
USA wholesale customers was down 20%. It is clear in customer
interactions that this inventory destocking is widespread across
the industry.
We were pleased to recently announce the appointment of Giles
Wilson as CFO and Ije Nwokorie as Chief Brand Officer (CBO). Giles
has significant listed company experience and will join in 2024
(date to be confirmed) to replace Jon Mortimore who is retiring, as
previously announced. The creation of a CBO role is an important
step in our journey to become a GBP2bn revenue brand. Ije Nwokorie,
who has served as a Non-Executive Director since IPO, will be
stepping down from the Board and joining as CBO in February. He
joins from Apple Inc, where he has been Senior Director, Apple
Retail, since January 2018. He will oversee the Global Marketing,
Product and Strategy functions and will be responsible for setting
the overall brand strategy, vision and direction.
We launched our new marketing brand platform, 'Made Strong', in
October, with very encouraging initial feedback. Made Strong brings
our brand purpose to life for today's wearers, reframing our role
as a catalyst to empower rebellious self-expression. During the
launch, we held a number of high impact city activations across
London, New York and Tokyo. The launch saw strong engagement on
social media channels and drove a step forward in earned PR
coverage.
Our product strategy is centered on 'icons and innovation' ,
meaning that we aim to grow revenue of our iconic continuity
products through constant innovation around this core, to drive
brand heat and newness. We aim to grow all three categories of
boots, shoes and sandals simultaneously. Overall, pairs were down
9%, however this was predominantly due to the reduction in the
wholesale business. Total DTC pairs, a far more relevant metric,
was up 12%. All three categories saw DTC volume growth, with
sandals up 8%, shoes up 26% and boots up 6%.
Alongside the launch of Made Strong, we launched a capsule
collection of our new Amp category: 14XX. Amp and 14XX represent
the pinnacle of our creative expression, with cutting-edge
innovation at the forefront while still remaining true to our
product handwriting and design principles of durability and
versatility. The capsule collection is made of up three new
products, built around our original 1460 boot, 1461 shoe and 2976
Chelsea boot. In Autumn/Winter 24 we will launch a larger 14XX
range to consumers. The purpose of these collections is to create a
'trickle down' effect, creating demand for the mainline product
range amongst new and existing consumers.
Collaborations play a crucial role in our product strategy,
creating energy and buzz while being an incubator for future
product success. We had a number of successful collaborations in
Spring/Summer 23, including A-COLD-WALL*, Wacko Maria and BT21
XXXXX. In 2023 we are celebrating 10 years of the Jadon, our
biggest product within our Fusion category and one of our four icon
products, with a sell-out collaboration with Marc Jacobs. Since
September, we've launched our first collaboration with Denim Tears
using the 1460 boot and penton loafer silhouettes as the canvas, as
well as highly successful collaborations with Supreme, Warner Bros.
and Born X Raised, all of which signify big cultural brand
moments.
During the half we completed the transformation of our North
American distribution network, with automated picking implemented
in our LA DC, a significant expansion of our New Jersey DC,
enabling picking for all three channels, and the opening of a new
DC in Toronto, moving from our previous west-coast Canadian
facility, with the new facility servicing both wholesale and DTC
orders. This new North American DC network improves both
distribution costs and delivery speeds.
We achieved significant supply chain savings in the half . This
is as a result of the transformation we have been executing in the
supply chain over recent years, steadily increasing direct control
over our supply chain inputs from c.10% five years ago to c.70%
control today. This has enabled improved quality and consistency,
diversification of risk from single point dependency and direct
negotiation of costs. The savings delivered in the half as a result
of this strategy include lower costs for leather (due to
competition between tanneries), factory benchmarking to align
profit, re-negotiation of our inbound shipping contract and
optimisation and re-tender of retail outbound freight. This also
enabled us to directly benefit from weaker macro demand for raw
materials and lower global freight costs.
We have a number of significant technology projects underway ,
which will drive efficiency savings and underpin future growth. We
have now implemented an order management system ("OMS") in EMEA and
at the end of FY23 we started a trial of omnichannel offerings,
'click and collect', 'ecom return to store' and 'store stock
look-up' in the UK. Following this successful trial, we rolled
these services out across UK stores in August and September, with
positive initial results. For instance, repurchase following a
return in-store is approximately double the ecommerce rate. We
intend to roll out these omnichannel services across the rest of
our core EMEA markets in 2024, starting with Germany. In Japan we
began trialling virtual sizing functionality and expanded staff
recommendations on-line.
We have also begun work to build a Customer Data Platform which
will give us a single view of the consumer across both DTC
channels. This will allow us to drive more consumer-first
initiatives, a key pillar of our DOCS strategy. In supply chain, we
have commenced the project to implement a modern supply and demand
planning system, which is so far progressing well. This will drive
working capital savings from FY26 onwards and improve availability
and accuracy of product forecasting.
Finally, we made good progress on our sustainability agenda. Our
Science Based Targets were verified and approved by the Science
Based Target Initiative in October. We have committed to reducing
our absolute greenhouse gas emissions aligned with the Science
Based Targets initiative to achieve near-term reduction targets by
2030 and Net Zero by 2040. In October we launched our Authorised
Repair service to consumers in the UK. The service enables
consumers to repair their Dr. Martens products, working with a
third-party repair partner and using our own machines and
materials. Whilst early days, we are pleased with initial consumer
reaction and will look to roll this out in our other key markets in
the future. Work on launching our own resale trial in the USA,
named ReWair, is ongoing and we expect to launch this during
2024.
FINANCE REVIEW
Total revenue declined 5% (3% CC) with growth in DTC offset by
weaker wholesale revenues. EBITDA was GBP77.6m, 13% lower than last
year, with margins 1.6%pts lower at 19.6%. The first half of the
financial year is typically a lower margin period due to higher
margin DTC trading being weighted to the second half. Profit before
tax was GBP25.8m (H1 FY23: GBP57.9m), down 55%, reflecting lower
EBITDA, increased depreciation and amortisation charges and higher
rate-led interest costs.
As described in the outlook, there is considerable macroeconomic
uncertainty. However, we remain confident in our long-term growth
prospects and the cash generative nature of the business. The
balance sheet is strong. As a result, the Board has maintained the
interim dividend at 1.56p, in line with H1 last year.
% change % change
GBPm (unaudited) H1 FY24 H1 FY23 Actual CC(4)
------------------- ------------------------ ------- ------- -------- --------
Revenue Ecommerce 91.7 88.8 3% 5%
Retail 104.7 91.0 15% 17%
------- ------- -------- --------
DTC 196.4 179.8 9% 11%
Wholesale(3) 199.4 238.8 -17% -15%
------- ------- -------- --------
395.8 418.6 -5% -3%
------- ------- -------- --------
Gross margin 254.9 257.8 -1%
Opex (177.3) (169.0) -5%
------- ------- --------
EBITDA(1) 77.6 88.8 -13%
Profit before tax 25.8 57.9 -55%
Earnings per share
(p) 1.9 4.5 -58%
Dividend per share
(p) 1.56 1.56 -
------- ------- --------
Key statistics Pairs sold (m) 5.7 6.3 -9%
No. of stores opened(2) 25 21 +4
DTC mix % 50% 43% +7pts
Gross margin % 64.4% 61.6% +2.8pts
EBITDA(1) margin % 19.6% 21.2% -1.6pts
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and
impairment.
2. Own stores on streets and malls operated under arm's length leasehold arrangements.
3. Wholesale revenue including distributor customers.
4. Constant currency applies the same exchange rate to the FY24
and FY23 non-GBP results, based on FY24 budgeted rates.
5. Alternative Performance Measures are used as we believe they
provide additional useful information on underlying trends.
PERFORMANCE BY CHANNEL
Revenue decreased by 5%, or 3% CC, to GBP395.8m, with a good DTC
performance offset by a decline in wholesale. Wholesale was
impacted both by the planned strategic decisions to reduce the
volume sold into EMEA etailers and cease the distributor contract
in China, and by weaker wholesale in Americas. DTC mix was up 7%pts
to 50% of Group revenues.
Ecommerce revenue grew 3% to GBP91.7m (5% CC) which represented
a revenue mix of 23%, up 2%pts. We had very strong growth in both
EMEA (up 19% CC) and APAC (up 18% CC), with America down 10%. We
saw traffic growth in EMEA and APAC, whilst in America traffic
declined. Ecommerce conversion improved in all three regions.
Retail revenue grew 15% to GBP104.7m (17% CC). Growth compared
to last year was led by new and maturing stores (stores opened last
year) across all geographies, with continued footfall recovery in
EMEA and APAC, offset by footfall decline in America. We also
benefitted from the transfer of 14 Japan franchise store at the end
of FY23. During the half, we have opened 25 new stores and closed
four stores, to end H1 with 225 own stores.
Wholesale revenue was down 17% to GBP199.4m (15% CC). As
previously announced, we took three strategic decisions which
impacted wholesale revenues this year, but will create a strong
platform for future growth. Firstly, we significantly reduced the
quantity and range of product sold into EMEA etailers, in order to
ensure scarcity of supply in the region and migrate sales to our
own websites. Secondly, we ceased sales to our distributor in China
ahead of the contract ending in June 2023. In the Americas we
worked with two large wholesale accounts who had excess inventory,
reducing shipments through the first half in order to rightsize
their inventory positions. In addition to these strategic
decisions, we also saw industry-wide destocking amongst USA
wholesale customers.
The total number of wholesale accounts globally remained broadly
flat at 1.9k after closing c.150 accounts and opening a similar
number, as we continued to elevate distribution of the brand. Total
revenues per account declined by 5%, with growth in EMEA offset by
lower revenue per account in America.
PERFORMANCE BY REGION
GBPm (unaudited) % change % change
H1 FY24 H1 FY23 Actual CC
-------------------- ----------------- ------- ------- -------- --------
Revenue: EMEA 194.2 179.0 9% 8%
America 147.7 179.7 -18% -15%
APAC 53.9 59.9 -10% -3%
------- ------- -------- --------
395.8 418.6 -5% -3%
------- ------- -------- --------
EBITDA(1) : EMEA 55.8 52.8 6%
America 28.6 41.4 -31%
APAC 12.2 13.1 -7%
Support costs(2) (19.0) (18.5) -3%
------- ------- --------
77.6 88.8 -13%
------- ------- --------
EBITDA(1) margin by
region: EMEA 28.7% 29.5% -0.8pts
America 19.4% 23.0% -3.6pts
APAC 22.6% 21.9% +0.7pts
Total 19.6% 21.2% -1.6pts
------- ------- --------
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and
impairment.
2. Support costs represent group related support costs not
directly attributable to each regions operations and including
Group Finance, Legal, Group HR, Global Brand and Design, Directors
and other group only related costs and expenses.
EMEA revenue grew by 9% to GBP194.2m (8% CC). DTC grew by 21%
(20% CC) with retail and ecommerce up 22% (21% CC) and 20% (19% CC)
respectively. DTC mix increased by 5%pts. There was good DTC growth
in all core markets (UK up 8%, France up 19%, Germany up 29% and
Italy up 62%, all CC). Wholesale was marginally down as expected,
due to the strategic decision to reduce volume to etailers.
During the first half we opened 11 new stores: four stores in
Italy, two stores in Belgium, two stores in Germany, two stores in
UK and our first store in Denmark. Included in the new store
openings were three locations that were closed and stores relocated
to more prominent positions in Belgium and the UK.
EMEA EBITDA was up 6% to GBP55.8m (H1 FY23: GBP52.8m), with
EBITDA margin 28.7%, 0.8%pts lower than last year, impacted by FX
on purchases and the temporary cost base drag of recently opened
stores.
America revenue was down 18% to GBP147.7m (15% CC). DTC revenue
was down 7% (3% CC) with retail up 5% CC and ecommerce down 10% CC
with lower footfall and traffic in retail and ecommerce
respectively, only partly mitigated by new and maturing stores and
better conversion across both channels. DTC mix increased by 6%pts.
Wholesale revenue declined 22% CC, due to both the strategic
decision to manage down inventory of some of our larger wholesale
customers, as well as industry-wide destocking resulting in weak
order book momentum. We maintained a disciplined approach to
wholesale, and at the end of October the average position of our
top ten USA wholesale customers was down 20% on the prior year.
During the first half we opened seven new stores including in
LA, Washington DC, San Antonio and Denver.
America EBITDA was 31% lower at GBP28.6m with EBITDA margin
3.6%pts lower than last year, reflecting lower revenue together
with incremental inventory storage costs in LA of GBP7.0m.
APAC revenue was down 10% to GBP53.9m (3% CC). We saw lower
revenue in China due to the planned exit of the distributor
contract in June, which also drove APAC wholesale revenue down 29%
CC. APAC DTC revenues grew 26% CC, improving DTC mix by 14%pts,
with both retail and ecommerce growing double-digit. This was led
by Japan with DTC revenues up 41% CC following the transfer of 14
franchise stores at the end of FY23.
During the first half we opened seven new stores including three
stores in Shanghai (including one outlet), two in Japan and one in
both South Korea and Hong Kong.
APAC EBITDA was down 7% to GBP12.2m (H1 FY23: GBP13.1m) and
EBITDA margin up 0.7%pts due to increased mix from Japan (our most
profitable market), partly offset by lower EBITDA in China.
RETAIL STORE ESTATE
During the period, we opened 25 (H1 FY23: 21) new own retail
stores (via arm's length leasehold arrangements) and closed four
stores as follows:
31 March 30 September
2023 Opened Closed 2023
-------- ------ ------ ------------
EMEA: UK 33 2 (2) 33
Germany 17 2 - 19
France 16 - - 16
Italy 6 4 - 10
Spain 4 - - 4
Other 12 3 (1) 14
-------- ------ ------ ------------
88 11 (3) 96
America: 54 7 - 61
APAC: Japan 40 2 - 42
China 5 3 - 8
South Korea 11 1 - 12
Hong Kong 6 1 (1) 6
62 7 (1) 68
Total 204 25 (4) 225
----------------------- -------- ------ ------ ------------
The Group also trades from 26 (FY23: 28) concession counters in
department stores in South Korea and a further 82 (FY23: 119)
mono-branded franchise stores around the world with 15 in China
(FY23: 55, the decline being due to the end of the distribution
contract), 16 in Japan (FY23: 16), 21 across Australia and New
Zealand (FY23: 20), 23 across other South East Asia countries and
the balance in the Nordics and Canada (FY23: 21).
QUARTERLY REVENUE PERFORMANCE
Ecommerce revenue was up in Q1 and flat in Q2, in part driven by
a stronger comparative in Q2. In retail, revenue grew double-digit
in Q1 and mid-single digit in Q2, driven by a slowdown in the pace
of traffic recovery. Both EMEA and APAC were impacted by strategic
decisions, of reducing EMEA etailer volumes and ceasing the
distributor in China respectively; these were mainly seen during
Q1. In Americas, revenue was down in both quarters as expected,
driven by wholesale.
Year on Year Change (unaudited) Q1 FY24 Q2 FY24 H1 FY24
Actual CC Actual CC Actual CC
Total revenue -11% -11% -2% 1% -5% -3%
Revenue: Ecommerce 7% 7% - 4% 3% 5%
Retail 27% 27% 6% 10% 15% 17%
DTC 17% 17% 3% 7% 9% 11%
Wholesale(1) -41% -41% -5% -2% -17% -15%
Region: EMEA -1% -3% 14% 13% 9% 8%
America -26% -27% -12% -6% -18% -15%
APAC 12% 16% -22% -14% -10% -3%
1. Wholesale revenue including distributor customers.
EBITDA ANALYSIS
Gross margin improved by 2.8%pts to 64.4% as follows:
%pts Increase
--------------
Price, net COGS inflation +0.7pts
New & Maturing Stores +1.0pts
Supply chain savings +1.1pts
--------------
+2.8pts
--------------
In the half, the average price increase was 4.5% and COGS
inflation was approximately 6%, with the incremental margin benefit
of +0.7%pts funding all opex inflation (of around 5%). Supply chain
savings in the period were approximately GBP10m, improving gross
margin by 1.1%pts.
Operating expenses increased by 5% to GBP177.3m as follows:
Increase/(Decrease)
----------------------
GBPm %
New & Maturing Stores 7.3 4%
Marketing Spend (2.2) -1%
Volume & Other (3.8) -2%
----------- ---------
Base 1.3 1%
Additional USA storage costs 7.0 -
Increase 8.3 5%
----------- ---------
Excluding additional USA storage costs, the cost base increased
by 1% with new store annualisation offset by the timing of the
autumn brand marketing campaign moving from September/October last
year to October/November this year, combined with good cost control
across all other categories including lower volume-related costs
and retail outbound freight savings. The additional USA storage
costs of GBP7.0m were all in relation to temporary space rented in
LA, which will annualise at around GBP15m, as previously
guided.
EBITDA decreased by 13% to GBP77.6m (H1 FY23: GBP88.8m)
resulting in an EBITDA margin movement of 1.6%pts to 19.6%.
EBITDA MARGIN % pts YoY
-------------
Price net inflation -
New & Maturing Stores(1) -0.9pts
Supply chain savings +1.1pts
Other investments -0.1pts
-------------
Base +0.1pts
Additional USA storage costs(2) -1.7pts
Movement -1.6pts
-------------
1. Incremental OPEX from new stores net gross margin benefit
from space. During the first half we opened 25 new stores compared
to 21 in H1 last year and 31 in H2 in the prior year. In the year
of opening, a store takes approximately six to 12 months to break
even EBITDA, as a result a store opening increases the cost base
faster than revenue in the year of the store opening before
positive returns are generated, broadly in year two.
2. Incremental stock holding costs in America.
Before additional USA storage costs, underlying EBITDA margin
was marginally up, driven by the supply chain savings.
Exchange
The profit and loss figures are prepared on an average actual
currency basis for the period. These exchange rates are calculated
monthly and applied to revenue and profits generated in that month,
such that the actual figures translated across the year are
dependent upon monthly trading profiles as well as exchange
movement. In addition, all distributor revenues are invoiced in
USD. To aid comparability of underlying performance, we have also
calculated constant currency performance for revenue. This is
calculated by translating non-UK revenues at the same exchange rate
year on year.
We have a natural GBP/Euro vs USD hedge. The UK is our
second-largest market after the USA but only comprised 18% of
global revenues in H1. Due to our balanced global trading footprint
with 37% of revenues in America and 31% in Continental Europe, we
have a strong natural hedge which protects group EBITDA should the
USD strengthen against GBP and Euro. Approximately 93% of COGS
purchases are paid in USD such that an appreciation of USD compared
to GBP and Euro leads to higher purchase costs in EMEA but is
broadly offset by a corresponding translation benefit from USA
derived cash flows, such that USA revenue and EBITDA is higher and
funds lower EMEA EBITDA. This hedge effect also operates should the
USD depreciate against GBP/Euro.
The major exchange rates that impact the Group are GBP/$,
GBP/EUR and GBP/Yen. The following table summarises average
exchange rates used in the year:
GBP/$ GBP/EUR GBP/Yen
FY24 FY23 % FY24 FY23 % FY24 FY23 %
----- ----- --- ----- ----- ---- ----- ----- ---
H1 1.26 1.22 3% 1.16 1.17 -1% 178 163 9%
H2 1.19 1.14 163
---- ----- ----- --- ----- ----- ---- ----- ----- ---
FY 1.21 1.16 163
---- ----- ----- --- ----- ----- ---- ----- ----- ---
EARNINGS
The following table analyses the results for the year from
EBITDA to profit before tax.
GBPm (unaudited) H1 FY24 H1 FY23
------------------------------------------ ------- -------
EBITDA(1) 77.6 88.8
Depreciation and amortisation (37.9) (23.3)
Exchange gains/(losses) 0.6 (0.2)
Net interest cost on bank debt (9.1) (4.7)
Amortisation of loan issue costs/interest
on lease liabilities (5.4) (2.7)
------- -------
Profit before tax 25.8 57.9
Tax (6.8) (13.2)
------- -------
Earnings 19.0 44.7
------- -------
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and
impairment.
Depreciation and amortisation charged in the period was GBP37.9m
(H1 FY23: GBP23.3) with the increase due to the annualisation of
new store openings in prior year, increased DC space in North
America and investment in the IT infrastructure including the
implementation of the OMS and omnichannel capabilities in EMEA.
Profit before tax declined by 55% to GBP25.8m (H1 FY23:
GBP57.9m) with profit after tax of GBP19.0m (H1 FY23: GBP44.7m).
This was primarily due to lower EBITDA together with higher
depreciation and amortisation costs.
Interest costs have increased due to higher interest rates on
the bank debt (being 3.4%pts higher than last year at 6.2%) and a
lower average cash balance.
Depreciation and amortisation charged in the period was GBP37.9m
(H1 FY23: GBP23.3m), and is analysed as follows:
GBPm (unaudited) H1 FY24 H1 FY23
--------------------------------------- ------- -------
Amortisation of intangibles(1) 4.6 3.4
Depreciation of plant and equipment(2) 7.9 6.3
------- -------
12.5 9.7
Depreciation of right-of-use assets(3) 25.4 13.6
Total 37.9 23.3
--------------------------------------- ------- -------
1. Mainly represented by IT related spend with the average term of 3 to 7 years.
2. Mainly represented by new store fit out costs with the average term of 5 years.
3. Mainly represented by depreciation of IFRS 16 capitalised
leases with the average term of 4.9 years and 301 properties (H1
FY23: 5.4 years and 210 properties).
In the year we recognised an exchange gain of GBP0.6m (H1 FY23:
loss GBP0.2m) which was predominantly due to the revaluation of
Euro denominated bank debt and working capital.
The tax charge was GBP6.8m (H1 FY23: GBP13.2m) with an effective
tax rate of 26.4% (H1 FY23 22.8%) which is slightly higher than the
UK corporate tax rate of 25.0%, due mainly to non-UK tax rates and
deferred tax on temporary differences. The tax rate was higher than
last year due to the increase in UK tax rate from 19.0% to 25.0% on
1 April 2023.
Earnings per share was 1.9p (H1 FY23: 4.5p). The total number of
diluted shares is detailed in note 6 in the financial statements.
The following table summarises these EPS figures:
Unaudited H1 FY24 H1 FY23 % change
pence pence
--------- --------- ---------
Earnings per share Basic 1.9 4.5 -58%
Diluted 1.9 4.5 -58%
EPS and diluted EPS for the current and prior year are presented
as the same amount due to the minimal dilutive impact of share
options on the total diluted share number.
OPERATING CASH FLOW
GBPm (unaudited) H1 FY24 H1 FY23
------------------------------------- -------- ---------
EBITDA(1) 77.6 88.8
------------------------------------- -------- ---------
Increase in inventories (55.5) (120.9)
Increase in debtors (28.5) (7.2)
(Increase)/decrease in creditors (3.6) 27.7
------------------------------------- -------- ---------
Total change in net working capital (87.6) (100.4)
Share-based payments 1.9 3.0
Capital expenditure (16.3) (19.3)
------------------------------------- -------- ---------
Operating cash outflow(2) (24.4) (27.9)
------------------------------------- -------- ---------
Operating cash conversion(2) (31%) (31%)
------------------------------------- -------- ---------
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and
impairment.
2. Alternative Performance Measures as defined in the Glossary on pages 29 and 30.
Operating cash outflow was GBP24.4m (H1 FY23: GBP27.9m)
representing a cash conversion of EBITDA of negative 31%, in line
with H1 FY23.
Trade debtor days increased from 48 days to 53 days, primarily
due to customer mix with a higher proportion of EMEA debtors (with
payment terms closer to 60 days) than America (with payment terms
closer to 30 days).
Capex was GBP16.3m (H1 FY23: GBP19.3m) and represented 4.1% of
revenue (H1 FY23: 4.6%). The breakdown in capex by category is as
follows:
GBPm H1 FY24 H1 FY23
--------------- -------- --------
Retail stores 8.8 7.7
Supply Chain 0.1 3.2
IT/Tech 7.4 8.4
16.3 19.3
--------------- -------- --------
Net cash flow after interest
Net cash flow after interest costs is summarised below:
GBPm (unaudited) H1 FY24 H1 FY23
---------------------------------------- --------- ---------
Operating cash flow(1) (24.4) (27.9)
Net interest paid (7.3) (2.1)
Payment of lease liabilities (25.3) (12.7)
Taxation (15.4) (14.1)
---------------------------------------- --------- ---------
Free cash outflow (72.4) (56.8)
Repurchase of shares (20.4) -
Net revolving credit facility drawdown 25.0 -
Dividends paid (42.8) (42.8)
---------------------------------------- --------- ---------
Net cash outflow (110.6) (99.6)
Opening cash 157.5 228.0
Net cash exchange translation (1.2) 4.6
---------------------------------------- --------- ---------
Closing cash 45.7 133.0
---------------------------------------- --------- ---------
1. Operating cash flow and free cash flow are Alternative
Performance Measures defined in the Glossary on pages 29 and
30.
Net interest paid was GBP7.3m, higher than H1 FY23 by GBP5.2m
due to the timing of interest payments and higher interest rates,
which were partially offset by higher interest receivables from
cash investments. The increase in lease liabilities was due mainly
to the increased number of retail stores opened in the period under
lease arrangements and increased space across the DC network.
Funding and Leverage
The Group is funded by cash, bank debt and equity. Further
details on the capital structure and debt are given in note 9 of
the interim financial statements. The Group's bank debt is
denominated in Euros to reflect the excess Euros the Group
generates from trading in Continental Europe to fund interest costs
(with USD revenue generated broadly funding USD purchase of
inventory and GBP generated broadly funding GBP related costs). The
bank debt falls due for repayment in full on 2 February 2026. The
Group also has a revolving credit facility of GBP200.0m which also
expires on 2 February 2026 with GBP25.0m drawdown during the period
(expected to be fully repaid before this financial year end) and
GBP5.1m utilised in relation to certain guarantee arrangements
primarily for landlord guarantees.
The group financing arrangements have a total net leverage
covenant test every six months. The total net leverage test is
calculated with a full 12 months of EBITDA and net debt being
inclusive of IFRS 16 lease liabilities at the balance sheet date.
At 30 September 2023 the Group had total net leverage of 2.0 times
(H1 FY23: 1.1x, FY23: 1.2x) giving us significant headroom against
our covenant test. If this was calculated using average cash
throughout the year, (reflecting the Groups intra-year cash swing)
average gearing would be approximately 1.7x.
Pensions
Dr Martens Airwair Group Limited and Airwair International
Limited (subsidiaries of the Group) operate a defined benefit
pension scheme in the UK, which was closed to new members in 2002,
and provides both pensions in retirement and death benefits to
members. At the most recent triennial valuation date (June 2022),
on an actuarial funding valuation basis as agreed with the
Trustees, the scheme had assets with a value of GBP55.4m and
estimated future liabilities (technical provisions) of GBP48.5m,
resulting in a surplus of GBP6.9m.
A detailed description of all pension commitments, including the
IAS 19 accounting valuation (which is prepared on a different
valuation basis of liabilities to the actuarial funding valuation
basis, the latter being used to agree with the pension trustees
whether cash contributions are or are not required to be made and
the former being purely for accounting purposes), is given in note
29 of the Group Annual Report. The surplus under the scheme is not
recognised as an asset benefitting the Group on the balance sheet
on the basis that the Group is unlikely to derive any economic
benefits from that surplus. At 30 September 2023 (H1 FY24), the
scheme had assets of GBP43.6m (H1 FY23: GBP48.5, FY23:
GBP49.5m).
The Group also operates a defined contribution scheme for its
employees and during the year the Group contributions to this
scheme were GBP2.6m (H1 FY23: GBP2.3m). At 30 September 2023, this
scheme had assets of GBP25.1m (H1 FY23: GBP19.9m).
BALANCE SHEET
GBPm (Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March 2023
2023 2022
----------------------- --------------- -------------- ---------------
Freehold property 7.4 6.8 7.4
Right-of-use assets 195.0 133.9 144.1
Other fixed assets 81.8 65.3 78.8
----------------------- --------------- -------------- ---------------
Inventory 314.5 261.4 257.8
Debtors 119.8 113.9 92.2
Creditors(2) (132.8) (186.4) (133.7)
----------------------- --------------- -------------- ---------------
Working capital 301.5 188.9 216.3
Other(1) 13.2 13.6 5.2
----------------------- --------------- -------------- ---------------
Operating net assets 598.9 408.5 451.8
Goodwill 240.7 240.7 240.7
Cash 45.7 133.0 157.5
Bank debt(3) (317.5) (297.0) (296.8)
Unamortised bank fees 2.9 4.1 3.4
Lease liabilities (207.1) (142.8) (152.4)
----------------------- --------------- -------------- ---------------
Net assets 363.6 346.5 404.2
----------------------- --------------- -------------- ---------------
1. Other includes investments, deferred tax assets, income tax assets, and provisions.
2. Include bank interest of GBP8.0m (Sep22: GBP3.3m, Mar23: GBP6.0m).
3. Includes drawdown of RCF of GBP25.0m
Net financing is summarised below:
GBPm (Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March 2023
2023 2022
------------------- --------------- -------------- ---------------
Bank debt - Term (292.5) (297.0) (296.8)
- RCF (25.0) - -
------------------- --------------- -------------- ---------------
Cash 45.7 133.0 157.5
------------------- --------------- -------------- ---------------
Net bank debt (271.8) (164.0) (139.3)
Lease liabilities (207.1) (142.8) (152.4)
------------------- --------------- -------------- ---------------
Net financing (478.9) (306.8) (291.7)
------------------- --------------- -------------- ---------------
Inventory
Given the high proportion of continuity products we sell, with
four out of five pairs being black and having a strong product
margin structure, we have minimal markdown risk below cost.
Inventory levels are higher than optimal and we plan to right-size
inventory through the course of FY25.
(Unaudited) (Unaudited)
30 September 30 September
2023 2022
------------------ --------------- --------------
Inventory (GBPm) 314.5 261.4
Turn (x)(1) 1.2x 1.3x
Weeks cover(2) 45 40
------------------ --------------- --------------
1. Calculated as historic LTM COGS divided by inventory.
2. Calculated as 52 weeks divided by stock turn.
Equity of GBP363.6m can be analysed as follows:
(unaudited)
GBPm 30 September
2023
---------------------------- --------------
Share capital 9.9
Treasury shares (2.0)
Hedging reserve 0.8
Capital redemption reserve 0.1
Merger reserve (1,400.0)
Non-UK translation reserve 13.7
Retained earnings 1,741.1
---------------------------- --------------
Equity 363.6
---------------------------- --------------
Dr. Martens plc (the Company) has distributable reserves of
GBP1,312.1m.
RETURNS TO SHAREHOLDERS
Our capital allocation philosophy guides our view of returns to
shareholders and usage of excess cash. The first priority for
investment is into the business and we will continue to invest in a
targeted manner to support long-term growth and resilience of the
Group. This is mainly represented by investment into marketing,
logistics, people, systems and inventory. Beyond this, our priority
is to return excess cash to shareholders, through a regular
dividend and, when possible, further returns.
Dividends
The Board has approved and the Company has declared an interim
dividend of 1.56p per share (H1 FY23: 1.56p). The interim dividend
will be paid to shareholders on the register as at 5 January 2024
with payment on 2 February 2024.
GBPm (unaudited) H1 FY24 H1 FY23 % change
--------------------------------------------- ------- ------- --------
Earnings 19.0 44.7 -57%
--------------------------------------------- ------- ------- --------
Equity dividends on ordinary shares declared
and paid during the period:
Final dividend (declared and paid): 4.28p
(H1 FY23: 4.28p) 42.8 42.8 -
Proposed dividends
(not recognised as a liability at H1 Sep
24 and H1 FY23)
Interim dividend: 1.56p (H1 FY23: 1.56p) 15.4 15.6 -1%
Payout ratio % 81% 35% 46pts
--------------------------------------------- ------- ------- --------
Share Buyback
On 14 July 2023 Dr. Martens plc commenced a share buyback
programme of GBP50m. Under the buyback programme shares are
repurchased daily. All shares repurchased during a given week are
cancelled collectively the following week. Treasury shares are a
result of the timing delay between the repurchase and cancellation
of these shares.
During the period, the Group repurchased 13.9m shares and
cancelled GBP18.9m of shares (12.5m shares). The cash outflow was
GBP20.4m. The average cost of shares purchased was GBP1.50.
DETAILED GUIDANCE FOR FY24
-- Net new own store openings to be at the top-end of previous guidance; around 35
-- Depreciation and amortisation to be around GBP70m, at the top end of previous guidance
-- Net finance costs of c.GBP30m, compared to previous guidance
of c.GBP25m, driven by higher interest rates and lower average cash
than previously expected
-- Blended tax rate of c.26%
-- Capital expenditure of around GBP50m, at the bottom end of
the previous guidance range of GBP50-GBP55m, due to timing of some
project spend
-- Operating cash conversion of around 80% of EBITDA, compared
to previous guidance of more than 100% as we now anticipate that
our inventory position with rightsize through the course of
FY25
Principal risks
The Board has considered the principal risks and uncertainties
which could impact the Group over the remaining half of the
financial year. This review has highlighted an increase in
macro-economic uncertainty since the FY2023 Annual Report and
Accounts. The risk was previously embedded within 'Financial Risks'
but it will now be disclosed separately. The principal risks are
therefore summarised as follows: Macro-economic uncertainty; Brand
and product; Social and environmental; People, culture and change;
Supply chain; Information and cyber security; Financial; and Legal
and compliance. These are detailed on pages 56 to 59 of the 2023
Annual Report, a copy of which is available on the Company's
website at www.drmartensplc.com .
Consolidated Statement of Profit or Loss
For the six months ended 30 September 2023
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
Notes GBPm GBPm GBPm
Revenue 3 395.8 418.6 1,000.3
Cost of sales (140.9) (160.8) (382.2)
------------------------------------- ------ -------------- -------------- ------------
Gross profit 254.9 257.8 618.1
Selling and administrative expenses (214.6) (192.5) (441.9)
Finance income(3) 1.7 0.4 1.9
Finance expense(3) 4 (16.2) (7.8) (18.7)
------------------------------------- ------ -------------- -------------- ------------
Profit before tax 25.8 57.9 159.4
EBITDA(1) 3 77.6 88.8 245.0
Depreciation and amortisation(2) (37.9) (23.3) (54.2)
Impairment - - (3.9)
Exchange gains/(losses)(2) 0.6 (0.2) (10.7)
Net finance expense (14.5) (7.4) (16.8)
------------------------------------- ------ -------------- -------------- ------------
Profit before tax 25.8 57.9 159.4
------------------------------------- ------ -------------- -------------- ------------
Tax expense 5 (6.8) (13.2) (30.5)
------------------------------------- ------ -------------- -------------- ------------
Profit for the period 19.0 44.7 128.9
------------------------------------- ------ -------------- -------------- ------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
-------------------- -------------- -------------- ------------
Earnings per share
Basic 6 1.9p 4.5p 12.9p
Diluted 6 1.9p 4.5p 12.9p
-------------------- -------------- -------------- ------------
3. Alternative Performance Measure 'APM' as defined in the Glossary on pages 29 and 30.
4. Exchange gains(losses) were previously combined with
depreciation and amortisation in Sep 22.
5. Finance income and expense were previously combined net in Sep 22.
The results for the periods presented above are derived from
continuing operations and are entirely attributable to the owners
of the Parent Company.
The notes on pages 18 to 27 form part of these consolidated
financial statements.
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2023
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
Notes GBPm GBPm GBPm
Profit for the period 19.0 44.7 128.9
-------------------------------------- ------ -------------- -------------- ------------
Other comprehensive income/(expense)
Items that may subsequently
be reclassified to profit or
loss
Currency translation differences 1.2 17.3 5.5
Cash flow hedges: Fair value (0.7) - -
movements in equity
Cash flow hedges: Reclassified
and reported in profit or loss 2.3 (3.9) (0.6)
Tax in relation to unexercised
share options 5 (0.1) - -
Tax in relation to cash flow
hedges 5 (0.3) - 0.2
-------------------------------------- ------ -------------- -------------- ------------
2.4 13.4 5.1
-------------------------------------- ------ -------------- -------------- ------------
Total comprehensive income for
the period 21.4 58.1 134.0
-------------------------------------- ------ -------------- -------------- ------------
The notes on pages 18 to 27 form part of these consolidated
financial statements.
Consolidated Balance Sheet
As at 30 September 2023
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
Notes GBPm GBPm GBPm
Non-current assets
Intangible assets(1) 265.5 265.1 265.6
Property, plant and equipment 8 64.4 47.7 61.3
Right-of-use assets 8 195.0 133.9 144.1
Investments 1.0 - 1.0
Deferred tax assets 11.0 11.0 11.8
536.9 457.7 483.8
----------------------------------- ------ -------------- -------------- ----------
Current assets
Inventories 314.5 261.4 257.8
Trade and other receivables 121.6 111.9 93.0
Income tax assets 8.7 10.8 -
Derivative financial assets 1.0 6.5 0.5
Cash and cash equivalents 45.7 133.0 157.5
----------------------------------- ------ -------------- -------------- ----------
491.5 523.6 508.8
----------------------------------- ------ -------------- -------------- ----------
Total assets 1,028.4 981.3 992.6
----------------------------------- ------ -------------- -------------- ----------
Current liabilities
Trade and other payables (124.8) (183.1) (127.7)
Borrowings 9 (33.0) (3.3) (6.0)
Lease liabilities 12 (40.0) (25.1) (28.1)
Derivative financial liabilities (2.8) (3.6) (1.3)
Income tax payable (0.8) (3.8) (1.4)
----------------------------------- ------ -------------- -------------- ----------
(201.4) (218.9) (164.5)
----------------------------------- ------ -------------- -------------- ----------
Non-current liabilities
Borrowings(2) 9 (289.6) (292.9) (293.4)
Lease liabilities 12 (167.1) (117.7) (124.3)
Provisions 10 (4.9) (3.6) (4.4)
Derivative financial liabilities - (0.9) -
Deferred tax liabilities (1.8) (0.8) (1.8)
----------------------------------- ------ -------------- -------------- ----------
(463.4) (415.9) (423.9)
----------------------------------- ------ -------------- -------------- ----------
Total liabilities (664.8) (634.8) (588.4)
----------------------------------- ------ -------------- -------------- ----------
Net assets 363.6 346.5 404.2
----------------------------------- ------ -------------- -------------- ----------
Equity attributable to the owners
of the Parent
Share capital 14 9.9 10.0 10.0
Treasury shares(3) 15 (2.0) - -
Hedging reserve 0.8 (4.0) (0.5)
Capital reserve - own shares - - -
Capital redemption reserve 0.1 - -
Merger reserve (1,400.0) (1,400.0) (1,400.0)
Foreign translation reserve 13.7 24.3 12.5
Retained earnings 1,741.1 1,716.2 1,782.2
----------------------------------- ------ -------------- -------------- ----------
Total equity 363.6 346.5 404.2
----------------------------------- ------ -------------- -------------- ----------
1. Included in intangible assets is goodwill of GBP240.7m Sep
22: GBP240.7m, Mar 23: GBP240.7m).
2. Bank debt is net of GBP2.9m (Sep 22: GBP4.1m, Mar 23: GBP3.4m) of unamortised bank fees.
3. On 14 July 2023 Dr. Martens plc announced a share buyback
programme. Treasury shares are a result of a timing delay between
the repurchase of shares under this programme, and the subsequent
cancellation of these shares.
The notes on pages 18 to 27 form part of these consolidated
financial statements.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Share Treasury Hedging Capital Capital Merger Foreign Retained Total
capital shares(1) reserve reserve redemption reserve translation earnings equity
- own reserve reserve
shares
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 31 March 2022 10.0 - (0.1) - - (1,400.0) 7.0 1,711.3 328.2
Comprehensive -
income
Profit for the
period - - - - - - - 44.7 44.7
Other
comprehensive
income/(expense) - - (3.9) - - - 17.3 - 13.4
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Total
comprehensive
income/(expense)
for the period - - (3.9) - - - 17.3 44.7 58.1
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Dividends paid - - - - - - - (42.8) (42.8)
Share-based
payments - - - - - - - 3.0 3.0
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
At 30 September
2022 10.0 - (4.0) - - (1,400.0) 24.3 1,716.2 346.5
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Comprehensive
income
Profit for the
period - - - - - - - 84.2 84.2
Other
comprehensive
income/(expense) - - 3.5 - - - (11.8) - (8.3)
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Total
comprehensive
income/(expense)
for the period - - 3.5 - - - (11.8) 84.2 75.9
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Dividends paid - - - - - - - (15.6) (15.6)
Share-based
payments - - - - - - - (2.6) (2.6)
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
At 31 March 2023 10.0 - (0.5) - - (1,400.0) 12.5 1,782.2 404.2
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Comprehensive
income
Profit for the
period - - - - - - - 19.0 19.0
Other
comprehensive
income - - 1.3 - - - 1.2 (0.1) 2.4
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Total
comprehensive
income for the
period - - 1.3 - - - 1.2 18.9 21.4
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
Dividends paid - - - - - - - (42.8) (42.8)
Share-based
payments - - - - - - - 1.9 1.9
Shares issued - - - - - - - - -
Repurchase of
ordinary share
capital - (20.9) - - - - - (0.2) (21.1)
Cancellation of
repurchased
ordinary
share capital (0.1) 18.9 - - 0.1 - - (18.9) -
At 30 September
2023 9.9 (2.0) 0.8 - 0.1 (1,400.0) 13.7 1,741.1 363.6
------------------ -------- ---------- -------- -------- ----------- ---------- ------------ --------- -------
1. On 14 July 2023 Dr. Martens plc announced a share buyback
programme. Treasury shares are a result of a timing delay between
the repurchase of shares under this programme, and the subsequent
cancellation of these shares.
The notes on pages 18 to 27 form part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2023
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
Notes 2023 2022
GBPm GBPm GBPm
Profit after taxation 19.0 44.7 128.9
Add back: income tax expense 5 6.8 13.2 30.5
finance income (1.7) (0.4) (1.9)
finance expense 16.2 7.8 18.7
depreciation, amortisation and
impairment 37.9 23.3 58.1
net exchange (gains)/losses (0.6) 0.2 10.7
share-based payments charge 1.9 3.0 0.5
Increase in inventories (55.5) (120.9) (133.2)
Increase in trade and other
receivables (28.5) (7.2) (6.6)
(Decrease)/increase in trade
and other payables (3.6) 27.7 (6.1)
-------------------------------------- ------ -------------- -------------- ------------
Change in net working capital (87.6) (100.4) (145.9)
-------------------------------------- ------ -------------- -------------- ------------
Cash flows from operating activities
Cash (used in)/generated from
operations (8.1) (8.6) 99.6
Taxation paid (15.4) (14.1) (22.3)
-------------------------------------- ------ -------------- -------------- ------------
Cash (used in)/generated from
operating activities (23.5) (22.7) 77.3
-------------------------------------- ------ -------------- -------------- ------------
Cash flows from investing activities
Additions to intangible assets (4.5) (6.4) (11.8)
Additions to property, plant
and equipment (11.8) (12.9) (39.6)
Finance income received 1.8 - 1.6
Capital contributions received
for right-of-use assets - - 0.2
Purchase of equity investment - - (1.0)
-------------------------------------- ------ -------------- -------------- ------------
Cash used in investing activities (14.5) (19.3) (50.6)
-------------------------------------- ------ -------------- -------------- ------------
Cash flows from financing activities
Finance expense paid 4 (9.1) (2.1) (7.2)
Payment of lease interest 12 (4.6) (2.1) (4.8)
Payment of lease liabilities 12 (20.7) (10.6) (29.1)
Repurchase of shares 15 (20.4) - -
Revolving credit facility drawdown 30.0 - -
Revolving credit facility repayment (5.0) - -
Dividends paid 7 (42.8) (42.8) (58.4)
-------------------------------------- ------ -------------- -------------- ------------
Cash used in financing activities (72.6) (57.6) (99.5)
-------------------------------------- ------ -------------- -------------- ------------
Net decrease in cash and cash
equivalents (110.6) (99.6) (72.8)
Cash and cash equivalents at
beginning of the period 157.5 228.0 228.0
Effect of exchange on cash held (1.2) 4.6 2.3
-------------------------------------- ------ -------------- -------------- ------------
Cash and cash equivalents at
end of the period 45.7 133.0 157.5
-------------------------------------- ------ -------------- -------------- ------------
The notes on pages 18 to 27 form part of these consolidated
financial statements.
Consolidated Non-GAAP Statement of Cash Flows
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
Notes 2023 2022
GBPm GBPm GBPm
EBITDA(1) 3 77.6 88.8 245.0
Change in net working capital(2) (85.7) (97.4) (145.4)
Capital expenditure (16.3) (19.3) (51.2)
---------------------------------- ------ -------------- -------------- ------------
Operating cash flow(1) (24.4) (27.9) 48.4
Net interest paid (7.3) (2.1) (5.6)
Payment of lease liabilities
and interest(3) 12 (25.3) (12.7) (33.9)
Taxation (15.4) (14.1) (22.3)
Purchase of equity investment - - (1.0)
Repurchase of shares 15 (20.4) - -
Net revolving credit facility 25.0 - -
drawdown
Dividends paid 7 (42.8) (42.8) (58.4)
---------------------------------- ------ -------------- -------------- ------------
Net cash flow (110.6) (99.6) (72.8)
Opening cash 157.5 228.0 228.0
Net cash exchange (1.2) 4.6 2.3
---------------------------------- ------ -------------- -------------- ------------
Cash and cash equivalents at
end of the period 45.7 133.0 157.5
---------------------------------- ------ -------------- -------------- ------------
1. Alternative Performance Measures as defined in the Glossary
on pages 29 and 30.
2. Included in working capital are share-based payments.
3. Includes interest of GBP4.6m (Sep 22: GBP2.1m, Mar 23:
GBP4.8m).
Notes to the Consolidated Interim Financial Statements
For the six months ended 30 September 2023
1. General information
Dr. Martens plc (the 'Company') is a public company limited by
shares incorporated in the United Kingdom, and registered and
domiciled in England and Wales, whose shares are traded on the
London Stock Exchange. The Company's registered office is: 28
Jamestown Road, Camden, London NW1 7BY. The principal activity of
the Company and its subsidiaries (together referred to as the
'Group') is the design, development, procurement, marketing,
selling and distribution of footwear, under the Dr. Martens
brand.
2. Accounting policies
The principal accounting policies adopted in the preparation of
the Consolidated Interim Financial Statements are the same as those
set out in the Group's Annual Financial Statements for the year
ended 31 March 2023 other than for the areas noted below. The
interim financial information is presented in GBP and to the
nearest million pounds (to one decimal place) unless otherwise
noted.
Taxation
As per the requirements of IAS 34 (Interim Financial Reporting)
paragraph 16A9a), the estimated effective tax rate for the full
year has been applied to taxable profits.
Share buyback
Where the Company purchases any of its own equity instruments,
for example, pursuant to the share buyback programme, the
consideration paid, including any directly attributable incremental
costs, is deducted from equity attributable to the owners of the
company. The repurchased shares are recognised as treasury shares
until the shares are cancelled. As at 30 September 2023, the
company still had control over whether the programme would continue
and therefore, no liability is recognised.
Basis of preparation
The condensed Consolidated Interim Financial Statements have
been prepared in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority, and with UK-adopted International Accounting
Standard (IAS) 34 "Interim Financial Reporting".
The interim results for the six months ended 30 September 2023
and the comparatives for the six months ended 30 September 2022 are
unaudited but have been reviewed by the auditors. A copy of their
review report has been included at the end of this report.
The financial information for the year ended 31 March 2023 has
been extracted from the Group financial statements for that period
and does not constitute statutory accounts as defined in section
434 of the Companies Act. These published financial statements were
reported on by the auditors without qualification or an emphasis of
matter reference and did not include a statement under section
498(2) or (3) of the Companies Act 2006 and have been delivered to
the Registrar of Companies.
The Consolidated Interim Financial Statements have been prepared
under the historical cost convention, except for derivative
financial instruments and pension scheme assets that have been
measured at fair value.
In preparing the Consolidated Interim Financial Statements
management has considered the impact of climate change,
particularly in the context of the financial statements as a whole,
in addition to disclosures included in the Strategic Report of the
Group financial statements for the year ended 31 March 2023.
Climate change remains as an emerging risk and is not expected to
have a significant impact on the Group's going concern assessment
to 31 March 2024.
Significant judgements and sources of estimation uncertainty
The Group's significant judgements and key sources of estimation
uncertainty are consistent with those disclosed in the Group's
latest audited financial statements.
Going concern
The interim consolidated financial information has been prepared
on the going concern basis. The Directors' assessment is based on
detailed trading and cash flow forecasts, including forecast
liquidity and covenant compliance. The period of management's
assessment is a 16-month period from the date of the signing of the
consolidated financial statements (the going concern period) to 31
March 2025 and the going concern basis is dependent on the Group
maintaining adequate levels of resources to operate during the
period.
The Directors also considered the Group's funding arrangements
at 30 September 2023 with cash of GBP45.7m, available undrawn
facilities of GBP171.7m and bullet debt repayment of GBP292.5m not
due until 2 February 2026.
FY24 started with a continuing challenging global macroeconomy
and weak consumer sentiment particularly in America. Global
recovery remains slow with growing divergences of impacts on our
core markets making it a challenge to return to pre-pandemic
growth.
The first half of FY24 was a difficult trading environment
particularly in America with good DTC growth in a number of our
core markets, particularly in EMEA, resulting in DTC mix expansion
+7%pts. There was strong ecommerce growth in EMEA and APAC, with
improved conversion and traffic growth. Retail growth was led by
maturing stores with continued footfall recovery in EMEA and APAC,
but footfall decline in America. We were encouraged to see that the
underlying core fundamentals of the DOCS strategy continued to be
in line with expectation. The H1 decline in revenue was mainly from
lower wholesale with planned volume reduction of etailers in EMEA,
a decision not to renew China distributor contract and lower
wholesale revenues in America due to industry wide destocking.
Gross margins growth was supported by strong supply chain savings
of c.GBP10m with price increases finding inflation.
In EMEA inflation started to ease as a result of a decline of
energy prices and moderating inflationary pressures. Russia's
ongoing aggression against Ukraine however continues to pose risks
and remains a source of uncertainty. Mounting climate risks,
illustrated by extreme weather conditions and unprecedented
wildfires and floods in the summer, also weigh on the outlook. In
America, the landscape continued to be increasingly uncertain with
weak consumer spending. The first half was also impacted by
unseasonable warm weather. The consumer in America is very cautious
and we do not expect significant improvement in the short/midterm,
with a risk of customer sentiment deteriorating further given the
recent conflict in the Middle East. In APAC the outlook remains
more balanced with recovery from the pandemic slow and gradual.
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
2. Accounting policies (continued)
Going concern (continued)
As a result, the Directors will maintain a cautious outlook
through the second half and beyond and will react appropriately to
further developments and associated risks (across ecommerce, retail
and wholesale channels). The Directors however remain confident in
the long-term growth prospects, cash generative nature of the
business, and strong balance sheet, with low risk from the higher
than optimal inventory levels due the inventory profile of core
product (minimal mark down risk). The Group is operationally strong
with a long track record consistently generating profits and cash
which is expected to continue over the short and long term. The
principal measure of future strength is in relation to our brand
and key metrics and brand survey together with our economic
strength gives confidence on our future growth prospects.
The Directors analyse the prospects of the Group by reference to
its current financial position, recent trading trends and momentum,
detailed trading and cashflow forecasts including forecast
liquidity and covenant compliance, strategy, economic model and the
principal risks, monitoring a number of consumer confidence metrics
across all core markets. Detailed forecasts are prepared and plans
for the assessment period taking into account experiences of
trading through the period to September 2023, including the impact
of the continued current global economic uncertainty, high
inflation on profitability, and cash flow and covenant
compliance.
As part of the going concern assessment, management have
modelled, and the Directors have reviewed a base case and a severe
but plausible downside scenario with no planned cost or working
capital mitigation (including the payment of dividends).
Our central planning assumptions in the base case are:
Micro:
-- Store growth in key markets will continue to be led by
traffic recovery back towards pre Covid-19 levels, though America
will have the slowest recovery, with a step improvement in
ecommerce awareness also continuing in conjunction with new store
openings
-- Price increases do not materially impact demand and funds inflation
-- Inventory to be right sized for forward demand through FY25
-- All DCs and factories remain open and operational throughout the year
Macro:
-- No material change to the global political situation /war in Ukraine/Middle East
-- No material deterioration in climate risk with respect to extreme weather
-- Higher inflation to remain (with associated higher interest
rates) with no marked stepped improvement in consumer confidence in
EMEA or America
The severe but plausible downside scenario includes a low base
case, where revenue and EBITDA have been reduced for risks and
challenging trading environment identified above, to reflect
further weakening of consumer demand, particularly America, with no
mitigation (but includes dividend payments), and a decline in both
revenue and EBITDA in FY25 to reflect continuation of weakened
consumer demand.
Should this severe but plausible downside scenario occur then
mitigating actions could also be taken including, (but not limited
to) cancellation of pay awards, reduced capital expenditure and
reduced marketing spend. Under this scenario dividends could be
maintained but would be reviewed if required. In the severe but
plausible downside scenario, the Group continues to have
satisfactory liquidity and significant covenant headroom throughout
the 16-month period under review. A more extreme downside scenario
is not considered plausible.
In addition, a reverse stress test has been modelled to
determine what could break covenant compliance estimates and
liquidity before any mitigating actions. To model these reverse
stress tests the impact on revenue of zero covenant headroom and
zero liquidity was calculated at the end of FY25 from the base
case. Under the covenant breach test, it is concluded that the
business could weather extreme growth reductions without
mitigation, -33pts of revenue growth in FY25 before covenants are
breached. Similarly, the business would have to experience -87pts
revenue growth reduction in FY25 before zero cash headroom is
reached. Under both tests modelled, there were no mitigating
actions (including dividend payments) modelled and the resulting
revenues calculated and likelihood of occurring have been
considered. The Directors have assessed the likelihood of
occurrence to be remote.
In adopting the going concern basis for preparing the
consolidated financial statements, the Directors have considered
the business activities as well as the principal risks and
uncertainties faced by the business. Based on the Group trading and
cashflow forecasts, the Directors have reasonable expectation that
the Group has an adequate level of resources to continue in
operational existence during the period under review.
Adoption of new and revised standards
A number of new or amended standards became applicable for the
current reporting period. These standards, amendments or
interpretations are not expected to have a material impact on the
Group in the current or future reporting periods:
-- Amendments to IAS 1 - Classification of liabilities as
current, and disclosure of accounting policies
-- Amendments to IAS 8 - Definition of accounting estimates
-- Amendments to IAS 12 - Deferred tax related to assets and
liabilities arising from a single transaction.
-- Amendments to IAS 12 - Pillar two model rules
-- Implementation of IFRS 17.
New standards and interpretations not yet applied
The following new or amended IFRS accounting standards,
amendments and interpretations are not yet adopted and it is
expected that where applicable, these standards and amendments will
be adopted on each respective effective date:
-- Amendments to IAS 1 - Presentation of financial statements:
non-current liabilities with covenants
-- Amendments to IFRS 16 - Leases on sale and leaseback
These standards, amendments or interpretations are not expected
to have a material impact on the Group in the current or future
reporting periods.
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
3. Segmental Analysis
IFRS 8 'Operating Segments' requires operating segments to be
determined by the Group's internal reporting to the Chief Operating
Decision Maker (CODM). The CODM has been determined to be both the
CEO and CFO, who receive information on this basis of the Group's
revenue in key geographical regions based on the Group's management
and internal reporting structure. The CODM assesses the performance
of geographical segments based on a measure of revenue and
EBITDA(2) . To increase transparency the Group also includes
additional voluntary disclosure analysis of global revenue within
different operating channels. Included within EMEA is revenue
attributable to Airwair International Limited and Airwair Wholesale
Limited, the principal UK trading subsidiaries of Dr. Martens plc,
with revenue from retail stores in Continental Europe and wholesale
and export customers, America revenue is fully attributable to the
USA and Canada, and APAC revenue is mainly attributable to Japan,
Australia, China, Hong Kong and South Korea. The types of products
from which each reportable segment derives its revenue are
consistent across all segments. The Group typically generates
approximately 60% of total revenue in the second half reflecting
the peak Q3 DTC trading period and, as a result of the stronger
gross margin structure of DTC compared to wholesale, EBITDA margins
are higher in the second half of the year.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Revenue by geographical market(1)
EMEA 194.2 179.0 443.0
America 147.7 179.7 428.2
APAC 53.9 59.9 129.1
----------------------------------- -------------- -------------- ------------
Total revenue 395.8 418.6 1,000.3
----------------------------------- -------------- -------------- ------------
1. Revenue by geographical market represents revenue from
external customers, there is no inter-segment revenue.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
EBITDA(2) by geographical market
EMEA 55.8 52.8 146.1
America 28.6 41.4 100.1
APAC 12.2 13.1 33.8
Support costs (19.0) (18.5) (35.0)
---------------------------------------- -------------- -------------- ------------
EBITDA(2) 77.6 88.8 245.0
Amortisation of intangibles (4.6) (3.4) (8.4)
Depreciation of property, plant
and equipment (7.9) (6.3) (13.6)
Depreciation of right-of-use
assets (25.4) (13.6) (32.2)
Impairment of property, plant
and equipment - - (0.6)
Impairment of right-of use assets - - (3.3)
Exchange gains/(losses) 0.6 (0.2) (10.7)
---------------------------------------- -------------- -------------- ------------
Depreciation, amortisation, impairment
& exchange gains/(losses) (37.3) (23.5) (68.8)
Finance income and expense (14.5) (7.4) (16.8)
---------------------------------------- -------------- -------------- ------------
Profit before tax 25.8 57.9 159.4
---------------------------------------- -------------- -------------- ------------
2. Alternative Performance Measure 'APM' as defined in the Glossary on pages 29 and 30.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Revenue by channel
Ecommerce 91.7 88.8 279.0
Retail 104.7 91.0 241.7
-------------------- -------------- -------------- ------------
DTC 196.4 179.8 520.7
Wholesale 199.4 238.8 479.6
-------------------- -------------- -------------- ------------
Total 395.8 418.6 1,000.3
-------------------- -------------- -------------- ------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Non-current assets
EMEA(1) 163.2 125.5 143.3
America 105.4 68.4 72.6
APAC 16.6 12.1 15.4
Goodwill 240.7 240.7 240.7
Deferred tax 11.0 11.0 11.8
-------------------------- -------------- -------------- ------------
Total non-current assets 536.9 457.7 483.8
-------------------------- -------------- -------------- ------------
1. Included in the EMEA non-current assets is GBP83.8m (Sep 22:
GBP64.5m, Mar 23: GBP79.4m) in relation to the UK legal
entities.
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
4. Finance expense
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Bank debt and other charges(1,2) 11.0 5.1 12.7
Interest on lease liabilities 4.6 2.1 4.8
Amortisation of bank loan issue
costs 0.6 0.6 1.2
Total financing expense 16.2 7.8 18.7
---------------------------------- -------------- -------------- ------------
1. Bank debt and charges and other interest charges were
GBP11.0m (Sep 22: GBP5.1m Mar 23: GBP12.7m), compared to interest
paid in the period of GBP9.1m (Sep 22: GBP2.1m; Mar 23 GBP7.2m),
with the difference of GBP1.9m (Sep 22: GBP3.0m; Mar 23: GBP5.5m)
relating to timing of interest payments on the debt.
2. Interest income of GBP1.7m (Sep 22: GBP0.4m, Mar 23: GBP2.1m)
was previously included within 'Bank debt and charges'.
5. Tax expense
The Group calculates the period tax expense using the tax rate
that would be applicable to the expected total annual earnings. The
major components of tax expense in the Consolidated Statement of
Profit or Loss are:
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Current tax
Current tax on UK profit for
the period 5.5 10.5 28.1
Adjustment in respect of prior
periods (0.2) 1.1 (1.7)
Current tax on overseas profits
for the period 1.5 2.1 4.3
--------------------------------------- -------------- -------------- ------------
6.8 13.7 30.7
--------------------------------------- -------------- -------------- ------------
Deferred tax
Origination and reversal of temporary
differences (0.1) (0.7) (1.0)
Adjustment in respect of prior
periods 0.1 0.2 0.8
--------------------------------------- -------------- -------------- ------------
- (0.5) (0.2)
--------------------------------------- -------------- -------------- ------------
Total tax expense in the Consolidated
Statement of Profit or Loss 6.8 13.2 30.5
--------------------------------------- -------------- -------------- ------------
Other Comprehensive Income
Tax in relation to unexercised 0.1 - -
share options
Tax in relation to cash flow
hedges 0.3 - (0.2)
--------------------------------------- -------------- -------------- ------------
Total tax expense in the Consolidated
Statement of Comprehensive Income 7.2 13.2 30.3
--------------------------------------- -------------- -------------- ------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Factors affecting the tax expense
for the period
Profit before tax 25.8 57.9 159.4
--------------------------------------- -------------- -------------- ------------
Profit before tax multiplied
by standard rate of UK corporation
tax of 25% (Mar 23 and Sep 22:
19%) 6.5 11.0 30.3
Effects of:
Non-deductible expenses 0.4 0.1 0.2
Effect of change in UK tax rate - - 0.1
Share based payments (0.1) - 0.1
Difference in foreign tax rates 0.3 0.9 0.8
Other adjustments (0.2) (0.1) (0.1)
Adjustments in respect of prior
periods(1) (0.1) 1.3 (0.9)
--------------------------------------- -------------- -------------- ------------
Total tax expense in the Consolidated
Statement of Profit or Loss 6.8 13.2 30.5
--------------------------------------- -------------- -------------- ------------
Effective tax rate 26.4% 22.8% 19.1%
Other Comprehensive Income
Tax in relation to unexercised 0.1 - -
share options
Tax in relation to cash flow
hedges 0.3 - (0.2)
--------------------------------------- -------------- -------------- ------------
Total tax expense in the Consolidated
Statement of Comprehensive Income 7.2 13.2 30.3
--------------------------------------- -------------- -------------- ------------
1. The adjustments in respect of prior periods are in relation
to current and deferred tax on temporary differences.
Factors that may affect future tax charges
The Group is within the scope of the OECD Pillar two model
rules. Pillar two legislation was recently substantively enacted in
some of the territories in which the Group operates and will come
into effect in these territories from 1 January 2024. On 20 June
2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15%. The
legislation implements a domestic top-up tax and a multinational
top-up tax, effective for accounting periods starting on or after
31 December 2023. The Group has applied the exception allowed by an
amendment to IAS 12 to recognising and disclosing information about
deferred tax assets and liabilities related to top-up income
taxes.
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
6. Earnings per share
The calculation of basic earnings per share is based on the
profit attributable to ordinary shareholders of the Parent Company
divided by the weighted average number of ordinary shares in issue
during the period.
Diluted earnings per share is calculated by dividing the profit
for the period attributable to ordinary equity holders of the
Parent Company by the weighted average number of ordinary shares in
issue during the period plus the weighted average number of
ordinary shares that would be issued on the conversion of all
dilutive potential ordinary shares into ordinary shares.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Profit after tax 19.0 44.7 128.9
----------------------------------- -------------- -------------- ------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
No. No. No.
Weighted average number of shares
for calculating basic earnings
per share (millions) 998.8 1,000.3 1,000.5
Potentially dilutive share awards
(millions) 3.2 4.4 0.7
----------------------------------- -------------- -------------- ------------
Weighted average number of shares
for calculating diluted earnings
per share (millions) 1,002.0 1,004.7 1,001.2
----------------------------------- -------------- -------------- ------------
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
Earnings per share
Basic earnings per share 1.9p 4.5p 12.9p
Diluted earnings per share 1.9p 4.5p 12.9p
----------------------------------- -------------- -------------- ------------
During the 6 months to 30 September 2023 the Group repurchased
13.9m shares. The cash outflow was GBP20.4m, with an additional
GBP0.7m of accrued expenditure at period end, resulting in a total
cost of GBP21.1m (including transaction costs of GBP0.2m) pursuant
to the share buyback scheme that was announced on 14 July 2023.
7. Dividends
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Equity dividends on ordinary
shares declared and paid during
the period/year:
Final dividend paid for FY23:
4.28p (Sep 22 and Mar 23: 4.28p) 42.8 42.8 42.8
Interim dividend paid for FY24:
nil (Sep 22: nil; Mar 23: 1.56p) - - 15.6
----------------------------------- -------------- -------------- ------------
Total dividends paid during
the period/year 42.8 42.8 58.4
----------------------------------- -------------- -------------- ------------
Proposed dividends
(not recognised as a liability
Sep 23, Sep 22 or Mar 23)
Interim dividend proposed of
1.56p (Sep 22: 1.56p, Mar 23:
nil) 15.4 15.6 -
Final dividend proposed of nil
(Sep 22: nil, Mar 23: 4.28p) - - 42.8
----------------------------------- -------------- -------------- ------------
Total dividends proposed during
the period/year 15.4 15.6 42.8
----------------------------------- -------------- -------------- ------------
Dividends as a % of earnings 81% 35% 45%
----------------------------------- -------------- -------------- ------------
Dividend per share
Interim dividend 1.56p 1.56p 1.56p
Final dividend - - 4.28p
----------------------------------- -------------- -------------- ------------
Total dividend per share 1.56p 1.56p 5.84p
----------------------------------- -------------- -------------- ------------
The Board has approved and the Company has declared an interim
dividend of 1.56 pence per share (H1 FY23: 1.56 pence) equating to
a 81% (H1 FY23: 35%) earnings payout. The Dr. Martens plc
International Share Incentive Plan Trust has waived all dividends
payable by the Company in respect of the ordinary shares it holds.
The interim dividend will be paid to shareholders on the register
as at 5 January 2024 with payment on 2 February 2024.
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
8. Property, plant and equipment and right-of-use assets
Movements in property, plant and equipment since 31 March 2023
predominantly relate to additions of GBP11.0m and depreciation
charged of GBP7.9m.
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Net book value:
Freehold property and improvements 7.4 6.8 7.4
Leasehold improvements 41.5 33.8 37.6
Plant and machinery 12.0 3.9 12.8
Office equipment 3.5 3.2 3.5
64.4 47.7 61.3
------------------------------------ -------------- -------------- ------------
Set out below are the carrying amounts of right-of-use assets
recognised and the movements during the period:
Right-of-use
assets
GBPm
Cost or valuation
At 31 March 2022 159.5
Additions(1) 66.3
Reassessments of leases 5.5
Reclassification from intangible assets 0.2
Disposals (0.8)
Exchange 4.7
----------------------------------------- -------------
At 31 March 2023 235.4
Additions(1) 70.1
Reassessment of leases(2) 7.2
Exchange (2.9)
----------------------------------------- -------------
At 30 September 2023 309.8
----------------------------------------- -------------
Depreciation and impairment
At 31 March 2022 54.0
Charge for the period 32.2
Impairment(3) 3.3
Exchange 1.8
----------------------------------------- -------------
At 31 March 2023 91.3
Charge for the period 25.4
Exchange (1.9)
----------------------------------------- -------------
At 30 September 2023 114.8
----------------------------------------- -------------
Net book value
At 30 September 2023 195.0
At 31 March 2023 144.1
----------------------------------------- -------------
1. Additions include GBP0.8m of direct costs (Sep 22: GBP0.8m,
Mar 23: GBP3.2m) and GBP0.6m (Sep 22: GBP1.3m, Mar 23: GBP2.7m) in
relation to costs of removal and restoring.
2. Lease reassessments relate to measurement adjustments for
rent reviews and stores that have exercised lease breaks.
3. During FY23, impairment charge was mainly in relation to
three stores in the US where footfall recovery, in their locality,
was weak, and they were written down to GBPnil.
9. Borrowings
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Current
Revolving credit facility drawdown 25.0 - -
Bank interest 8.0 3.3 6.0
------------------------------------ -------------- -------------- ------------
Borrowings 33.0 3.3 6.0
Lease liabilities 40.0 25.1 28.1
------------------------------------ -------------- -------------- ------------
Total current 73.0 28.4 34.1
------------------------------------ -------------- -------------- ------------
Non-current
Bank loans (net of unamortised
bank fees)(2) 289.6 292.9 293.4
Lease liabilities 167.1 117.7 124.3
------------------------------------ -------------- -------------- ------------
Total non-current 456.7 410.6 417.7
------------------------------------ -------------- -------------- ------------
Total borrowings(1) 529.7 439.0 451.8
------------------------------------ -------------- -------------- ------------
1. From total borrowings, only bank loans (excluding unamortised
bank fees) and the revolving credit facility drawdown and lease
liabilities are included in debt for bank loan covenant calculation
purposes.
2. Bank debt is net of GBP2.9m (Sep 22: GBP4.1m, Mar 23: GBP3.4m) of unamortised bank fees.
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
9. Borrowings (continued)
Analysis of bank loan:
Non-current bank loans (net of
unamortised bank fees) 289.6 292.9 293.4
Add back unamortised bank fees 2.9 4.1 3.4
-------------------------------- ------- ------ ------
Total gross bank loan 292.5 297.0 296.8
-------------------------------- ------- ------ ------
On 29 January 2021, the Group entered into a Facilities
Agreement comprising a new term B loan facility of EUR337.5m
(equivalent to GBP300.0m at that date) and a new multi-currency
revolving credit facility of GBP200.0m. These facilities have a
maturity date of 2 February 2026. Included within this agreement is
a committed ancillary facility of which GBP3.3m (Sep 22: GBP4.1m)
has been utilised primarily related to landlord bank
guarantees.
At 30 September 2023 the Group had utilised GBP25.0m (Sep 22:
GBPnil, Mar 23: GBPnil) of drawn debt under the revolving credit
facility to support short-term working capital requirements.
The Group value of the bank loan as at 30 September 2023
(excluding unamortised bank fees and accrued interest) of GBP292.5m
(Sep 22: GBP297.0) is GBP7.5m lower (Sep 22: GBP3.0m lower) than
the amount borrowed on 29 January 2021 due to an appreciation of
the sterling Euro exchange rate movement. The Group's total gross
bank borrowings (excluding lease liabilities) is denominated in
Euros and loan repayments will occur in February 2026.
10. Provisions
Provisions as at 30 September 2023 of GBP4.9m (31 March 2023:
GBP4.4m) consist of property provisions relating to the estimated
repair and restoration costs for retail stores at the end of the
lease. The provisions are not discounted for the time value of
money as this is not considered materially different from the
current cost.
11. Financial instruments
IFRS 13 requires the classification of financial instruments
measured at fair value to be determined by reference to the source
of inputs used to derive fair value.
The fair values of all financial instruments, except for leases,
in both periods are materially equal to their carrying values. All
financial instruments are classified as amortised cost with the
exception of derivatives, cash amounts held within Money Market
Funds, and investments in equity instruments which are measured at
fair value. Derivatives and Money Market Funds are classified as
Level 2 under the fair value hierarchy, and investments in equity
instruments as Level 3, which is consistent with that defined in
note 2.17 of the Group's consolidated financial statements for the
year ended 31 March 2023.
Unaudited
30 September 2023
-------------------------------------------------------
Fair value Fair value
Assets through through
at amortised other comprehensive profit
cost income or loss Total
GBPm GBPm GBPm GBPm
---------------------------- ------------- -------------------- ---------- ------
Assets as per Balance Sheet
Investments - 1.0 - 1.0
Trade and other receivables
excluding prepayments and
accrued income 110.5 - - 110.5
Derivative financial assets
- Current - 1.0 - 1.0
Cash and cash equivalents 32.1 - 13.6(1) 45.7
----------------------------- ------------- -------------------- ---------- ------
142.6 2.0 13.6 158.2
---------------------------- ------------- -------------------- ---------- ------
1. A proportion of cash is invested in high-quality overnight
money market funds to mitigate concentration and counterparty
risk.
Fair value Fair value
Liabilities through through
at amortised other comprehensive profit
cost income or loss Total
GBPm GBPm GBPm GBPm
----------------------------------- ------------- -------------------- ---------- ------
Liabilities as per Balance
Sheet
Bank debt 289.6 - - 289.6
Borrowings - Current 33.0 - - 33.0
Lease liabilities - Current 40.0 - - 40.0
Lease liabilities - Non-current 167.1 - - 167.1
Derivative financial liabilities
- Current - 2.8 - 2.8
Trade and other payables excluding
non-financial liabilities
(mainly tax and social security
costs) 110.5 - - 110.5
------------------------------------ ------------- -------------------- ---------- ------
640.2 2.8 - 643.0
----------------------------------- ------------- -------------------- ---------- ------
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
11. Financial instruments (continued)
Audited
31 March 2023
------------------------------------------------------
Fair value Fair value
Assets through through
at amortised other comprehensive profit
cost income or loss Total
GBPm GBPm GBPm GBPm
---------------------------- ------------- -------------------- ---------- -----
Assets as per Balance Sheet
Investments - 1.0 - 1.0
Trade and other receivables
excluding prepayments and
accrued income 86.3 - - 86.3
Derivative financial assets
- Current - 0.5 - 0.5
Cash and cash equivalents 86.3 - 71.2(1) 157.5
----------------------------- ------------- -------------------- ---------- -----
172.6 1.5 71.2 245.3
---------------------------- ------------- -------------------- ---------- -----
1. A proportion of cash is invested in high-quality overnight
money market funds to mitigate concentration and counterparty
risk.
Fair value Fair value
Liabilities through through
at amortised other comprehensive profit
cost income or loss Total
GBPm GBPm GBPm GBPm
----------------------------------- ------------- -------------------- ---------- -----
Liabilities as per Balance
Sheet
Bank debt 293.4 - - 293.4
Bank interest - Current 6.0 - - 6.0
Lease liabilities - Current 28.1 - - 28.1
Lease liabilities - Non-current 124.3 - - 124.3
Derivative financial liabilities
- Current - 1.3 - 1.3
Trade and other payables excluding
non-financial liabilities
(mainly tax and social security
costs) 115.7 - - 115.7
------------------------------------ ------------- -------------------- ---------- -----
567.5 1.3 - 568.8
----------------------------------- ------------- -------------------- ---------- -----
12. Leases
Set out below are the carrying amounts of lease liabilities
(included under borrowings - lease liabilities) and the movements
during the period:
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
At start of period 152.4 112.9 112.9
Additions 68.5 27.0 60.6
Reassessments 7.4 4.1 5.5
Disposals - (0.8) (0.8)
Interest expense (note 4) 4.6 2.1 4.8
Lease capital and interest repayments (25.3) (12.7) (33.9)
Exchange (0.5) 10.2 3.3
--------------------------------------- -------------- -------------- ------------
At end of period 207.1 142.8 152.4
--------------------------------------- -------------- -------------- ------------
Current 40.0 25.1 28.1
Non-current 167.1 117.7 124.3
--------------------------------------- -------------- -------------- ------------
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
12. Leases (continued)
The following amounts were recognised in the Statement of Profit
or Loss:
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 March
30 September 30 September 2023
2023 2022
GBPm GBPm GBPm
Depreciation expense of right-of-use
assets 25.4 13.6 32.2
Interest expense on lease liabilities
(note 5) 4.6 2.1 4.8
Expenses relating to short-term
leases 0.3 0.6 1.3
Variable lease payments 1.1 0.8 2.8
--------------------------------------- -------------- -------------- ------------
Total operating expenses recognised
in Statement of Profit or Loss 1.4 1.4 4.1
--------------------------------------- -------------- -------------- ------------
Total amount recognised in Statement
of Profit or Loss 31.4 17.1 41.1
--------------------------------------- -------------- -------------- ------------
The Group operates its own retail stores via arm's length
leasehold arrangements and also leases one warehouse (in the UK)
and its offices (apart from one property which is freehold). At 30
September 2023, the average lease term remaining across all
property related leases to end of term was 4.9 years (H1 FY23: 5.4
years), and 3.5 years (H1 FY23: 3.4 years) to tenant-only break.
The annual rent commitment was GBP47.8m (H1 FY23: GBP29.7m) and
undiscounted total lease commitment was GBP235.0m (H1 FY23:
GBP161.4m), reducing to GBP167.4m (H1 FY23: GBP100.4m) to lease
break.
At 30 September 2023 the Group has right-of-use ('ROU') assets
of GBP195.0m (H1 FY23: GBP133.9m) and lease liabilities of
GBP207.1m (H1 FY23: GBP142.8m). This includes 4 DC 3PL contracts
that are within the scope of IFRS16.
13. Pensions
Defined contribution scheme
The Group operates a defined contribution pension scheme for its
employees. The Group's expenses in relation to this scheme were
GBP2.6m for the six months ended 30 September 2023 (Sep 22:
GBP2.3m) and at 30 September 2023 GBP0.9m (Sep 22: GBP1.2m, Mar 23:
GBP0.8m) remained payable to the pension fund.
Defined benefit scheme
Dr Martens Airwair Group Limited and Airwair International
Limited operates a pension arrangement called the Dr. Martens
Airwair Group Pension Plan (the Plan). The Plan has a defined
benefit section that provides benefits based on final salary and
length of service on retirement, leaving service or death. The
defined benefit section closed to new members on 6 April 2002 and
closed to future accrual with effect from 31 January 2006.
The Plan is managed by a board of Trustees appointed in part by
Airwair International Limited and in part from elections by members
of the Plan. The Trustees have responsibility for obtaining
valuations of the fund, administering benefit payments and
investing the Plan's assets. The Trustees delegate some of these
functions to their professional advisers where appropriate.
The defined benefit section of the Plan is subject to the
Statutory Funding Objective under the Pensions Act 2004. A
valuation of the Plan is carried out at least once every three
years to determine whether the Statutory Funding Objective is met.
The last valuation was carried out at 30 June 2022 which confirmed
that the Plan had sufficient assets to meet the Statutory Funding
Objective. The next valuation is due at 30 June 2025. The Statutory
Funding Objective does not currently impact on the recognition of
the Plan in these accounts.
During the period, no discretionary benefits were awarded. There
were no Plan amendments, settlements or curtailments during the
period.
The weighted average duration of the defined benefit obligation
is approximately 12 years (Mar 23: 13 years). Around 50% of the
undiscounted benefits are due to be paid beyond 17 years' time,
with the projected actuarial cashflows declining to zero in about
70 years.
Effect of the Plan on Company's future cash flows
Airwair International Limited is required to agree a Schedule of
Contributions with the Trustees of the Plan following a valuation,
which must be carried out at least once every three years.
Following the valuation of the Plan at 30 June 2022, a Schedule of
Contributions was agreed under which Airwair International Limited
was not required to make any contributions to the defined benefit
section of the Plan (other than payments in respect of
administrative expenses). Accordingly, Airwair International
Limited does not expect to contribute to the defined benefit
section of the Plan, although it will continue to contribute to the
defined contribution section in line with the Schedule of
Contributions. The next valuation of the Plan is due at 30 June
2025. If this reveals a deficit then Airwair International Limited
may be required to pay contributions to the Plan to repair the
deficit over time.
The amounts recognised in the Balance Sheet are determined as
follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
GBPm GBPm GBPm
Amounts recognised in the Balance
Sheet
Fair value of plan assets - defined
benefit section 43.6 48.5 49.5
Present value of funded obligations
- defined benefit section (35.1) (35.9) (38.4)
Surplus of funded plans 8.5 12.6 11.1
Impact of asset ceiling (8.5) (12.6) (11.1)
------------------------------------- ------------- ------------- ---------
Net pension asset - - -
------------------------------------- ------------- ------------- ---------
Notes to the Consolidated Interim Financial Statements
(continued)
For the six months ended 30 September 2023
13. Pensions (continued)
Although the Plan has a surplus, this is not recognised on the
grounds that Airwair International Limited is unlikely to derive
any future economic benefits from the surplus. As such, an asset
ceiling has been applied to the Balance Sheet, and the net surplus
of GBP8.5m (Mar 23: GBP11.1m) has not been recognised on the
balance sheet. The net surplus has been restricted to GBPnil (Mar
23: GBPnil).
14. Share Capital
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
No. GBP No. GBP No. GBP
Authorised,
called up
and fully
paid
Ordinary shares
of GBP0.01
each 988,567,950 9,885,680 1,000,557,598 10,005,576 1,000,793,898 10,007,939
----------------- ------------ ---------- -------------- ----------- -------------- -----------
The movements in ordinary share capital during the half year
ended 30 September 2023 were as follows:
Unaudited 30 September
2023
No. GBPm
As at 1 April 2023 1,000,793,898 10.0
Shares issued 250,751 -
Repurchase and cancellation of ordinary
share capital (12,476,699) (0.1)
----------------------------------------- ----------------- ------
As at 30 September 2023 988,567,950 9.9
----------------------------------------- ----------------- ------
Unaudited 30 September
2022
No. No.
As at 1 April 2022 1,000,222,700 10.0
Shares issued 334,898 -
------------------------- ----------------- ------
As at 30 September 2022 1,000,557,598 10.0
------------------------- ----------------- ------
Audited 31 March 2023
No. GBPm
As at 1 April 2022 1,000,222,700 10.0
Shares issued 571,198 -
--------------------- ----------------- -----
As at 31 March 2023 1,000,793,898 10.0
--------------------- ----------------- -----
During the half year ended 30 September 2023 Dr. Martens plc
repurchased 13.9m ordinary shares for a cash outflow of GBP20.4m,
with an additional GBP0.7m of accrued expenditure at period end,
resulting in a total cost of GBP21.1m, including transaction costs
of GBP0.2m, as part of a share repurchase programme announced on 1
July 2023. All shares purchased were for cancellation, with 12.5m
shares cancelled and 1.4m shares to be cancelled. The repurchased
shares represented 1.4% of ordinary share capital. The number of
shares in issue is reduced where shares are repurchased.
15. Treasury Shares
The movements in treasury shares held by the Company during the
half year ended 30 September 2023 were as follows:
Unaudited 30 September
2023
No. GBPm
As at 1 April 2023 110,000 -
Repurchase of shares for cancellation 13,880,002 20.9
Cancellation of shares (12,476,699) (18.9)
As at 30 September 2023 1,513,303 2.0
--------------------------------------- --------------- --------
On 14 July 2023 Dr. Martens plc announced a share buyback
programme. All shares repurchased during a given week are cancelled
collectively the following week. Treasury shares are a result of
the timing delay between the repurchase and cancellation of these
shares.
16. Related party transactions
The Group's related party transactions are with key management
personnel and other related parties as disclosed in the Group's
Annual Report and Accounts for the year to 31 March 2023. There
have been no material changes to the Group's related party
transactions during the six months to 30 September 2023.
17. Post balance sheet events
The Group has continued with the repurchase and cancellation of
shares in line with the share buyback programme that was announced
on 14 July 2023.
First half / second half financial summary
H1 H2 FY
---------- ---------- ----------- ---------- --------
Unaudited Unaudited Unaudited Audited
FY24 FY23 Variance FY23 FY23
GBPm GBPm % GBPm GBPm
Revenue by channel:
Ecommerce 91.7 88.8 3% 190.2 279.0
Retail 104.7 91.0 15% 150.7 241.7
---------------------- ---------- ---------- ----------- ---------- --------
DTC 196.4 179.8 9% 340.9 520.7
Wholesale(3) 199.4 238.8 (17%) 240.8 479.6
---------------------- ---------- ---------- ----------- ---------- --------
395.8 418.6 (5%) 581.7 1,000.3
---------------------- ---------- ---------- ----------- ---------- --------
Gross profit 254.9 257.8 (1%) 360.3 618.1
EBITDA(1) 77.6 88.8 (13%) 156.2 245.0
Profit before
tax 25.8 57.9 (55%) 101.5 159.4
Tax expense (6.8) (13.2) (48%) (17.3) (30.5)
---------------------- ---------- ---------- ----------- ---------- --------
Profit after tax 19.0 44.7 (57%) 84.2 128.9
---------------------- ---------- ---------- ----------- ---------- --------
Earnings per share
Basic 1.9p 4.5p (58%) 8.4p 12.9p
Diluted 1.9p 4.5p (58%) 8.4p 12.9p
---------------------- ---------- ---------- ----------- ---------- --------
Key statistics:
Pairs sold (m) 5.7 6.3 (9%) 7.5 13.8
No. of stores(2) 225 174 29% 204 204
DTC mix % 50% 43% +7pts 59% 52%
Gross margin % 64.4% 61.6% +2.8pts 61.9% 61.8%
EBITDA(1) % 19.6% 21.2% -1.6pts 26.9% 24.5%
---------------------- ---------- ---------- ----------- ---------- --------
Revenue by region:
EMEA 194.2 179.0 8% 264.0 443.0
America 147.7 179.7 (18%) 248.5 428.2
APAC 53.9 59.9 (10%) 69.2 129.1
---------------------- ---------- ---------- ----------- ---------- --------
395.8 418.6 (5%) 581.7 1,000.3
---------------------- ---------- ---------- ----------- ---------- --------
Revenue mix:
EMEA % 49% 43% +6pts 45% 44%
America % 37% 43% -6pts 43% 43%
APAC % 14% 14% - 12% 13%
---------------------- ---------- ---------- ----------- ---------- --------
EBITDA(1) by region:
EMEA 55.8 52.8 6% 93.3 146.1
America 28.6 41.4 (31%) 58.7 100.1
APAC 12.2 13.1 (7%) 20.7 33.8
Support costs (19.0) (18.5) (3%) (16.5) (35.0)
---------------------- ---------- ---------- ----------- ---------- --------
77.6 88.8 (13%) 156.2 245.0
---------------------- ---------- ---------- ----------- ---------- --------
EBITDA(1) margin:
-0.8
EMEA 28.7% 29.5% pts 35.3% 33.0%
-3.6
America 19.4% 23.0% pts 23.6% 23.4%
+0.7
APAC 22.6% 21.9% pts 29.9% 26.2%
---------------------- ---------- ---------- ----------- ---------- --------
Total 19.6% 21.2% -1.6pts 26.9% 24.5%
---------------------- ---------- ---------- ----------- ---------- --------
1. EBITDA - earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation, and
impairment.
2. Own stores on streets and malls operated under leasehold arrangements.
3. Wholesale revenue including distributor customers.
Glossary and Alternative Performance Measures (APMs)
The Group tracks a number of performance measures (KPIs)
including Alternative Performance Measures (APMs) in managing its
business, which are not defined or specified under the requirements
of IFRS because they exclude amounts that are included in, or
include amounts that are excluded from, the most directly
comparable measures calculated and presented in accordance with
IFRS or are calculated using financial measures that are not
calculated in accordance with IFRS.
The Group believes that these APMs, which are not considered to
be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance
of the business. These APMs are consistent with how the business
performance is planned and reported within the internal management
reporting to the Board.
In FY23 the Group disclosed two measures relating to FY22
comparatives which are now no longer relevant to the current or
comparative period. The Group is no longer presenting free cash
flow as this measure is no longer discussed as a performance
measure for the group. Discussed in its place, and considered more
relevant, are the other cash flow related performance measures
included in the glossary below. The Group is also no longer
presenting underlying EPS. In previous years this metric was
introduced to present existing performance measures exclusive of
exceptional costs and preference share interest. The Group
recognised GBPnil exceptional costs and GBPnil preference share
interest in HY24, FY23 and FY22, and as such, this adjustment
measure is no longer relevant.
These APMs should be viewed as supplemental to, but not as a
substitute for, measures presented in the consolidated financial
statements relating to the Group, which are prepared in accordance
with IFRS. The Group believes that these APMs are useful indicators
of its performance. However, they may not be comparable with
similarly titled measures reported by other companies due to
differences in the way they are calculated.
Metric Definition Rationale APM KPI
Revenue Revenue per financial Helps evaluate growth No Yes
statements trends, establish budgets
and assess operational
performance and efficiencies
------------------------------ ------------------------------ ---- ----
Revenue by Revenue per Group's Helps evaluate growth No Yes
geographical geographical segments trends, establish budgets
market and assess operational
performance and efficiencies
------------------------------ ------------------------------ ---- ----
Revenue: EMEA
------------------------------ ------------------------------ ---- ----
Revenue: America
Revenue: APAC
------------------------------ ------------------------------ ---- ----
Revenue by Helps evaluate growth No Yes
channel trends, establish budgets
and assess operational
performance and efficiencies
------------------------------ ---- ----
Revenue: ecommerce Revenue from Group's
ecommerce platforms
Revenue: retail Revenue from Group's
own stores (including
concessions)
Revenue: DTC Revenue from the Group's
direct-to-consumer
(DTC) channel (= ecommerce
plus retail revenue)
Revenue: wholesale Revenue from the Group's
business-to-business
channel, revenue to
wholesale customers,
distributors and franchisees
------------------------------ ------------------------------ ---- ----
Constant currency Non-GBP results with Presenting results of No No
basis the same exchange rate the Group excluding
applied to the current exchange volatility
and prior periods,
based on the current
budgeted rates
------------------------------ ------------------------------ ---- ----
Gross margin Revenue less cost of Helps evaluate growth No No
sales (raw materials trends, establish budgets
and consumables) and assess operational
performance and efficiencies
Cost of sales is disclosed
in the Consolidated
Statement of Profit
or Loss
------------------------------ ------------------------------ ---- ----
Gross margin Gross margin divided Helps evaluate growth Yes No
% by revenue trends, establish budgets
and assess operational
performance and efficiencies
------------------------------ ------------------------------ ---- ----
Opex Selling and administrative Opex is used to reconcile Yes No
expenses and finance between gross margin
expenses less depreciation, and EBITDA
amortisation, impairment,
exchange gains/(losses)
and finance income/(expense)
------------------------------ ------------------------------ ---- ----
EBITDA Profit/(loss) for the EBITDA is used as a Yes Yes
year/period before key profit measure because
income tax expense, it shows the results
financing income/(expense), of normal, core operations
exchange gains/(losses), exclusive of income
depreciation of right-of-use or charges that are
assets, depreciation, not considered to represent
amortisation, impairment the underlying operational
and exceptional items. performance
Exceptional items are
material items that
are considered exceptional
in nature by virtue
of their size and/or
incidence
------------------------------ ------------------------------ ---- ----
Glossary and Alternative Performance Measures (APMs)
(continued)
Metric Definition Rationale APM KPI
EBITDA % EBITDA divided by revenue Helps evaluate growth Yes Yes
trends, establish budgets
and assess operational
performance and efficiencies
---------------------------- ------------------------------ ---- -----
Operating cash EBITDA less change Operating cash flow Yes Yes
flow in net working capital, is used as a trading
IFRS2 share-based payment cash generation measure
expense and capital because it shows the
expenditure results of normal, core
operations exclusive
of income or charges
that are not considered
to represent the underlying
operational performance
---------------------------- ------------------------------ ---- -----
Operating cash Operating cash flow Used to evaluate the Yes Yes
flow conversion divided by EBITDA efficiency of a company's
operations and its ability
to employ its earnings
toward repayment of
debt, capital expenditure
and working capital
requirements
---------------------------- ------------------------------ ---- -----
Consolidated Movement in cash flows To aid the understanding Yes No
non-GAAP Statement from EBITDA of the reader of the
of Cash Flows accounts of how the
Group's cash and cash
equivalents changed
during the period, including
cash inflows and outflows
in the period
---------------------------- ------------------------------ ---- -----
Earnings per IFRS measure This indicates how much No Yes
share money a company makes
for each share of its
stock, and is a widely
used metric to estimate
company value No Yes
No No
Basic earnings The calculation of A higher EPS indicates
per share earnings per ordinary greater value because
share is based on earnings investors will pay more
after tax and the weighted for a company's
average number of ordinary shares if they think
shares in issue during the company has higher
the period/year profits relative to
its share price
Diluted earnings Calculated by dividing Used to gauge the quality
per share the profit attributable of EPS if all convertible
to ordinary equity securities were exercised
holders of the parent
by the weighted average
number of ordinary
shares in issue during
the period/year plus
the weighted average
number of ordinary
shares that would have
been issued on the
conversion of all dilutive
potential ordinary
shares into ordinary
shares and adjusted
for (increased) for
any interest or dividend
in respect of the dilutive
potential ordinary
shares.
Ecommerce mix Ecommerce revenue as Helps evaluate progress No Yes
% a percentage of total towards strategic objectives
revenue
DTC mix % DTC revenue as a percentage Helps evaluate progress No Yes
of total revenue towards strategic objectives
---------------------------- ------------------------------ ---- -----
Net finance The net expense when Shows the total net Yes No
expense finance income and financing costs to the
finance expense are Group.
combined.
---------------------------- ------------------------------ ---- -----
No. of stores Number of 'own' stores Helps evaluate progress No Yes
open in the Group towards strategic objectives
---------------------------- ------------------------------ ---- -----
Pairs Pairs of footwear sold Used to show volumes No Yes
during a period and growths in the Group
---------------------------- ------------------------------ ---- -----
Company Information
Shareholders' enquiries
Any shareholder with enquiries relating to their shareholding
should, in the first instance, contact our registrar, Equiniti,
using the telephone number or address on this page.
Electronic shareholder communications
Shareholders can elect to receive communications by email each
time the Company distributes documents, instead of receiving paper
copies. This can be done by registering via Shareview at no extra
cost, at www.shareview.co.uk. In the event that you change your
mind or require a paper version of any document in the future,
please contact the registrar.
Access to Shareview allows shareholders to view details about
their holdings, submit a proxy vote for shareholder meetings and
notify a change of address. In addition to this, shareholders have
the opportunity to complete dividend mandates online which
facilitates the payment of dividends directly into a nominated
account.
Registered Office
28 Jamestown Road
Camden
London
NW1 7BY
Investor relations
investor.relations@drmartens.com
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0371 384 2030 (from the UK)
Tel: +44 121 4157047 (from overseas)
Independent auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Tel: +44 (0) 20 7583 5000
Statement of directors' responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
The directors of Dr. Martens plc are listed in the Dr. Martens
plc annual report for 31 March 2023. A list of current directors is
maintained on the Dr. Martens plc website:
www.drmartensplc.com.
By order of the board
Jon Mortimore, CFO
29 November 2023
Independent review report to Dr. Martens plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Dr. Martens plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Interim results of Dr. Martens plc for the 6 month period
ended 30 September 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Consolidated Balance Sheet as at 30 September 2023;
-- the Consolidated Statement of Profit or Loss and the
Consolidated Statement of Comprehensive Income for the period then
ended;
-- the Consolidated Statement of Cash Flows for the period then ended;
-- the Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results
of Dr. Martens plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim results, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the Interim results in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the Interim results, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
29 November 2023
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END
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