Dr Martens Aktie

Thank you very much, Liam. I think he's in the room, thank you. And welcome, everybody, to our full year results for FY '26. 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 would 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 that was 2 hours away.

So the team gave me a cup of tea from doctors' 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'm determined to be the first customer in this new store. And I am desperate to get my hands on the Kiki black boots." And so she stood there, had a cup of tea. And at 11:00 a.m. Monique was the first customer in the store. She got her black Kiki boots in size 8, and she walked out with a bounce in her steps.

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 goes through the financial update.

Thank you, Ije, and good morning, everyone. As Ije and Liam have said is 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 FY '26. 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 U.S. tariffs, particularly as companies are approaching this in different ways following the U.S. Supreme Court judgment in February. We've reclassified the full cash amount incurred this year of the unlawful U.S. 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 recognized also as an adjusting item in future periods. All other lawful U.S. 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 aggression and, together with our strong cost control, we delivered an adjusted PBT on a constant currency basis of GBP 54.2 million, up 59%, and GBP 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 GBP 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 DTC 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 FY '25 revenue. The second column adjusts for a one-off U.S. off-price deal completed in quarter 4 last year. So we get a cleaner year-on-year comparison and shows revenue in FY '26 was essentially flat.

Starting with the Americas. We returned to growth across both DTC and wholesale with total growth adjusted for that off-price deal of GBP 13.3 million while significantly improving full price DTC sales, which are up 14%, at the same time as pulling back on markdown. We are particularly pleased with the Americas wholesale. And Ije 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 GBP 24 million year-on-year and full prices back 13%. The brighter spot is wholesale. EMEA wholesale grew by GBP 10 million and, looking forward, the order book is again encouraging.

And finally, APAC. DTC 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 are pleased with the progress made in the quality of the revenue.

Whilst there is still work to be done in EMEA DTC, what gives us confidence is the continued DTC 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 mix shift from DTC 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 FY '26.

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 at 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 FY '26. As a reminder, one of our medium-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 benefit 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 and stronger margin, adding GBP 13.8 million, which was offset by the planned pullback in markdown volume of GBP 12.6 million, OpEx and actions we've taken to reduce costs by GBP 13.8 million, and as we said at H1, we've increased brand investment, putting an additional GBP 1 million into demand generation.

With fewer store openings and store closures as we execute against the retail strategy, which Ije will update on later, the depreciation is reduced, along with other items delivering a net saving of GBP 4 million. Finally, adjusting items were GBP 24.4 million in total. That includes GBP 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 2 years, the balance sheet has improved significantly. Net debt bank debt has come down from a peak of GBP 272 million at half 1 FY '24 to just under GBP 70 million at the end of this year. This chart shows the key movements in cash flows in FY '26 and it also includes the IFRS 16 lease debt to give the overall debt position. Net debt reduced from GBP 249.5 million in FY '25 to GBP 213.5 million, made up of an GBP 11.6 million reduction in leases and GBP 24.4 million in bank debt.

We generated GBP 70 million of operating cash flow, the first 4 bars on the chart. We've invested GBP 12 million into CapEx. We've paid GBP 24 million in dividends, and we spent GBP 7 million on the share purchases for the employee benefit trust. Net debt to EBITDA finished at 1.4x. That's comfortably below our covenant of 3x, and it's an improvement of 0.4x 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 focused on reducing inventory. After 2 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 1.5x 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 in 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 GBP 1 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 would 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 Ije, 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've prioritized revenue quality over volume, more full price, less markdown driven by the U.S.A. We've kept a relentless focus on costs. That has driven cash generation that has strengthened the balance sheet, and net debt has reduced further. We've also invested into the organization and transformation, which Ije 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 Ije. Thank you.

Thank you, Giles. You recognize many of these slides. Let me use them to talk about the progress we're making in executing on our strategy. First thing to say, we're building on strong foundations here, a much desired global brand, strong financial fundamentals and significant headroom in markets around the world. The work we've done in the last year has strengthened our control over the business and proved that we can drive revenue quality as we shift to growth.

Our ambition, as it says on that slide, is to be the world's most desired premium footwear brand. We've talked about the four levers that we will use to do that, consumer, product, markets, organization. And as I said, I will always update you on those, and I'll do that in a moment. While there's still work to do in the pivot, we are happy with the progress and we are beginning to scale the things that are ready to be scaled.

In some areas, notably, organization, the pivot is complete. In other areas, particularly as Giles said, full price EMEA revenue, the pivot has further to go in FY '27. But our progress gives us confidence in our medium-term financial targets, which I'll come back to at the end. There is a lot more to go after in this brand.

When we announced the strategy a year ago for each of the levers, we set out very clear objectives, and I'm happy to say that we've delivered on every single one of them. In consumer headlines, we reduced reliance on discounted pairs in America Wholesale. In product, we drove sales growth in those new product families that we talked about, and I will touch on them a bit later. In markets, we opened in 9 additional markets through a capital-light market structure. And as I'll share later, we have significantly simplified our operator model. We're doing what we said we would do.

So I'll take each lever in a bit more detail, remind you of our medium-term objective, share the headlines of what we did in FY '26 and cover where we still have work to do in the year ahead. When I get to the market section, which is the third of those, I'll also do a double-click on retail strategy, as Giles said.

But first, and as always, I want to start with the consumer. The consumer lever is about engaging more consumers. That's the goal we've set ourselves. This includes building great post purchase experiences such as the repair and customization that Liam shared and that you can look at downstairs, or the refurbished Dr. Martens offer, we call it ReWair, which grew 73% in the U.S. in FY '26.

But the focus for this pivot in FY '26 was to evolve from a narrow trend-focused presentation of our brand to one that expresses what matters to more of our wearers: craft, comfort, confidence with a real focus on the products that we sell. And you can see that in this compilation right here.

[Presentation]

I think caught Liam dancing. The focus on craft, comfort, confidence helps us attract a loyal consumer segment. We call them the Craft Curator, and we talked about that last year. These are less promotionally minded than the style seekers that the brand had previously focused on. And the messages that attract them, things like design, quality, craft, durability, have the advantage of being attractive to the other segments. This pivot is helping us engage more consumers and driving high-quality revenue.

I'm happy to say that our share of the Craft Curators in the market, having gone down from FY '23, is now back up again and, in fact, is higher than at any point in which we've kept records. And in addition to this, our consumer data platform that we've talked about is helping us land more personalized messages to these different groups. There's still more to do here, but we continue to take benefits from these early advantages.

And this focus on the right consumer, on the Craft Curator and this ability to reach consumers with what really matters to them beyond just a deal is helping us drive this full price growth and revenue quality. And you can see the results here, and Giles has talked to some of them. In U.S. DTC, again, full price revenue was up 14%. In APAC, full price revenue in our DTC was up 15%. But it's not just in our DTC. We reduced off-price U.S. wholesale by about 1/3 and, as a result, the average selling price in U.S. wholesale is up 23%.

What we still have work to do is in EMEA. And as you can see here, EMEA DTC full price revenue was down. A heavily promotional market in the second half and the absence of stronger local executional muscle in EMEA meant that we went backwards, particularly in U.K. and Germany. This is a big area of focus for us in the year ahead, and we have a strong playbook because we've done this in other markets, and now we have market level leadership to deliver improved results in FY '27.

So for the consumer lever, as we think about the year ahead, we will complete the pivot by driving that full price mix in the U.K. and Germany, where we had the biggest declines in FY '26.

Completing this pivot to full high-quality revenue in our markets is the critical final component of this pivot. In the short term, it will create a revenue headwind, but it will improve revenue quality and give us a better basis for profitable growth. In terms of what we will scale, as we look across our markets, this focus on the Craft Curator is working. So we will be investing up to another 100 basis points in the brand to reach more consumers. When we've done that and as we go through there and we get to a half, we'll come back and tell you how we are using that investment.

So that's consumer. Now let me talk about product. And I'll give you an update on the new product families that we've talked about and that was at the heart of our pivot in FY '26. But before I do that, I wanted to say, that's not all we did. We reinforced our premium, for example, the Rick Owens collection, that product up there, which sells at between GBP 340 to GBP 390 depending on the silhouette. And across our products, while the GBP 220-plus segment is our smallest segment, it is our fastest-growing segment. As I've said before, this brand can command an even higher premium.

So to the new product families and how they help us drive more purchase occasions. Lowell, which you see right here, Buzz and Zebzag were all successful. Their contribution to the business went from 3% to 9% of pairs in FY '26. The Craft Curator loves Lowell. But that's not all we did. Buzz continues to give whereas a uniquely DOCS fashion-led option. We have some of it in the back of the place here. And Zebzag, which you can see here, meets that everyday comfort need with its lightweight, easy on design.

Importantly, we gained 4% on comfort versus the competition based on our brand health index between October 2024 and October 2025. We'll make sure that comfort is even more closely associated with the Dr. Martens brand as we grow.

Now let me take the product categories one by one, starting maybe obviously with shoes. Shoe revenue is up 19% in the year as we focused on engaging more consumers with a wider range of our products, as I told you last year. And it's not only Lowell and Buzz. It's some of our longer established core products that are doing this. The 1461 shoe, the Mary Jane that's right there, the Adrian Tassel Loafer have all done very well for us. So shoes is not a single product story. And the growth was across all our markets, led by the Americas, where shoes were up 32% in revenue.

Boots saw a decline of 8% in FY '26, but we are beginning to see green shoots, especially in the U.S., were full price boots and our core 1460 boot were back in growth. The Kasey boots, pictured here, was actually the #1 product of our products in U.S. DTC in FY '26. So we're excited about where we can take boots next.

Sandals requires a bigger reset, as I've previously shared, with performance down 11% in FY '26. And while we've had successful lines like the Zebzag Dunnet slide that you see here, sandals recovery will not start in earnest until Spring/Summer '27. Growth will be driven by an innovative program that delivers on lightweight and comfort. Early pre-reads from our partners are very encouraging. So from late FY '27 and into FY '28, we expect to begin to deliver that sandals growth.

With bags, the growth has already come in. Revenue grew 15% in FY '26. Now this is from a small base, but bags is an important growth category, as I said last year, and it was encouraging to see the success in the first year of the strategy in bags. So looking to FY '27, we aim to make progress across all product categories.

To complete the pivot, we will focus on full price boots. As I said, we're beginning to see that turn, and we will focus and make sure that we deliver that full price boots performance. And we will introduce a new sandals program towards the end of the financial year, and we'll continue to scale what's already working. So we will continue the momentum in shoes across price points, and we will build on our early success in bags, particularly getting into more of our wholesale partners around the world. So that's product.

Next is market, where we've made good progress partnering great multi-brand retailers around the world. This picture here is a wonderful partnership we have in South Korea with our partner there called Musinsa where they present the 1461 shoe in such a wonderful way. A few of us managed to see that, and it's really inspiring to see. It's a powerful presentation of our brand, and I'll say more about how those partnerships work in a moment.

But as a reminder, our key objective that we said was to open in at least one market with a capital-light model. And I'm thrilled to say that we are now trading in Argentina, Chile, Colombia, Costa Rica, Mexico, Paraguay, Peru, Uruguay and UAE, all markets we were not in a year ago. We've also accelerated this model in markets that we're already in, like the Philippines. And even in markets where we have a DTC offering like China and Italy, there are parts of the market where this is a great way to go, and we have also extended our presence in those places with similar capital-light models.

But the thing I want to spend a bit of time talking about is our focus on multiyear relationships with multi-brand retailers. And the headline here is that this is not just about distribution. This is about creating value together. When you work with the incredible reach, a discovery engine for consumers, for diverse consumers, cross-sell opportunities and rich consumer insight, the result is these great experiences that I shared with the Musinsa example, but great experiences for the customer, which in turn create value for all parties. It's the right way to partner, and we've begun to see those results bear fruit in FY '26.

Two examples illustrate this from two partners that we have. Both partners [indiscernible] an offering in FY '25, if you look at those assortments. In FY '26, we worked closely with them on multi-brands to tailor the assortment to their consumers. Partner A remains rooted in core boots with newness coming through. That's what their consumer wants. Partner B has shifted, as you can see in the graph here, to an assortment that aligns much more to their fashion-forward consumer. It shoes, its brown, not as much black, but all of it 100% Dr. Martens. As a result, both partners experienced growth in FY '26, and their FY '27 order books reflect that differentiation is driving continued growth.

That's the power of this approach. Focusing on the consumer and giving them the assortment and the products they want, you drive growth. And of course, that results, as Giles has said, that wholesale is back to growth in FY '26 and for the first time since FY '23. I should flag that, as Giles said, that the American wholesale figure has been adjusted to exclude a large one-off wholesale deal, off-price deal. So this chart shows underlying performance. You can see the sizable decline, particularly in the Americas in FY '24 and '25 is reversed as we return to growth in FY '26. And again, as Giles said, we're encouraged by the order books and these multiyear plans, and they give us confidence that we'll continue to grow wholesale in FY '27 and the years ahead.

As I promised, let me now dive a bit into the retail strategy, which is another key part of how we show up in the market. Between FY '21 and FY '24, our store estate doubled from about 122 stores to 239 stores, but retail revenue only grew 50%. every store was essentially the same, whether it was in a college town in the East Coast or in one of Tokyo's fashion-led streets.

In FY '26, in our comprehensive review that we looked at, we've aligned on a segmented estate to drive brand desire and customer engagement by having the right kind of store for the right kind of experience for the consumer. And in FY '26, as part of that, we introduced two new formats. You're sitting in one of them right now. Brewer Street here in London is our Beacon concept. The store has an average selling price of about 15% higher than other London stores, even though to create this kind of experience, it has about 60% less SKUs than the other stores in London.

But the cafe, the weekly events program that the team puts on, the repair center, they really make this a beacon for our brand. People come, they hang out, they engage more deeply with Dr. Martens, and it's an important concept for us to have.

On the right is our brand center concept or format, which we've introduced in Dosan Park in Seoul. It's a step down from the Beacon, but it's also a new retail model that we're really excited about. Just 2 months in, average selling prices here are 20% higher than the average store in South Korea. Bag sales are 2.5x what they are in typical stores because we really display the entire assortment. Again, you have a cafe, a customization center, a craft zone. The cafe there, which is provided by a partner, actually, and so again, that partnership comes together. And consumers are able to come in and get the full range of experience from the Dr. Martens brand.

So if you take those two new models, the beacon and the brand center and combine them with the rest of the estate, the vast majority of our stores, you begin to get a differentiated estate. The beacons will be about 5% of our stores, immersive brand destinations. The brand centers will be about 10% of our stores, destinations to explore a full range of the brand. And then the brand stores, the core offering elevated would be about 70%. And of course, we have our brand outlets, which offer an accessible entry to the brand at value, would be about 15% of our stores. These percentages are illustrative of where we're heading over the next 3 to 5 years.

And I want to make it clear that the vast majority of our stores are already brand stores, this third concept, which means that we do not need significant capital expenditure to get there. The estate at that level is already pretty much fit for purpose.

So for markets, to summarize, in FY '27, completing the pivot will be about launching these new retail concepts in key cities around the world. There is much more that we can do for our consumer in this area. But we also have things to scale because they're already working. We will use our learnings from FY '26 to upgrade 30 high potential stores to become brand centers, so similar to Dosan Park, over the next 2 years. We'll continue to scale the low capital model that we talked about that we've opened in new markets in the year ahead. And we will open more doors with great multi-brand retailers using that same partnering a mutual value creation approach in the year ahead. And as we do that, we'll come and share that back.

And so finally, organization, and I'll keep this short. Our goal is to simplify the operator model, optimize the cost base and build a culture of excellence, care and, importantly, accountability. And the first thing we've done is to streamline the executive team from 12 to 8 and build a team that blends deep institutional knowledge with an external perspective. They're all in the room today, and I hope you get to meet them again.

Mike and Anna are here, who have been in the company for the best part of a decade. And if you cut them, they bleed Dr. Martens. Giles, Bridget and Catherine joined about 2 years ago, and they've been at the ground floor of the pivot that we've been engineering. And then in the last year, Carla and Paul have joined us, even though it feels like they've been with us forever. They're all here today, and we're excited to operate as one executive team.

We've also simplified our operating model, effectively removing the regional layer between the center and the markets. It created distance from our consumer and led to duplication of functions across the organization. You have product, marketing, technology, HR and so on replicate across each region. Instead, we've strengthened the group functions, giving us global centers of excellence in products, marketing, customer experience, supply chain, technology, finance and HR, and we've empowered experienced commercial teams in our biggest markets, led by general managers or, in the case of our biggest market, the U.S., led by Paul Zadoff himself.

The result is a leaner, more agile structure with the dual strengths of strong brand direction from the center and genuine consumer connection in each market, focused on delivering what the consumer desires. This change is what unlocks everything I've talked about today because proximity to the consumer is at the heart of why we will win.

And then before I wrap up, a few words on the last organizational enabler, technology. Over the last few years, Dr. Martens has invested in a strong technology platform. And in the year since we last spoke, we've built out our global technology center, we call it GTC, in Bangalore with a smart and experienced team of engineers and data technologists. You can see some of them here. Actually Giles and I are in this picture, and there will be prizes for whoever could spot us.

This is now impacting how our supply and demand planning system give us more control. It's helping embed AI and advanced analytics to people's everyday work. And it powers the consumer-first mindset, how we attract high-quality consumers, how we deliver consistent personalized experiences and how we drive repeat purchases or reactivate those who may have gone somewhere else for a while. A year in, we're encouraged, I'll be honest, we're excited and thrilled by the impact they have, and there's much more to come.

So the organizational pivot is, in effect, done, leadership in place, structure executed and enabling technology embedded. So in the year ahead, the focus is on scaling what works. And I look forward to coming back in the half and sharing with you the benefits we're reaping for this operating model and how technology is unlocking benefits for the entire business.

So I'll wrap up. I hope I've given you a sense of what we've been up to. In FY '26, we did what we said we would do across our growth levers. In FY '27, we [indiscernible] an innovative new sandals range. Innovation is at the heart of this organization, and executing that in the year ahead is a critical focus. In markets, we'll launch new retail concepts in key cities around the world, and we'll come back and share those. And in the organization, as I just said, it's about unlocking the operator model and technology benefits.

We set these objectives because transparency matters to us. You should be able to judge our progress clearly. And when we next speak, we'll tell you how we're getting on each one of them.

Finally, let me come back to what this is all about for all of us, value creation. As I've said, ours is a much desired iconic global brand with significant headroom to grow, and the advantage of attractive British roots and heritage, that I can personally tell you resonates around the world. We're leveraging this brand, our strong financial fundamentals and the operational control that we've implemented to move towards our medium-term objectives, which I'll remind you of again: profitable revenue growth above the rate of the relevant footwear market; operational leverage going to mid to high teens EBIT margin, you can see that we've started moving in that direction from 7.7% to 10.4%; all underpinned by strong cash generation.

I get to stand up here and talk about this, but the truth is that this is only possibly because of the talent, passion and commitment of our people. It's an honor to lead them, and I'm grateful for the great work they do every day.

Giles and I will now sit down and take your questions. If you're asking a question. There's some mics going around. Please start with your name, where you're from, We'd be delighted like to take those questions. And eventually, we'll take some questions from the calls out as well. Thank you.

John Stevenson at Peel Hunt. Two questions, or at least discussion areas, I guess. First one on EMEA. You've sort of talked about the very tough backdrop. You also alluded to areas where you can execute better. Can you sort of dig a bit more into that in terms of how you're executing in the market and what you sort of intend to do about EMEA?

Second question was on the sort of store refresh. Again, can you talk a little bit about the detail behind it? So it sounds like are we going to need new sites for the brand and sort of beacon centers? Or actually, can they come from the existing estate? How much do you intend to sort of spend in terms of CapEx? And what's going into outlets as well would be quite interesting.

What's going into...

Into outlet. Are you actually producing for outlet?

Okay. Yes. Thank you. I'll take both questions. On execution, it's about leadership. Execution is always about leadership. And the big change is that we now have general managers, who are senior leaders in our business, who are now responsible for markets. That's 100% of their job to execute. That's the fundamental change from before. In the past, we had channel leaders but there was nobody who was responsible waking up every day thinking, how do I grow the German market. Now we have those leaders in place. That's the fundamental unlock. And these are all experienced multichannel leaders in our industry who can drive it. So that's the answer to that.

We'll probably share the store question. Let me talk about beacon and outlet and then you'll talk about investment. As we said, we're not planning to launch a whole bunch of beacons. In the next 3 to 5 years, it's 5% of our estate. And so yes, I think the beacons will be in new locations, but that's not a big part of the plan here. In terms of outlets, no, we do not make for outlets. Outlets are a really great way, though, to give the consumer an entry point. Sometimes it's about a product that has ended the season, and we're really now ready to offer that at a profitable discount through an outlet. It also helps us keep most of our other channels clean and focused on full price. But we are not manufacturing for outlets. Do you want to talk about capital?

Yes. In term of CapEx, I think you've seen the guidance in the notes. We expect to do most of these -- the 30 stores which we reference are existing stores. So it will be more about upgrading those. There will always be closures and openings in the year, but we talk about the next couple of years being probably broadly flat on the number of stores we have in the portfolio.

What you will notice also, just while on CapEx, we have highlighted that we've got both of what was our EMEA office and our head office have leases have come to an end. We are doing an office move and there's some CapEx in were put into the guidance, which included within the numbers this year.

It's Anne Critchlow from Berenberg. You talked about the core 1460 boot being back in growth. So I'm just wondering if you're seeing any sign that fashion trends might be moving back towards boots, and can we expect growth in boots maybe next year or year after? I don't know.

And then secondly, I'm just wondering if you could comment a bit about your wholesale order books because you've got a bit of forward view there. And I think in your statement, you talked about operating leverage and strong profit growth, so clearly expecting top line growth. Wondering what's informing your confidence there.

Yes. Full price boots, the green shoot I spoke to, just to be clear on that, is full price boots growth in the U.S, and in the fourth quarter, the 1460 growth in the U.S. Look, I think the overall trend in decline in boots has flattened, but I don't see that boots as a category are yet in growth. But we have a ton of opportunity. And so I haven't been told of a test. If that happens again, we might have to orderly exit.

So that's not about external trends. But when we look at our business and our ability to present great boot offerings, we still have a ton of potential. And so our guidance for the year ahead is that we're going to focus on full price boots and drive performance in that while the market recovers in boots.

Kate Calvert from Investec. Can I just come back to John's question on EMEA...

Sorry, I don't think we answered all of them, sorry. We only answered one of them, sorry. Apologies. Sorry to interrupt you, Kate. Wholesale order book, do you want to talk about wholesale order book and operational leverage?

Yes. So as we said in the statement and in both Ije and I referenced, we've seen good look forward to autumn into '26. I'll let Ije just comment on some of the early signs on Spring/Summer '27. Absolutely. I talked about it in my statement that we've put the foundations in place on cost control. We put the foundations on quality of revenue. We are now in the position, the cost base is in the right place, so to see profit growth will come through operational leverage.

So what we can control, we feel in a good place on. Obviously, there is macroeconomics that we make very clearly in the statement that we can't control. But what we can control, we feel that we're in a good place to go forward and start to grow the top line.

Right. Me again. Just coming back to John's question on EMEA and obviously, the change to being more sort of country managed. Can you sort of bring alive an example perhaps in terms of how your approach to pivoting the U.K. and Germany, how it might be different given the different nuances in the market?

Okay. Yes. So that's a great question. The markets are different in many ways. What is common to the U.K. and Germany at the moment is that the consumer is often looking for a deal. That's the reality of the consumer. The U.S. consumer has been more resilient than the U.K. and German consumer. So that's base fact and that's real.

The color that we have, though, when you take a market-led approach is that you can go to where the consumer is. And so you're not trying to make retail do what e-com can do or what the wholesale is better to do. And it allows you, as I said earlier, to put the right assortment in front of the right consumers. So the consumer that's coming into your retail, you can have a bit more of a full price offering versus the consumer who might be going into a wholesaler, who might have a discount going on.

So it's really about understanding all the levers that you're pulling around the consumer. That's the power of this model. The playbook we have from the year that's gone back shows us that when we do present that full price offering to the consumer, as I said, there is a revenue headwind because you don't get that clearance. But with the right offering, our consumers have proven in all markets that they will pay a higher price.

That's why the GBP 220-plus range is doing really well. That's why full priced booths can get back into growth. So it's really about making sure that we have the market level discipline as opposed to a distant channel discipline to present the right offering to the consumer. And they are empowered to make those calls at a market level.

And my second question is can you give us an idea of how far along your journey you are to increase full price sales across the business? .

How far along we are on our journey. I understand your question. I think you got to look at that at a market-by-market level, Kate. So I'm really happy with what we've done in the U.S., I'm really happy with what we've done in Asia. As I've said, the thing to focus on as we chat over the next few months and quarters is how we're achieving that in the U.K. and Germany.

Piral Dadhania from RBC. So could you just help us understand from a pricing perspective how you're thinking about fiscal '27? Obviously, raw materials are going up because of oil prices. So what should we think about in terms of the price contribution to revenues? And I'll ask my other questions after that, I'm sorry.

Yes, let's take it as -- because that's a supply chain question really. And it's...

I think, firstly, what we'd say is, if you remember, after 3 years, we took some price earlier in the year in the U.S. We also took some tactical pricing across Europe and other parts of the world. At the moment, we have no planned price increases. We'll always review what the opportunities are. We're in line with our pricing policy. So we don't comment on overall view, but we have a pricing policy that we review.

In terms of raw materials, we have price, we have sort of certainty up to the next cycle. We negotiate those on an annual basis. We're not seeing any real material movements at the moment. And actually, when you break down the various components, you've got to get to the point where actually the oil makes it -- the one to call out, I would say, which I'm sure you're hearing from lots of people will be there will be potentially some fuel surcharges coming through on freight. But we'd expect to manage that within the overall cost base.

And just to finish because I think it's important. Pricing is about what's right for the consumer. And we feel really confident that we will only make those calls when we see a consumer opportunity. We can manage the cost issues.

And then just on the systems investments that you've made in the last few years, could you help us understand what the contribution has been to '26 in terms of demand forecasting and, I think, MS Dynamics or other things and what we can expect for '27? Will that be an accelerator to the way that you execute?

Yes. So it will be an accelerated way to execute, but it's not something I'm going to quantify that it gives us x amount of uplift. It's all part of the tools that our people use to run the business. But I can tell you that it's a key component of your ability to drive full price. The more you know what the consumer is motivated by, the more likely you are to present them an offer that motivates them that isn't about price. The reason you often depend on price is because you don't really know what else to motivate the consumer with. And so it will help us drive that. But it's not something that would quantify in a financial value.

Right. And just one more. So as you think about moving towards a mid- to high teens EBIT margin rate, I think your gross margin is already at sort of peak levels, should we say. So is it fair to assume that all of that additional EBIT margin expansion just comes from operating leverage by holding your OpEx costs as close to stable as possible?

Effectively, yes.

We'll take a question from Adrien Duverger from Goldman Sachs.

Most of mine have already been asked. Maybe just a couple. Maybe one on discounting. How would you describe the current promotional environment across markets? And where do you see most concern or where do you see the greatest opportunity?

And the second question would be on the Middle East implications. Have you noticed any changes in spending patterns in recent months, maybe like in Europe or in the U.S. and across, I mean, the different end markets?

I'll take the discounting question, you take Middle East. I think I've said it, Adrien. It's really in the U.K. and Germany that we need to [ balk ] a discounting trend. That's really where our focus is. We've done the work in most of the markets. But U.K. and Germany are really important markets for us, and so that's the completion of the pivot, is in those markets. They are heavily promotional markets, and you don't have things like map pricing that you have in the U.S. that allows you to control a bit of the pricing. So it's work we have to do, but that's where that work is.

In the rest of the world, I'm fairly comfortable with where we are in discounting.

Yes. And in terms of the Middle East indications, I mean, obviously, we don't actually have -- we have a very small business, actually a business just starting itself in the Middle East. In terms of sort of current trading, obviously, period one is a small period for us anyway. We always make that statement. But the key for me, which I think is when we look forward, is the strength of those orders. And I think that's the real focus that we're looking at. So at the moment, that's the one we keep an eye on, and we're not seeing any changes to those.

I think that's all we have. I don't have a big close. I think we've said a lot this morning. And so thank you all for coming. A few of us are still around. So really happy to meet and catch up. But thank you for coming and enjoy the rest of your day.

Hello, everyone, and welcome to the Dr. Martens' Q3 Trading Update. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions]

I will now hand over to your host, Ije Nwokorie, CEO, to begin. Please go ahead.

Good morning, everyone, and thank you for joining Giles Wilson and I on the call this morning. You've hopefully all read the statement. In a moment, we'll open up to your questions. But before we do, let me give you a brief update on our strategic progress to date.

This year, my first in a row, is a year of pivot. And what do I mean by that? I mean making the necessary changes to set us up for sustained profitable growth. And as I've said each time I've spoken to you, these changes can involve hard decisions, such as returning to a disciplined approach to promotions and incurring the top line headwind as a result. It means simplifying our operating model and ways of working to ensure our people and processes are truly consumer first and contribute to making this the world's most desired premium footwear brand.

It means the hard work, optimizing each market for the right distribution. So our wholesale partners and our DTC offering complement each other instead of acting in competition. It means reducing reliance on off-price deals, particularly in America wholesale, which, if you remember, was a top line benefit in FY '25. And it means starting to assemble a lineup of fantastic distribution partners in new markets such as Lat Am and UAE, where it doesn't make sense for us to have a DTC presence, but where there is still untapped demand for our brand. Those are some of the things that this pivot is about.

Our Q3 figures demonstrate the progress we're making. I'd call out Americas where on a 2-year stack basis, our growth rate has accelerated by almost 20 percentage points. This growth was across both retail through great in-store execution and wholesale, particularly with our largest partners. Wholesale across the group performed well. And Q3 is the first quarter in over 3 years where we've achieved wholesale growth in all 3 regions. You will recall me talking about the importance of wholesale growth in this strategy.

APAC saw a strong full price revenue performance. And again, I'd call out the important market of South Korea as a standout market for us. E-commerce was the channel particularly impacted by our planned reduction in promotions and clearance, and you'll see that across all 3 regions. EMEA also continued to experience a challenging consumer backdrop, which I'm sure you've heard from other companies. And coupled with our disciplined approach to promotions, this has impacted our DTC results in EMEA. It is worth highlighting, however, that overall EMEA pairs were slightly up in the period. So we're continuing to get pairs on feet as well as grow our bags and accessory business.

We will deliver all 4 of our strategic objectives this year. What are they? Reducing reliance on discounted pairs in America wholesale, driving pairs growth in those new product families I've told you about, Buzz, Zebzag, Lowell, opening in new markets through our capital-light structure and simplifying our operating model so we better serve our consumers. As we talked about in November, the primary financial metrics we're focused on this year are quality of our revenues, profit before tax and cash. And on all 3, we're performing in line with our plans and happy with our progress.

We remain on track to deliver significant year-on-year growth in PBT through a combination of healthy margin and good quality revenue and strong cost control. We're in year 1 of a multiyear strategy at Dr. Martens, changing from a channel-first mindset to a consumer-first mindset. So there remains much work to do. And while we're pleased with progress, we continue to be laser-focused on execution, and you'll hear me talk about that again and again.

With that, I'll open it up for questions. So Nadia, over to you.

[Operator Instructions] The first question goes to Kate Calvert of Investec.

A couple for me. The first question is, could you talk about the sell-through rate in the U.S. wholesale and sort of more generally, the quality of the stock in both wholesale and D2C at the end of the period, you sort of pretty happy with where you are?

And my second question is just on the U.S. price increases for spring/summer, which you're putting through to offset tariffs. Can you talk about how these have been put through? What sort of level of increase has gone through in the end? And are there any early indications on how they've been received?

Yes. Kate, as you know, this is just a Q3 trading update. We're happy with sell-through rates. It's the reason why the order books are healthy because as partners sell through, they place future orders and with that confidence in the performance. So we're happy with sell-through rates. I'm not going to give you any specific figures, but the health of the order book is the ultimate signal that, that is in a good place.

And in terms of quality of stock, we're also really happy with what we have and what our partners have. There is some in-season orders that our partners place, but it really is the order book, the forward-looking order book for autumn/winter '26 and spring/summer '27 that gives us the confidence in the order book. So they have the right levels of stock. Inventories are significantly down. And more importantly, they have a broader assortment of products than what they probably had 12, 18 months ago.

On U.S. price, it's still early days. We're still in the third week here. But we have no reason to be -- no evidence to be worried about that. Those price increases were different from different products. So I can't kind of give you a specific increase by individual products. But in terms of how the consumer is reacting to that, it's early days, but we've seen nothing to worry about. The most important point is to again mention that while this is to mitigate tariffs, this is really the first price increase we've taken in 3 years in America. So we are not expecting any negative consumer reaction, but we will continue to track how that performs in the market.

And just to say that, that's in the marketplace. So wholesale customers, you might have now taken that increase through. So we have get the pushback from our wholesale partners.

The next question goes to John Stevenson of Peel Hunt.

Two questions from me, please. First one, just on the EMEA. I mean, it seems like obviously, EMEA has been undermined, I guess, to a degree by discounting within the wholesale channel. I mean how do you deal with that? And does that change your thinking in terms of channel mix going forward?

And second question is just on the order book for autumn/winter '26, which I guess we're in the sort of build for at the moment. Can you talk about how that's going both in terms of, I suppose, overall size of the order book and also the quality of the order book we talked about in the past, obviously, the sort of mix of product that's going in there.

Yes. I'll answer the second question first, and it's very similar to what I just -- what I said to Kate about the overall order book. We're happy with the quality of the order book. It's a healthy order book. Our partners are buying a spectrum of products. So they're back in our core products, but also back in our new stories. And as I've talked to you previously, we can go into more depth in the full year, how we really work closely with them over multiple seasons as opposed to just give them a portfolio of products to place an order on. So we're really happy with the diversity and the spectrum of assortment that they are buying, and that's definitely the case in EMEA. As you've seen, EMEA wholesale is in growth. And so that's a really healthy relationship there.

And it may be -- and I wanted to answer that first -- the second question, Q3 was promotional in EMEA and the consumer, generally speaking, across categories, not just in our sector, was looking for deals. And wholesale has a really good role to play for us in that. We've never said that this business shouldn't have promotion. It is right to reward the consumer with a deal and particularly in that as you approach sort of Black Friday, Cyber Monday, that whole period leading up to Christmas. The consumer rightly so and all of us do it, looks for a deal. And it is important that our wholesale partners who have a spectrum of brands to think about can offer the consumer a deal.

I think what we do is to make sure that in our DTC offering that we don't have to stretch as much as the wholesale partner -- partners do. I talked to you how we need to think about DTC less in competition with wholesale and much more as working in complement. And there are times when I'm really happy for wholesale to offer the consumer a discount, a promotion, and that's how the consumer will get that product from us and our wholesale and our D2C will remain more full price, more with some of our DTC exclusive offerings.

So I'll give you an example. We did really well with our collaborations in Q3, whether that was something like Wednesday or the Marc Jacobs. Those are not available in wholesale. They only sold in DTC at full price. So that's the way we think about the marketplace. Every different channel has a role to play. And -- so I'm not critical of our wholesale partners who have offered some discounts. I just want to make sure that in DTC, we don't think that we have to play second fiddle.

The next question goes to Anne Critchlow of Berenberg.

I've got 2 questions, please. The first one is about the return on advertising spend. I'm just wondering if you've been able to size up the effectiveness of your new marketing approach at this point.

And then the second question is just about availability. So did you order too lightly in any particular product areas or for any particular regions? I mean could you have sold more perhaps in DTC?

So return on advertising spend, I think probably it's a good question. We're constantly reviewing it. We've got much better data through our customer data platform, so we can start to see how -- so we're much more targeted about the way we're doing that type of advertising. I think in terms of the bigger campaigns, we obviously have the big campaign, we have a big campaign 1 or 2 a year. We saw real interest from the rain boot. That particularly was one that generated a lot of interest and a lot of discussion around products, how you measure the exact returns is what I suppose you see through footfall. But I think the other piece, I think I would say is that we are trying to be much more targeted and understand how we work through the e-com, I think as you see.

In terms of the second question, which I think is more about lines, I mean it's like all things, we've had a couple of really good products this year. We talked about it at the half year, the Kasey boot. We talked about the fact that actually that sold through really quickly, and we saw that with the Dunnet Flower sandal. And yes, it would be lovely to have some more of that. There was pent-up demand, and it's great because it generates that interest. Generally, stock availability is pretty good.

The U.S. particularly has been challenged, if any area that we would say we've been -- we've seen 2 or 3 really good products have done really well. So Kasey was a good one. We saw it with Dunnet. We've also seen it with Mary Jane. And our aim is to make sure we keep stocks here. But yes, ultimately, we're pleased with our overall, I suppose, overall levels of inventory. It's always nice to have a product that scarcity as well.

The next question goes to Adrien Duverger of Goldman Sachs.

I'll have 2, please. So the first one would be on the U.S. market and specifically the U.S. footwear market, how would you characterize the market backdrop and the performance specifically of the boots category? How would you qualify the competitive environment? How do you think it's evolving? And how would you describe Docs' relative market share?

And my second question would be on the different cost initiatives. How have they tracked relative to your expectations? And in the event of a softer environment in Q4 and into next year, what further scope would there be for cost rationalization?

Thanks, Adrien. I'll take the first question, and Giles will talk to you a bit about costs. As you can imagine and as you've probably heard from lots of other people, there is some -- there is a bifurcation happening in the consumer market in the States. And a lot of it is, to be honest, playing to our benefit. There is a -- I think it's called the K-shaped. There is a consumer who is really squeezed at the bottom. That's sort of sub-$100 price point. That consumer has been squeezed, and we see in the footwear market that, that's a tighter space.

In the space, in the premium space, we participate, we've seen the customer react really well, particularly to new products, to more of our more elevated products. So that's continued to do well. When you speak about boots specifically, while we are in decline, I just want to point out a couple of things that give us -- that we're quite excited and pleased about. One is, again, our discipline of not chasing promotions is part of what we are not confident. If you remember where we were 18 months ago with inventory, there was a significant amount of promotional boots in the marketplace, which is part of what we're confident. We're not doing that this year.

When I look at some of the newer products that we've brought in, and we've talked about some of them, the Kasey High, the Buzz Hi, the rain boot, those products have done really well. When I look at our products, the boots that we've done through our collaborations, those have done incredibly well to the point of actually generating scarcity. So we're confident that we can, in time, turn boots into positive growth. We see enough green shoots in full-price boots to be confident about that. And we just have to get through this pivot piece of moving away from discount. But overall, we feel good about that.

As a category, there is limited insight that you can take from that because often consumers are not buying -- are not just going into the market to look for a boot. They're looking for a certain kind of boot. And so -- but when I think about it as a category, yes, it has been in decline. That decline is flattening and our own business shows that there are lot of green shoots to turn into positive.

I'll let Giles talk about costs.

Yes. I mean I think, obviously, we did the big cost action program last year. We've definitely seen the benefits of that coming through. And there is always opportunity to manage costs. I think there's -- I think the bigger thing I would say is the cultural shift in the focus on cost has been -- is a real change year-on-year. And as you look forward, there's always opportunities to focus on being more diligent about how we procure. We continue to see good work done in the supply chain and continue to work with our suppliers on those, particularly as we gain some cost and things like some of the tariffs.

But no, I'm comfortable with the way that we're managing cost. And you will see that in the full year, you will see the benefit of cost year-on-year coming through. The discipline here at all times that you can expect from us is, with a high gross margin business, is to manage through the P&L. And so you'll continue to see us talk about that and work that through to make sure that we are constantly delivering a profitable business. That's the focus. That's a big part of the pivot and continue to expect that from us.

[Operator Instructions] The next question goes to Alison Lygo of Deutsche Bank.

Apologies, I got cut off earlier, so sorry if this did get asked in the meantime. But 2 for me, if that's okay. Just wondering if you could share any color on how retail stores kind of performed across the different markets and maybe what that shape looked like?

And then the second one, just coming back again on the wholesale and the more promotionally driven product that was going through the partners there. Any kind of color you can share in terms of the sell-out and what lines that's really coming through? Is it more focus into the boots? Is it more in shoes? Yes, anything you could share there would be interesting.

Thanks, Alison. I'll take the second question, which I'm going to be fairly short and then Giles can talk about color on retail stores. As we've said, shoes have done really well, and that's across the board, across channels, across markets. And the sellout in those is really good. When I look at the order book, though, you begin to see a bigger mix. And so like us, our partners are excited about the wider spectrum of product.

But if you're asking about Q3 performance, and it's a trading update. I'm not going to go into too much detail on that. But obviously, shoes, we are really pleased with the performance of shoes. We're really pleased with the performance that we're beginning to see the turnaround in boots. And as we move into the spring season, we're excited about our sandals offering. So it's a broad spectrum of success that we're beginning to see. And again, still early days, but shoes is the silhouette that is performing the best.

Retail, it is definitely different by region. I think it's actually clear. We've seen good performance in our U.S. retail. We've seen good performance in our APAC retail, particularly in South Korea, which we referenced and solid performance in Japan. EMEA has been the drag on retail generally. That's been driven by both the promotional activities. Obviously, they happen more in stores here in this part of the world and just generally the consumer backdrop. EMEA has been the drag on the overall retail, but a good overall performance and actually really strong performance in the U.S.

Thank you. We have no further questions. I'll hand back to Ije for any closing comments.

Thank you, everybody, so much for your time this morning and engagement. If you have any questions later on today, please do reach out to Bethany Barnes. I look forward to seeing you all in May when we present our full FY '26 results and give you a fuller update on our strategic progress.

Thank you so much, and enjoy the rest of your day. Bye-bye.

Thank you. This now concludes today's call. Thank you all for joining, and you may now disconnect your lines.

Like I said, we've been busy, and I'm proud of what our people have been up to in the first half of the year. So let's get into it. I know you would have seen the statement this morning, so Giles and I will cover 3 things. I'll share a brief introduction, just frame a bit of what we're up to. And then Giles will pull out some of the key themes from our performance in the first half. And then I'll give you an update on the strategy that we introduced to you back in June.

So I'm pleased to report, as we saw on the slide that we are on track with the execution of the strategy and are on track with our guidance for the year. I'll go into each one of the 4 levers later on, but I also want to be clear that we still have some challenges that we're addressing, particularly with boots and sandals, and with EMEA direct-to-consumer. Yet overall, we're doing what we said we would do, with good cash generation and cost control, driving good financial progress. And as I will keep telling you, I'm laser focused on execution and the work we've done to date gives me confidence that we will deliver our full year results as planned.

Giles will go into more detail now on how we performed in the half.

Thank you, Ije and good morning, everyone. I'm here today to talk through our first half results, and I'm pleased to report good progress in all our key metrics. But before I go into any detail, I felt it is important to share with you how we are making decisions and how we're running the business. We are focusing on making the right decisions for the long term while making sure we control our costs and our financials in the short term, as evidenced through our cost action plan last year and our significant reduction in our leverage position. This means we have FY '27 and beyond at the front of our minds. We're making those decisions and the actions we are taking. A really good example of this is in our first half year results, has seen been a focus on improving our full price sales and reducing markdown volume, especially in the periods outside more normal promotional events. Therefore, making markdown directly related to those promotional events or as a tactical way to reward existing consumers and drive new customer acquisition.

This principle has also guided our approach to U.S. tariff actions and to make sure we make optimal decisions for FY '27 and beyond. We have worked closely with our wholesale and our supply chain partners in timing of those actions. So turning to our key financials. And as I introduced last year, I will focus on constant currency comparison as this reflects the true underlying performance of the business. Just before I go into any detail and to flag at the outset, as you know, at the year-end, we changed the definition of adjusting items to include impairment of financial assets, and the H1 FY '25 has therefore been represented accordingly.

So turning to the financials. Our revenue performance shows a small growth year-on-year, up GBP 2.7 million to GBP 327.3 million and crucially, revenue quality was better as we focused on full price sales and a reduction in our markdown sales. The impact of better quality of revenue and focus on our costs can be seen in our profit lines, especially in operating profit which swings by GBP 6.5 million from a loss last year to a GBP 3.4 million profit this year. After accounting for interest, our profit before tax is still a loss in H1, but a significant improvement on H1 last year. And as I'll explain in more detail, this is after accounting for a tariff headwind and demand generation timing headwind as well. Our dividend is declared at 0.85p which, as a reminder, is a formularic for the half of being 1/3 of the prior year full dividend.

Finally, I talked to you in June about the focus we've had on reducing net debt, and we've continued to strengthen the balance sheet in H1 with net bank debt down by GBP 33 million. As a reminder, our net bank debt tends to peak around now as we build the inventory ahead of the peak selling period. With our continued focus on profitability and the strengthening of the balance sheet, this sets us up for sustainable success in FY '27 and beyond.

So turning to the revenue. This bridge sets out the movement in sales by region and channel year-on-year. Starting with Americas, we see the business now return to growth across both DTC and wholesale. Following our return to growth in DTC in H2 last year, that has continued in the first half of this year with particularly strong performance in our retail stores, offset by our planned reduction in markdown volume in our e-comm channel, delivering an overall GBP 4.8 million year-on-year increase in DTC. Following the focus on reducing inventory levels in our wholesale partners last year, we're now starting to see wholesale partner orders improving, delivering an increase of GBP 2.4 million and we're also seeing further confidence in the spring/summer order book, particularly amongst our larger wholesale customers.

Turning to EMEA. As highlighted at the AGM's trading statement, EMEA across DTC has been more challenging. And that, together with our focus on reducing markdown volume saw a reduction year-on-year of GBP 5.9 million in DTC. However, this was generally much better quality revenue. Wholesale in EMEA, as explained at the full year, was stronger year-on-year, and that is together with a more normal wholesale shipments in H1 saw an increase in wholesale revenue. Finally, in APAC, DTC saw continued year-on-year growth with a particular standout performance in South Korea retail and full-price e-comm across the entire region. Again, like other regions, we saw significant reduction in markdown e-com in sales, especially in China and South Korea. And therefore, overall, a GBP 1.2 million increase in DTC and better quality revenue. The wholesale revenue is in line with our expectations with some small changes in shipment dates year-on-year.

So overall, our regional and channel performance was in line with our expectations. Though we're disappointed in the overall DTC revenue in EMEA, this was partly due to our own decisions to reduce markdown volume and the well-publicized weak EMEA consumer environment. We are really pleased with the continued DTC growth in Americas, the overall performance in APAC and the overall better performance in our wholesale sales, delivering on our strategic objective to reduce reliance on markdown sales.

As we set out in the statement this morning, our gross margin has improved year-on-year, and I felt it was worth explaining a little bit more in detail. As always, there is lots of moving parts in gross margin. However, what this chart shows is the consistent resilience of our gross margin rate. So a slight headwind from our channel mix was fully offset by the average selling price. The average selling price was a combination of much better full price sales, offset slightly with the strongest shoes performance where the average selling price is slightly less. We saw a strong COGS performance with freight saving negotiated by our supply chain teams being one of the biggest component. And it is also worth noting that includes the H1 U.S. tariff impact as well. And I should speak a little bit more about that on the next slide.

So turning to underlying EBIT bridge. And as I set out on the first slide, we see adjusted EBIT turn from a loss -- turn a loss back into a profit. increasing by GBP 6.4 million to a GBP 3.4 million profit. And actually, if you add the 2 headwinds of tariffs, the fourth box and the timing of demand generation, the sixth box that is a figure increases to GBP 9 million profit in the period, a year-on-year growth of GBP 12 million. The slide sets out the key moving parts. GBP 5.3 million gross margin increase driven by GBP 5 million from strong average selling price and better cost of goods, particularly freight costs, GBP 3 million from the increase year-on-year in volume offset by a GBP 2.7 million of U.S. tariff costs.

We have continued to tightly control our costs. Within the GBP 2 million benefit from non-demand generating OpEx is to benefit of the cost action plan last year, partly offset by inflation. The full impact of more -- year impacts of more stores being opened and paying you all retail bonuses as retail stores performed better. Demand generation OpEx drove a GBP 2.9 million increase driven by the timing of our key stories campaign being in September this year versus October last year. This will vary year-on-year depending on when the right time is to support key campaigns. Year-on-year benefits in depreciation and other items. And finally, GBP 3.1 million of adjusting items which includes the lease impairment reviews following the accounting policy change and the carryover adjusting items from prior year for incentives and our global technology center.

Before I move on to the next slide, I just want to come back to tariffs. As we set out in our statement, the focus has been to mitigate the effects of FY '27 and beyond. And we are pleased to say the action we are taking will do that. Those actions are continued tight cost control, flexible product sourcing and targeted adjustment to our U.S. pricing policy. These have started and will now phase in through to the end of the financial year. We have worked these actions thoroughly, both internally and with our customers and suppliers. The intention has always been to think of the longer-term impacts and make sure the actions we take are with that in mind. The net effect of all that work is that we see about half the high single-digit millions tariff headwind in FY '26 being offset this year. And most importantly, the tariff impact for FY '27 and beyond being fully offset. I have cleverly left the page over there, I'm going to get it. It was an important page because I can't remember it. So it's actually a final slide.

So finally, turning to cash flow and our net debt. I'm really pleased to continue to report our significant reduction year-on-year in net debt both in terms of net bank debt reducing by GBP 33 million to GBP 154 million and total debt, including leases, reducing by GBP 46 million to GBP 302 million. As a reminder, our business builds up the inventory levels in advance of peak and the September net debt position tends to be the highest in the year. As we go through the peak period, the net debt will start to reduce. It is worth noting that included in our half 1 results is around GBP 4 million of tariff costs in inventory and this will grow to near GBP 10 million at the year-end. The bridge sets out the cash flows from FY '25 year-end position. The first 4 blocks just show underlying operating cash flow -- outflow of GBP 44 million, made up of delivering GBP 37 million of cash inflow from EBITDA, being invested into working capital as we build stock levels and then the spend on lease payments of GBP 28 million and interest and tax payments of GBP 13 million. CapEx accounts for GBP 6 million and our dividends in the year of GBP 8.2 million.

Finally, our net debt-to-EBITDA finished at 2.1x, well below our bank covenant of 3x and an improvement year-on-year. We will continue to see those leverage ratios improve as we head towards the year-end. Our guidance remains for net debt of a year of around GBP 200 million, including leases. So to summarize before I hand back to Ije, looking forward into the second half, we are pleased with our performance in the first half, setting ourselves well up for our key peak period. We continue to see positive performance in our U.S. DTC business, and our order books across the business for SS26 are looking healthy.

So with that, I shall pass back to Ije.

Thank you, Giles. So let me give you some color on how in the first half, we executed the strategy that we outlined in June. So you'll remember this slide. And after stabilizing the business last year, this is a year of pivoting the business towards the new strategy. The great news, by the way, that underpins this is that the brand is strong. The team is passionately committed, and we are already seeing results from our work. Importantly, the work we've done in this half has also set us up for the second half and particularly these big trading weeks that we have ahead of us in the next few weeks and provided a foundation for growth in the outer years. But we are in this period of pivoting the business.

And what's that pivot about? That pivot is about moving from a channel-first mindset that was primarily about building out DTC to much more of a consumer mindset, giving people more ways and more reasons to buy more of our products and making sure the business is in a situation where any one market or channel or product or consumer segment presents an outsized risk to our success. We have a brand that resonates around the world, and it's a privileged traveling around the world and seeing consumers and partners. And our ambition, therefore, is to become the world's most desired premium footwear brand. As you can imagine, it's a motivated ambition and one that the entire team is united around.

So in June, we shared our 4 levers for growth. And what are they? They are engaging more consumers, driving more purchase locations, curating market-right distribution and simplifying our operating model, so consumer, product, markets and organization. And we also gave you a set of FY '26 specific objectives in which we're going to use to make sure that we're on track on this and that we advise you to use to also keep an eye on what we're doing.

We said in consumer, we would reduce reliance on discounted pairs. We said in product that we would drive those new product families that we've introduced to you, and I'll talk about it a bit later, Zebzag, Buzz, Lowell, they allow us to give the consumer a different way to think about the brand in different purchase locations. In markets, we guided that we would open with capital-light distribution in some new markets. And in organization, we said we will make concrete steps to simplify our operating model.

So let me now share the progress we're making in each of these areas. And as you would expect, I'm going to start with the consumer. As I said in FY '26, we are focused on reducing the reliance on discounts and I'm pleased to say that we are making good progress on both wholesale, which we kind of paid particular attention to and DTC. Working closely with our American wholesale partners and under the leadership of Paul Zadoff, our new President in the Americas, we've achieved a good shift from discount in both in the current season, autumn 1 and '25, and in the order book, as we look forward to spring/summer '26. And as Giles said, we're really happy with that growth that we have in that order book in the Americas because that's the first time we've been able to say that in a while.

And similarly, in our DTC, the shift is having a clear impact. DTC full price revenue is up 6% year-on-year. The mix of full price to clearance is up 5%. And we have a full 10% up in the percentage of new consumers coming to full price versus discounts. That's particularly important because if you remember, the objective is to attract new to engage more consumers and we're engaging them -- we'll engage more of them at that full price basis, really critical for us. And while our full price to, if you look at that graph on the right, while our full price to discount profile will go up and down in different times of the year. We will continue to make sure that we're offering the consumer the right thing at the right time. And we will continue to manage this as we go through the pivot. So for example, expect in the weeks ahead, we will participate in Black Friday and Cyber and we'll do some discount. We will reward the consumer with that. We will deal with seasonal product that we want to move quickly. But we will do that in very specific seasons and then return to that focus on full price.

I would also say that our customer data platform is helping in this effort because it allows us to directly target consumers based on their buying behavior. So now, for instance, when we are targeting a consumer who is -- who has a high propensity to buy full price, we will not be targeting them with a discount -- with a seasonal discount message because we know that they are motivated by that full price offering, and I've got to say this is still -- and I'll talk a bit about CDP later on. This is early days of this work and a lot more to benefit from as we go forward.

The push for full price, along with our focus on comforts, on craft, on quality is supporting overall momentum, and you can particularly see this in Americas DTC. America's retail revenue in the first half was up 15.7% driven by increased footfall. The consumer is coming in to really engage with that product we've been putting before them. In Americas e-commerce, while revenue is only marginally up full-price revenue is up 20%, offsetting a significant headwind as we've reduced and we knew we would get this as we reduced clearance revenue. So we'll share more on that reduction in discount revenue across channels, and our work to attract new wearers at full price when we report the full year in May. I do want to emphasize, particularly with the U.S. numbers that we are showing growth on weaker comps, and this is still work in progress. There was more work to do and significantly more growth to go after in that market. So that's consumer.

Let's talk about products. On product, we said we will drive more wearing occasions and in this year that we will drive growth in those distinct family products, Zebzag, Lowell and Buzz. So as you saw in the statement, we have had a successful half with shoes. Pairs are up 20% in DTC and 33% overall. And a big part of this success has come from us being able to give the consumer different reasons and different ways to buy. Playing into those product families and the different wearing occasions and, of course, leveraging the individual customer profiles to give them what is really right for that individual. We talked to you at full year about our success with our more style-focused Buzz family. We're pleased that, that momentum has continued, that's that product to the left with the Buzz shoe being the best-performing new shoe of the half.

Another product family that we haven't talked to you much about, but if you want to see it in real life, John is wearing a pair today, is the Lowell. The Lowell is more crafted and more elevated than the Buzz. And we introduced that just a year ago. We haven't really backed it with marketing and has already risen to be 1 of the top 5 shoes for us in EMEA. But let me just say, it's not just the new product families, our iconic 1461 Shoe has continued to perform well. In Asia, it is our best selling product. I'll share a bit more about the work we've done in South Korea and a little case study about how this product has done really well there. And maybe a product we don't speak about a lot, but one that's been on the line since 1992 is our Mary Jane and this is the #3 best-selling product in the Americas and a big part of the success we are seeing there.

Let me make one important point. I said this at the full year, but this is important to keep making. This ability to give the consumer more choice, we are matching that with a reduction in SKUs. So this is not about the proliferation of SKUs. And in fact, in Autumn/Winter '25, what we're in right now, we have 45% less SKUs than we did in Autumn/Winter '23. This is about disciplined curation of choice for the consumer as opposed to proliferation of products used.

We've talked a lot about the Adrian, and I think the Adrian Tassel Loafer and the success of shoes has really been driven a lot by Adrian as Giles mentioned earlier. This is a product that's been aligned since 1980. It is our second biggest selling product. So I present shoes to make the point that the brand is not just strong, it is relevant across more silhouettes than we really leveraged in the past, and consumer groups allow different -- knowing different consumers allows us to play the right product to the right consumer. And we're really focused on making sure that, that curated breadth is put to work for the brand.

What I don't want you to think, though, is that boots are not important to us. Boots are important, and this is an area while we have work to do as they -- as we continue that decline in the half, we are committed to boots. And it's worth saying that decline has moderated and has been impacted by, as Giles said earlier, our planned reduction in discounting. Boots matter to us and the 1460 Black Smooth that everybody knows, remains our top selling product, and we're making progress in the category as a whole with an increased percentage in full price mix. That's really important to us year, and we're achieving that in boots as well.

I'll also say we're pleased with the performance that we've had in some of those -- again, going back to the product families, some of the newer products that we've introduced to the line. Let me give you some examples here. The Kasey high boots was new to the line last year and is the best -- the third best-selling product in the line in DTC in the half. And so remember, the 1460 Black Smooth is the first, the Adrian Loafer and then it's the Kasey high. The Buzz Hi, the green one you see back there has been built on the success of the Buzz shoe that we've talked about and that we launched in February. The Buzz Hi was the best-selling new product at launch in EMEA DTC this year.

And as part of our focus on comfort, this autumn, we introduced the Zebzag Laceless boots. Zebzag is a family that we've built around being lightweight and casual. We've done [ heels ]. We've done sandals. And now we've introduced a really comfort led easy on boot called the Zebzag boot, you probably -- especially if you're in London, you probably saw some activation around this. And while it's too early to quantify commercial success in this, we're really happy with how that's gone and how it's raised comfort as a topic for this brand. And then 2 weeks ago, we brought to market a new innovation that's built off the 1460 boots.

[Presentation]

The 1460 Rain Boots is the first fully waterproof Wellington boots, utilizing our signature heat-sealed construction, that's how the bottom is joined to the top. And our Air Cushion sole -- if you've got the right -- if you got a sample size, it's worth putting your feet in this if you haven't yet, it is built for comfort, and we are getting great feedback on that already. It really captures the essence of what Dr. Martens is about comfort, innovation, craftsmanship functionality without losing the bold attitude of DOCS that our consumers love. This is a whole new wear in occasion for the brand, a real proof point of our strategy of increasing wearing occasions. It's an easy sell for existing customers. They love that silhouette, they love, they understand what the brand is about, but it's also a compelling product for new wearers of the brand. It's been fun visiting our stores and talking to consumers about it, people who came with somebody else and I never knew you did this and all of a sudden, they're getting on their feet.

We've used our customer data platform to customize marketing messages based on the customer profiles. Some people are built more for style. And so you pitch a style message and from some other people, it's comfort and function, and we're able to do that as well to those people. It ticks all those boxes. And we've brought it to life in a really immersive way. These are some pictures on the screen, for example, a takeover of our store in Brooklyn, which is all merchandised just for the rain. And the wealth of press and social media coverage on this has been absolutely stunning. So we're thrilled how the launch has gone. I expect those of you in festival season from the summer to be wearing a pair of these, and we'll keep updating you on our progress.

So now we talked about consumer, we talked about product, let's talk about markets. And the market lever is really about making sure that in each market, we have the right distribution, working in partnership with wholesalers and distributors. To get the right product in front of the right consumer in the places that, that consumer naturally wants to buy. And in FY '26, we've told you we'll focus on opening capital-light models with our partners. And I'm pleased to share now the progress that we've made. Much of this has been announced, but it's worth just encapsulated on one place.

In the first half, we've announced new distribution partnerships in LatAm and in the UAE. Latin America agreement is with Crosby, and they will drive our reach in Mexico, Argentina, Paraguay and Chile. And this will include both wholesale and mono-branded Dr. Marten stores run by them. We now have 2 mono-branded stores launched already with Buenos Aires opening in August and Santiago at the start of October. In the UAE, we've partnered with Beside, who will launch and then grow the brand's presence in UAE, initially through wholesale with mono-branded stores planned very soon. And excitingly products that are arriving with that partner just last week. And in the Philippines, where we already have a great partner, we are accelerating that expansion on the back of this strategy. They have already operated 2 stores but they've now opened a third store again in Manilla, that's actually the picture that is here. And there are more planned.

I also want to say, even though we've talked about capital-light models, this is not just about the deployment of capital, it's also about working with experienced and trusted local partners who have experience with global brands and who have deep market expertise and operating know-how. Working with them ensures our brand shows up in the right way for those consumers, whilst they'll be in 100% DOCS. And these are the first agreements of many that we will announce in the quarters and years to come.

And while that is largely about new markets, it's worth saying the same principle applies to our existing markets. In Italy, we have 14 direct-to-consumer stores and we've been making good headwinds in Italy since we started building that strategy up. Now we're expanding through a combination of, yes, our own DTC, but also these partner stores with the first franchise store opening in Pompei in October 2025 with a great local partner. And we're really pleased with how that's gone. And as you can see from that image, it's a really great Dr. Martens experience. We have more stores planned for the future. We're taking a similar approach in China where we've opened recently in the half, new stores in Chengdu, in Chongqing and in Hangzhou. So this is an exciting growth lever for us.

And it's worth saying, these capital-light models are a good example of our ability to create value in partnership with great businesses around the world. As I shared in June, we're excited about the skill, commitment, resources that our partners bring to our brand, whether it's through franchise stores as shared or in deep marketing partnerships with our wholesale partners. The images here is just a spectrum of -- some of the wonderful activations that our partners put out when we launched the Zebzag Laceless boot that I mentioned earlier.

I'd highlight Zalando in Germany who really took over the big hub and held the biggest event there to date. And [ La Rinascente ] in Italy, which included the takeover of a metro station in the Milan that you see in the bottom right corner there. These close partnerships, along with the work we've done with them over the years to rightsize inventory are some of the driving reasons behind healthy order books for Spring/Summer '26. And curating this market right distribution with our partners is key to value creation for everybody. And so a few things take up more of my time than this, and we'll keep you posted on how we keep going to it.

And so finally, let me talk about the organizational layer, which is lever, which is really about simplifying how we operate and focusing squarely on consumer. And here, we are beginning to reap early benefits of systems that we probably talked to you about in a bit, but that we've now really focused on executing, implementing and embedding the organization in the half and getting our global technology center in India up and running. I'll start with the customer data platform. The customer data platform is making it easier for our marketing teams, really simplify our marketing and commercial teams to reach the right consumer with the right proposition. I think I've given a few examples of that already today. So the focus to date has been on optimizing the consumer journey. That's how the consumer navigates through from social to a site to find the product they are looking for, driving repeat purchases and making sure that we're efficient when we do a discount that we're not cannibalizing full-price sales. And then we've also used it for our product launches, really tailoring the market, such as in the rain boot example that I gave you earlier. So again, early days, part of our business, but you can see how that really simplifies the way our teams can deliver value to each individual consumer.

Our supply and demand system, as we told you, went live in the summer as planned and is already delivering greater visibility and accuracy between demand signals on one hand and supply orders on the other hand, you can imagine what that does for the efficiency of the business. For instance, our teams have started utilizing statistical modeling of past sales database on this platform to identify patterns, trends and seasonality, which then are used to predict future demand really on a 2-year rolling basis, that's new capability that really simplifies the way we think about things that and operate.

And then finally, while not due to be fully operational until FY '27, our global technology center and actually the image in the background is the global technology center in India, is now up and running. And by bringing engineering in-house, which is what this does for us. We have already become much quicker in delivery and optimized customer journeys, allowing teams, for example, our retail teams to recognize the consumer and offer a more tailored store experience, such as an in-store pickup or a promotion for that individual consumer. So this is a muscle that we will keep pulling how do we simplify the organization, how do we equip our teams to be -- to make it easier for them to really deliver to individual consumers. Because again, that's what the pivot is about being much more consumer first minded.

So that's the work we've been doing and the results we're beginning to see. In consumer, we're driving more full price in both wholesale and DTC. In product, we're growing those product families and alongside the icons, they've given our consumers more reasons and more occasions to buy. In markets, we're working closely with partners, whether that's capital-light models or deep market and product partnerships with major wholesale partners. And in organization, we're using technology to simplify how we work and how we serve our consumers better.

So to wrap up, let me use one specific market to illustrate how this strategy all comes together as you see you get a picture of it. South Korea is still a small market for us and a proof of how we can grow in new markets. It's also a critical market, South Korea, because as you probably know, it really influences cultural trends around the world. So how does our strategy playing out here? In consumer, we've grown full price with that strategy. We've grown full price 65%, and we're increasing that mix of revenue by 25% in the year -- in the half over half.

In product, we've leaned into that market specific demand for the 1461, which is really where that product is in more demand than any other market in the world, and really allowed our team to push that, while also significantly build a new equity around the Lowell shoe. So we know what the -- if you like, the major product is, but we're also able to start creating affinity around a product behind that so that we're not at risk of just one product lastly. The Lowell, as we started doing that is up, up in 90% half one to half one as we've done that. We're building exciting partnerships like this one in the picture shown here, which is with [indiscernible], who built out a major 2-week installation for the 1461 Shoe. And Giles and I were privileged to be in South Korea in the middle of those 2 weeks, and it's just a stunning experience, delivered entirely by our partner.

And finally, by simplifying around the consumer, really making the consumer at the top of mind, it's allowed the career team to be liberated and deliver what works for their market. while aligning 100% to our brand. These are great experiences of Dr. Martens, but they're right for the South Korea market. As a result, revenue in South Korea is up 30% year-on-year in the first half. This is a growth market for us, and we're excited to see how the customer focus is helping them connect with more wearers and the learnings we can take from there to apply to other markets.

So I hope that gives you a good sense of the progress we're making. We're focused on executing on the levers of our growth. We're seeing early results. But this is work in progress, and there are still key areas to address. We've set ourselves up well to deliver the plans in the second half. And along with our partners, we feel good about our plans for these big trading weeks that are ahead of us. And I have to emphasize there is significant opportunity ahead. That opportunity, as you remember, comes through the headroom that we still have to grow. Just in the 15 -- in our 15 top markets, we are only 0.7% of $180 billion relevant market in just those 15 countries. And we're in many places where the brand is still attractive and desired. And we're going after that. You've already heard us about Mexico in UAE and other places, and in our existing markets as you've seen with the U.S. or South Korea, we're also going after opportunities to grow there.

So these early results and the significant headroom give us confidence in our medium-term value creation thesis to grow profitably and faster than our peer set. The operational leverage that delivers high to mid-teens EBIT margin and the underpin -- and the continued underpin of strong cash generation. This will create significant returns for shareholders. And that's why Giles, the team and I are laser-focused on this execution of the strategy. There's a lot of work ahead, yes, but the brand has never been stronger or more relevant and the green shoots are promising. So we're going after it. Thank you.

We will take questions now. We'll take questions in the room first. Please say your name and what organization you're from. And then we'll go to questions via the operator. I think I'm going to get John for us today.

John Stevenson of Peel Hunt. A couple of questions to get us going, please. On the product side, you mentioned sort of areas to focus on and mentioned sandals and boots. Can you talk about what the plans are for next year in terms of how you think you can address sandals and what sort of innovation or how we're going to develop that?

Secondly, on EMEA, I don't know if we can have a bit of a sort of dive into the region in terms of trading. I mean, clearly, the U.K. has been challenging. Can you talk about sort of an overview of where the weakness in EMEA is coming from and what your thoughts are from here sort of going into the second half and a very, very quick one. What's the price change agreed for factory pricing for the year ahead?

I will take the first 2, and I'll pass you the questions on pricing. Yes, it's interesting. I have for simplicity loved the boots and sandals together, but I want to be clear that there are 2 different problem statements. And I'm confident about our boots plan. We have more work to do in sandals. I think sandals is a place where we need to drive more innovation, and we really have that work to do ahead of us. And I think that will take us -- to be very honest with you, that will take us a couple of seasons to get that right. But the team are working on it. I told you around innovation that we're working on lightweight. We're working on really making sure that our sandals proposition stands on its own and isn't just on the back of other things.

But we're not starting from a standing start. We've had sandals in the line since '80s. Some of our top selling products in the season have actually come from America, if I take an example, we have a sandal called Dunnet Flower, which even 2 weeks ago, was one of the top sellers in America in November, right? And so we have strong sandal offerings, so we have -- we know what works. We now have to do the work to build that out over the next 2, 3 seasons, but it's work in progress -- it's an area of focus. With EMEA, the slight evolution on our analysis since the first quarter is that the U.K. isn't particularly the challenge anymore. That really was the case in the April to June quarter. But since then, actually, we've seen traffic return to stores. And I would say that the EMEA challenge is an EMEA-wide challenge. Of course, there are variances from market to market, but it's really about a consumer who is out shopping, but being a lot more considered. A lot more browsing and research happening. And they're doing 2 things largely. They are either looking for a deal. And so the market is promotionally led, but as we all know, there's only -- there's a bottom that you get in the market will have to fight back from just being promotionally led.

But actually, more interestingly, there is also a flight to quality. There's a bit of a trade down from luxury into premium into craft and quality. And there's a bit of a considered purchase, which means I'm not just buying anything, I'm buying, I'm making -- I'm treating this purchase as an investments. I might actually spend a bit more because I'm getting the quality. And we see that come through in our more expensive products. We are actually doing quite well. What is the weekend of bag at EUR 300 -- over EUR 300 or whether it's something like the Kasey boot, which is one of our more expensive boots. So this is a consumer who is considered. There's nothing wrong with that and a brand that has quality, has opportunities. And that's what we're going after. We can, of course, control broader macroeconomic issues and the ways in which the consumer thinks but we feel we have enough levers. We planned into the headwind on discounts. We're not going to over chase that. We'll participate where we need to participate. That will remain a headwind for the rest of the financial year, but we still think we have opportunities to make sure that we are competitive in the market.

So your factory pricing, looking ahead, I mean, effectively, we don't guide specifically on factory pricing. I'm comfortable where the numbers are. There's nothing there. With the exception of tariffs, it's obviously a cost that we've given you views on. But overall, we have a good relationship with our suppliers, long-term relationships with our suppliers and actually some of the work that we've been doing specifically around tariffs has been working with them about where we source some of our American purchase orders from. So I think we don't normally guide on it, but there's nothing in there that I would be saying this particularly to pull out.

It's Anne Critchlow from Berenberg. I've got 2 questions, please. First of all, on the U.S. In terms of the perception of pricing power in the U.S., how confident are you that you can put through these price rises. Do you think they'll strengthen the brand? Or do you think you'll encounter some resistance? And then secondly, on EMEA, how confident are you that you can drive engagement and turn that sales trend around? And how important are the CDP capabilities within that?

I will grab both of those, but add anything if there's anything I miss out. So as I shared, and we've traveled a lot together. We were in a Boston store early in the year. We're not seeing any resistance in America to our higher prices. In fact, we have some anecdotal evidence that the price position in some products -- some specific products might be on the low side, and we have opportunity. It's worth saying we haven't taken price in the market for 3 years, right? And so the market -- we have headroom to go to and still to remain competitive. But we will be surgical about this. This is not a blanket price raise. We will look at individual products. We will understand how their benchmark and understand how the consumer sees them and that's how we will apply pricing.

So to your question, do you see any resistance? Never take the consumer for granted, but this is strengthening our premium position to have the right prices at the right...

I think just worth also adding, we look at price -- those prices on a global basis. So we look about how does that feature in a product, not just in the U.S., but where does it turn up in other countries. So it's part of our pricing policy to look at this. And as Ije said, we haven't taken pricing for 3 years in the U.S. So there's actually -- there's a lot more detail that goes behind that work that goes in, and we're much more confident about where they come through.

In EMEA, I think I'm going to make a similar statement but you never take the consumer for granted. We do think that less clearance will remain a headwind for the rest of the year, but we've planned for that. That's baked into our plans. That's not any new risk. We like the fact that the consumer is in the store. So that gives us the opportunity to make sure that we deliver that value that they're looking for because the footfall in the stores is absolutely fine.

And online, we continue to make sure that we are using the CDP to your point, to really manage that experience so that consumer finds the thing, not just that they're looking for, but the thing that is right for them based on their profile. This is trade and work on. And so there are no ground strategies. It's really understanding each consumer. I really understand in each -- literally down to each individual store, but we've got great people in our stores who really know how to trade and we're giving them great product to work with. So we're confident that we'll hit our plans for [ India ].

Kate Calvert from Investec. Just 2 for me. First of all, just on the franchise model, apart from Italy, where else in Europe are you thinking of using this model? And are you thinking of using it in the U.S. And my second question on the U.S., you talked about the full year results about the opportunity to elevate the brand and work with more premium wholesale partners. Have you made any progress in autumn/winter on this? Or is this all to come sort of year and beyond?

Yes. Good questions. I'll take both of them. I don't want to get ahead of myself on markets where we will do the franchise model. It's worth saying we have it -- it's a big part of our business in Japan, it's a big part of business in China, a significant part of our business in China and a significant part of our business in Italy. So we have those examples. We will look at it as we look at retail strategy going forward. So I don't want to open or close any markets to it, but those are the 3 places where we are active. And as we deliver on that and as we build that out, we'll share that information with you.

We're really happy with what we've been able to do with Nordstrom in the last year and I'm not going to guide on their numbers, but we've had that premiumization and some of the product at the more expensive area, some of the work and the success we've had with the Adrian Loafer has been in partnership with Nordstrom. So that's a really -- that's an example of a premium brand where we've done that. We've also done some really great work just recently with Kit, which is out in the market and a kit is really that sort of that Pinnacle retailer and some of our more refined elevated product, something we call [ Regen ]. These are not huge volumes, but they really position the brand in that Pinnacle space. And so those are 2 examples, and Paul and the team are hard at work building that out.

You've got a question there? Let's go. Same rules. Just tell us your name and where you're from and would love to hear your question.

We'll take questions from Alison Lygo from Deutsche Bank.

Two for me, please. First one is about the U.S. and the profitability there and the operating cost base. Margins in the U.S. has kind of reached flattish now in the first half and expect that to be positive in the second half with the seasonal weighting, but still very much dragging on the group. Just wondering what your sort of outlook for regional margins there is? What you think kind of can be done now? Is this just the case of kind of growing back into the cost base?

And then the second one is really on the product that your wholesale partners are buying into. And so you talked about plans to get partners buying into a broader assortment. You've talked about a healthier order book. And I'm wondering if you could add a bit more color around that in terms of the range of products that wholesale partners are now buying into and really how the regions are kind of comparing in terms of whether one is more ahead of the others?

Yes. So on U.S. margin, I think there's a couple of things we need to just pull apart for the first half. Firstly, obviously, the U.S. margin has got the U.S. tariffs in. So you will have that as a bit of a headwind in the half year and obviously, Ije rightly said the first half is obviously the smaller the half. You'll have noticed that Ije put up on the screen that we saw our retail stores grew 15-plus percent year-on-year. So we're seeing much better performance across our retail stores. And as we set ourselves up into peak, we feel much more confident there.

And then thirdly, the growth in the wholesale, I think that's the other key part here. We've obviously had a couple of years where wholesale, particularly in the U.S., was where we came off. And we're sitting here much more confident about our summer spring -- sorry, spring summer even order book as we go forward. So I think it's a bit of both, in all honesty, it's about us growing back into some of the -- into the volume, particularly on the wholesale, getting better return from our retail stores as we're doing. But also, as you're well aware, we have been looking at our store network, and we have closed or provided for stores, and we are doing that. We've been quite clinical now about what each store needs to produce and have actually -- I think, at the half year or the full year, we did actually put a few stores as impaired. So we will expect to see that margin now begin to really improve and get back to the levels that you've seen in the past.

And on the second question, Alison, which is a great question. Thank you. What we're seeing is our wholesale partners are buying into a broader range. But I want to be clear, what's the right range varies from wholesale partner to wholesale partners. What journeys once is going to be very different from Nordstrom ones, and it's going to be very different from -- it's not just once, what's right for their consumer. And so having really built up the strategy and particularly in the U.S., demonstrated that return to growth based on the strategy in DTC. Of course, the wholesale partners are now very interested in a broader range of products.

But there isn't a particular regional split on that, that's going to be different from wholesale partner to wholesale partner based on who their consumer base is, who their buyer is, how they sell. But it's a broad spectrum across particularly -- we've seen a huge growth in shoes and the assortment of shoes and across those new range of products. So it's broader than it's been before. You've got those new product families in it. You've got a bit more shoes than in the past, but it's -- that's a general statement. It's going to vary from wholesale partner to wholesale partner.

There are currently no further questions over the phone. And with this, I'd like to hand back over to Ije for closing remarks.

Thank you all very much. I believe the statement is clear, and it's been a pleasure to share with you some of the highlights from the execution of the strategy. The statement remains the same. We're happy with progress to date but there's still work to be done. And when we look at the long-term opportunity, the headwinds in the market, the strength of the brand, the fundamental economics, we're really excited with how we're going to create value for our shareholders in the future. So thank you very much.