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Struggling boot brand Dr Martens to cut costs, invest in marketing

FILE PHOTO: Dr. Martens shoes are displayed inside a shop in Manchester

By Helen Reid and Echha Jain

(Reuters) - Dr Martens laid out plans for cost-cutting measures on Thursday as the struggling British bootmaker faces mounting pressure to bolster its finances amid dwindling demand in the U.S., its biggest market.

Inflation and economic uncertainty have hurt consumers' appetite for more expensive items like the brand's $170 classic leather lace-up boots.

"There's something going on with the USA consumer... they haven't been spending," CEO Kenny Wilson told Reuters in an interview. "Obviously there's a big election there this year, so there is clearly still uncertainty."

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Wilson added that he expects an improvement in the U.S. business in the second half of the year.

Weak wholesale demand in the U.S. drove Dr Martens' profit before tax down 42.9% to 97.2 million pounds for the year to March 31, just above an average analysts' estimate of 96.4 million pounds.

The company billed this year as a transition year ahead of a hoped-for return to growth in its 2026 financial year. In leadership changes announced in April, Wilson will step down as CEO at the end of this financial year, to be replaced by the current chief brand officer Ije Nwokorie.

COST CUTS

Giles Wilson, who took over as chief financial officer this month, said Dr Martens aims for cost savings of 20 million-25 million pounds ($25.38 million-$31.72 million) and would see the benefits of the plan from fiscal 2026.

The cost cut announcement came after investment firm Marathon Partners Equity Management urged Dr Martens to detail planned expense cuts and buy back stock.

Dr Martens shares were up more than 5% by 0910 GMT.

Overall Dr Martens sees group revenue falling by 20% in the first half of this year, driven by wholesale revenues sliding by around a third. Wholesale accounts for around 60% of Dr Martens' U.S. revenues, with 40% coming from its own stores and website.

Dr Martens will increase its marketing spending in the U.S. to boost demand ahead of the key autumn-winter season, outgoing CEO Wilson said.

In a call with analysts, Wilson also said Japan was a market with potential, saying he could see Dr Martens doubling its number of stores there as awareness of the brand is growing.

($1 = 0.7881 pounds)

(Reporting by Echha Jain and Radhika Anilkumar in Bengaluru; Editing by Rashmi Aich, Jan Harvey and Bernadette Baum)