Dr Martens shares fall as bootmaker posts slump in profits
Shares of Dr Martens fell after the cobbler’s profits collapsed on declining US demand – but revenue topped £1bn for the first time
- Dr. Martens saw its annual pre-tax profit fall by 26%, new figures show
- The London-listed group saw its share price fall by more than 10%
Shares of Dr Martens fell sharply after the shoemaker reported a decline in full-year profits and predicted lower core margins in 2024.
The group’s pre-tax profit for the year to March fell 26 per cent to £159.4m, while sales rose 10 per cent to pass the £1bn mark for the first time.
The FTSE 250 firm blamed weaker US demand and additional costs caused by blunders at its Los Angeles distribution center.
Dr. Martin shares were down 10.04 percent or 15.70 pence this morning to 140.60 pence after falling more than 45 percent over the past year.
Impact: Dr. Martens’ stock fell sharply after the bootmaker reported a decline in its annual results
Dr. Martens said high inflation, rising interest rates and an uncertain geopolitical landscape had dampened consumer demand in some of his core markets.
This was particularly the case in the US, where shoppers refrained from buying the company’s iconic chunky-soled boots and shoes.
“We don’t expect this to change materially throughout 2024,” it warned.
Current full-year core margins are expected to be between one and two percentage points lower than last financial year, driven by the additional £15m cost at the Los Angeles distribution center and the £20m incremental investment.
CEO Kenny Wilson: “In America, against the backdrop of a challenging consumer environment, we made operational mistakes, such as moving to our LA distribution center and the way we executed our marketing campaigns and e-commerce.
“We conducted detailed assessments to understand why these issues occurred and began embedding the lessons learned in the business.
“We are solving the problems in the Americas, including significantly strengthening the team there, and returning good growth to the Americas is our number one operational priority.”
Russ Mold, investment director at AJ Bell, highlighted a sharp fall in Dr. Martens, which are now worth just 40 percent of their price at the time of the 2021 listing.
He said, “Dr. Martens has had operational difficulties, but has also not been able to properly manage his expectations. This is an essential part of a publicly traded company, where the goal should always be to under-promise and over-deliver.
Turnover may have reached a £1bn milestone, but profits are heading in the wrong direction as the company’s margins are squeezed by rising costs.
“It feels like the brand is strong enough for Dr. Martens to hold up on the stock market and the current management team could come under increasing pressure if they don’t deliver quickly.”
Neil Shah, director of content and strategy at Edison Group, added: “In addition to the widely felt macroeconomic challenges that have plagued the consumer sector over the past year, Dr. profit forecast over a period of three months.’