Dr Martens said quarterly revenue fell and it now expects broadly flat full-year revenue after cutting back on discounts, a strategy that slowed sales in parts of its business and led to a sharp share-price reaction.
Revenue for the third quarter ended December 28 declined 3.1% to 251 million pounds ($343 million), with direct-to-consumer sales down 7% in the period. The market response was severe: the company's shares slid nearly 13% on the news and at one point fell as much as 12.5%, marking the worst daily drop since September 2024.
Management attributed the softer top-line to a deliberate reduction in promotions and discounts as it seeks to protect margins amid rising U.S. import costs and weak consumer demand in some regions. The chief executive has faced the task of trimming promotional activity while trying to avoid a lasting consumer backlash, accepting a near-term trade-off between sales volume and margin protection.
Regionally, the Americas performed better than other markets. On a constant currency basis, the Americas delivered 2% revenue growth in the quarter, driven by U.S. customers who appeared more willing to accept full-price product. Management said these were the company's first price increases in three years and, on a call with analysts, asserted confidence about the U.S. approach: "we have no reason to worry," although executives also cautioned it was early to draw definitive conclusions and that they did not expect negative consumer reaction to the U.S. hikes.
By contrast, shoppers in Germany and the UK - which together make up more than half of the company’s EMEA sales - were reportedly less receptive to non-discounted boots. The company said customers in those markets avoided full-price items, contributing to the decline in DTC revenue in the quarter.
Despite the near-term top-line weakness, Dr Martens reiterated its outlook for significant profit growth for the year ending March. The company is also continuing to expand geographically, naming new market entries into Latin America including Colombia and Uruguay.
Analysts highlighted the uncertain demand backdrop. RBC Capital Markets cautioned: "The outlook for boots demand remains difficult to predict near term, even if we acknowledge the brand value."
Exchange rate used in reporting: $1 = 0.7309 pounds.
Implications for markets and sectors
- Apparel and footwear retail - The shift away from promotions is weighing on near-term sales where consumers are price-sensitive.
- Consumer discretionary - Regional differences in willingness to pay full price highlight variable demand across consumer segments and geographies.
- Import-dependent retailers - Higher U.S. import costs are pressuring margins and influencing pricing decisions.
Management commentary and strategic posture
Company leadership signalled a deliberate priority on margin protection over immediate sales recovery as it reduces promotional activity. Management noted that newer, higher-priced products were performing well in the U.S., supported by stronger spending among more affluent shoppers during the U.S. holiday season.
At the same time, executives acknowledged the unpredictability of consumer demand in the near term while maintaining confidence in the brand and the company’s profit outlook for the fiscal year.