Dr. Martens plc

Welcome to 39 Brewer Street, Dr Martin's first speaking space. Come in and let me show you around. So my name is Liam, I'm the store manager of the space. We opened in November last year and I'm going to take you out on a private tour of it. This part of the store is the assembly point. This is an area where our consumers can try on the product, connect with the brand and connect with each other as well. Over to the shed. And yes, we have a shed in the store. The shed is an adaptation of the original Dr. Martin shed. And in here, it changes every six weeks from a different campaign. At the minute, we're in re-wear, which is highlighting our pre-loved product and how we can give them a second chance. This is our amazing archive where this is an opportunity for our consumers to connect with the brand even deeper in our history. And we have the original tools from the Dr. Martin shed, which is fantastic for consumers to see how it all begins. And over to my favourite part of the store, the Made in England section. This area of the space is the most activated, it's the first place consumers go when they come in. With the craft creator we're going after in the store, this is an opportunity for them to really engage and touch and feed the premium product that we have. And this is the Brewer Street exclusive product that was launched for the opening of the store in November. And this area of the space sets aside from the rest of the fleet. This is the repair and customisation station. The staff themselves will activate this space all throughout whether buffing shoes or we're using the boot repair company to give shoes a second chance or else we're customising products to give it that personal touch to consumers. Now over to the nook. So this is where our accessories live and it's a designated area for accessories in this space. This is an opportunity for us to really bring that product to life, let the consumer feel it and engage with the product. Speaking of engagement, Doctors Orders Cafe is an adaptation of the original cafe 31 years ago and this is where we support all these social enterprises and our Dr. Martens Foundation. And this is the most activated part of the space, where we host weekly panel talks, craft workshops, and are really a way for us to invite the community into our space in Dr. Martin's. Now over to you, AJ.

Thank you very much, Liam. I think he's in the room. Thank you. And welcome, everybody, to our four-year results for FY26. I'm joined by Giles Wilson, our CFO, Paul Mason, our chair. I believe you all know Bethany. Barnes who leads corporate communications and investor relations. We're also joined by our executive team who are in the room and they'll be around for conversations afterwards. You can see the agenda on the screen. Giles in a minute will come and give us a financial update and then I will return to talk about our progress on the strategy. The strategy we introduced last year shifts the business from a channel first mindset to a consumer-first mindset to create more desire for Dr. Martens and the brand around the world. Creating that desire is what Brewer Street is about. We opened this store at 11 a.m. on a morning not dissimilar to this one. It was cold, drizzly, wet, late November. At around 9 a.m., even though the store was due to open at 11 a.m., we spotted just in that corner an immaculately dressed lady who was just looking into the store, and it was obvious she was waiting for the store to open, and it was two hours away. So the team gave me a cup of tea from Doctor's orders to take to her, and I let her know that the store wasn't open for another couple of hours, and she said, I know, but I am determined to be the first customer in this new store, and I am desperate to get my hands on the Kiki black boot. And so, she stood there, had a cup of tea, and at 11 a.m., Monique was the first customer in the store. She got her black kinky boots in size 8 and she walked out with a bounce in her step. While I can't promise that the CEO of Dr. Martens will make every consumer a cup of tea when they come, what I can promise is that as a team, Liam, the rest of us in this business are obsessed with creating that kind of desire with our consumers around the world. And the pivot we've been doing this year is fundamentally about creating that kind of desire And we're excited to move into a year where we start scaling that around the world. So I'll talk a bit more about how we're doing that after Giles takes us through the financial update.

Thank you, EJ. And good morning, everyone. As EJ and Liam have said, it's great to welcome you to our Brewer Street Beacon Store. It's a pleasure to be here and to take you through our full year results for FY26. It's been a year of significant change, some really tough calls and a lot of hard work as we pivot the business to be more consumer-led while continuing to strengthen the core financials building on the work we did last year. As I said at the half year, we've been focused on making the right long-term decisions. while staying disciplined on cost in the short term so we can fund them. We've also worked hard to improve the quality of our revenue by driving more full-price sales and reducing markdown. Over the next few slides, I'll talk you through some key highlights. So let me turn to the key financials. Before I get into the detail, I want to be clear on how we've treated US tariffs. particularly as companies are approaching this in different ways following the US Supreme Court judgment in February. We've reclassified the full cash amount incurred this year of the unlawful US tariff costs, both from cost of goods and what would have been included in closing inventory as an operating expense and included that as an adjusting item to show a true performance comparison year on year and not to distort future years from these tariffs. We are in the process of reclaiming these and any refunds received will be recognised also as an adjusting item in future periods. All other lawful US tariffs incurred are included in cost of goods sold and closing inventory as usual. Right, on revenue, we're in line with guidance, down 1.4% on a constant currency basis. We saw strong gross margin progression, and together with our strong cost control, we delivered an adjusted PVT on a constant currency basis of 54.2 million, up 59%, and 55 million on a reported basis, up 61%. We have declared a final dividend of 2.55p in line with last year, And finally, we continue our focus on reducing net debt, with net bank debt down a further 25 million. Our overall objective this year was to strengthen the financials and focus on decisions for the long term, while delivering significant profit growth. Turning to revenue, this bridge shows performance by region and also calls out the full price B2C performance in each region. The focus this year was on improving revenue quality, not quantity. We delivered that in Americas and APAC, and there is work to be done in EMEA. The first column is FY25 revenue. The second column adjusts for a one-off US off-price deal completed in quarter four last year. So we get a cleaner year-on-year comparison and shows revenue in FY26 was essentially flat. Starting with the Americas, we returned to growth across both D2C and wholesale, with total growth adjusted for that off-price deal of $13.3 million, while significantly improving full-price D2C sales, which are up 14%, at the same time as pulling back on markdown. We are particularly pleased with the Americas wholesale, and EJ will cover that in more detail later. Looking ahead, we expect the wholesale momentum to continue with strong order books for autumn-winter 26. On EMEA, as we talked about through the year, DTC has been tougher with the consumer backdrop weak and the market has been highly promotional. Overall, DTC was down 24 million year-on-year and full prices back 13%. The brightest spot is wholesale. EMEA wholesale grew by 10 million And looking forward, the order book is again encouraging. And finally, APAC. D2C delivered continued year-on-year growth with a standout performance in South Korea retail and full-price e-commerce across the whole region. Full price is up 15% and there is a significant year-on-year pullback in Markdown. So overall, we're pleased with the progress made in the quality of the revenue. Whilst there is still work to be done in EMEA D2C, what gives us confidence is the continued D2C growth in Americas, the strength in APAC, the better wholesale performance and order books, and the progress we've made in reducing reliance on markdown sales. Moving to gross margin, we continue to see a good year-on-year progress with margin up 1.2%. Even with a mixed shift from D2C to wholesale, which is slightly lower gross margin channel creating a 0.2% headwind, the reduced discounting and continued cost control have more than made up for it. And of course, at an EBIT margin level, wholesale performance was a benefit in FY26. Less markdown also fed straight through into our average selling price. Even with a higher mix of shoes, which has a lower average selling price than boots, overall ASP is still up 0.6%. And as we highlighted in the half year, we also delivered a strong COGS outcome with freight savings negotiated by supply chain team as one of the biggest drivers. Turning to underlying EBIT bridge, the first thing to call out is the step up in EBIT margin from 7.7% to 10.4% in FY26. As a reminder, one of our median term targets is to deliver EBIT margin of mid to high teens, driven by better quality revenue, continued cost control and operational leverage. This year, you can see the benefits of the first two of these, better quality revenue and cost discipline coming through. And now we have the foundations in place to deliver operational leverage as we return to top line growth. In total, adjusted EBIT increased from 60.7 to 78.7, an improvement of 30%. This has been driven by better quality revenue, a stronger margin, adding 13.8 million, which was offset by the planned pullback in markdown volume of 12.6 million. OPEX and actions were taken to reduce costs by 13.8 million. And as we said at H1, we've increased brand investment, putting an additional 1 million into demand generation. With fewer store openings and store closures as we execute against the retail strategy, which EJ will update on later, the depreciation is reduced, along with other items delivering a net saving of 4 million. Finally, adjusting items were 24.4 million in total. That includes 9.9 million for the full cash cost of the unlawful U.S. tariffs explained earlier and a number of other adjusting items as set out in the statement. Finally, cash flow and net debt. We've had another strong year here. Over the last two years, the balance sheet has improved significantly. Net debt, bank debt, has come down from a peak of $272 million at half one FY24 to just under 70 million at the end of this year. This chart shows the key movements in cash flows in FY26, and it also includes the IFRS 16 lease debt to give the overall debt position. Net debt reduced from 249.5 million in FY25 to 213.5 million, made up of an 11.6 million reduction in leases and 24.4 million in bank debt. We generated 70 million operating cash flow, the first four bars on the chart. We've invested 12 million into CapEx. We've paid 24 million in dividends, and we spent 7 million on the share purchases for the employee benefit trust. Net debt to EBITDA finished at 1.4 times. That's constantly below our covenant of three times, and it's an improvement of 0.4 times year on year. As I promised at the half year, we're now setting out our capital allocation framework. The first point to make is this is a highly cash-generative business. Operating cash flow conversion is over 70%, and it's been much higher in recent years as we've focused on reducing inventory. After two years in the role, I've got a much clearer view of the cash needs of the business and how cash requirements move through the year. The conclusion I've come to is that a healthy balance sheet is net debt to EBITDA of 1.5 times or below throughout the year. That gives us a sensible, prudent covenant headroom and flexibility for what is needed. In terms of how we deploy capital, we think about it in four boxes. They can overlap, and while there's a preferred order, we don't follow them rigidly or by formula. In the first two rows, Firstly, we look to invest into the business, into our brand, into capex and systems and other value-driving projects. We will then look to make a payment of a regular progressive dividend. Our dividend policy is 25 to 35% earnings payout and you will have seen from our past decisions here that we are committed to payment of a dividend. The second row of boxes are more choices for additional capital. Here we look at strategic investment opportunities. By way of example, the investment the business made a few years ago of circa a million into the Gen Phoenix Leather Company. Alongside this, when we have excess capital assessed against our leverage requirements, we would also look to return excess cash to shareholders. You will have also seen this morning we announced the second tranche of our share purchase for our employee benefit trust. So to wrap up, and before I hand back to EJ, here are the key takeaways. We're pleased with the performance this year and we're positioning the business to get back to growth. We prioritise revenue quality over volume, more full price, less markdown driven by the USA. We've kept a relentless focus on costs. That has driven cash generation that has strengthened the band sheet and net debt has reduced further. We've also invested into the organization and transformation, which EJ will cover next. And we've done all that while turning the business to profit growth with adjusted PBT up 61%. So with that, I shall hand back to EJ.