Dr Martens shares were down heavily on Thursday as investors in the boot-maker reacted to falling margins and the board’s decision to favour investment over profits.
Dr Martens have pushed on with store openings and marketing which saw EBITDA margin lower by 2.8% to 21.2%. The company said they would continue investing in the brand for future growth – at the expense of short-term profits.
The promise of persistent investment wasn’t taken well by the market, despite fairly robust sales numbers for the first half.
Revenue grew 13% on an actual exchange basis to £418m in the first half, however EBITDA was flat at £88.8m.
Despite the company raising the dividend by 28% to 1.56p per share, investors choose to focus on the uncertain outlook and Dr Marten shares were down 20% at the time of writing.
“The maker of iconic footwear, Dr Martens has tripped up in a big way with investors following its first half results,” said AJ Bell investment director Russ Mould.
“The main reason the company has lost a bit of shine and polish is news that margins are under significant pressure.”
“While external factors such as a stronger dollar are playing a part, the company is also suffering from weakening demand and there are at least hints that its pricing power isn’t what many might have hoped given the apparent strength of the brand.