Dr Martens shares fall as bootmaker posts slump in profits

Dr Martens shares fell sharply after the bootmaker posted a slump in annual earnings and forecast lower core margins in 2024.

The group’s pre-tax profit for the year to March fell by 26 per cent to £159.4million, while revenue increased by 10 per cent, topping the £1billion mark for the first time. 

The FTSE 250 firm pinned the blame on weaker demand in the US, and extra costs caused by blunders at its Los Angeles distribution centre. 

Dr Martens shares were down 10.04 per cent or 15.70p to 140.60p this morning, having fallen over 45 per cent in the last year.  

Impact: Dr Martens shares fell sharply after the bootmaker posted a slump in annual earnings

Dr Martens said high inflation, rising interest rates and an uncertain geopolitical landscape had dampened consumer demand in some of its 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 do not expect this to change materially through full-year 2024,’ it cautioned. 

Current full-year core margins are expected to be between one and two percentage points lower than last fiscal year, driven by the extra £15million in costs at its Los Angeles distribution centre and incremental investment of £20million.

Boss Kenny Wilson, said: ‘In America, against the backdrop of a challenging consumer environment, we made operational mistakes, such as the move to our LA Distribution Centre, and how we executed our marketing campaigns and ecommerce trading.

‘We have undertaken detailed reviews to understand why these issues occurred and have begun to embed the lessons learned into the business. 

‘We are fixing the issues in America, including a significant strengthening of the team there, and returning America to good growth is our number one operational priority.’

Russ Mould, investment director at AJ Bell, highlighted a sharp fall in Dr Martens’ shares, which are now worth just 40 per cent of their price at the time of its 2021 listing.

He said: ‘Dr Martens has struggled operationally but also hasn’t done a good job of managing expectations. This is a key part of being a public company, where the aim should always be to under-promise and over-deliver.

‘Revenue may have hit a £1 billion milestone, but profit is heading in the wrong direction as the company’s margins are under strain thanks to rising costs.

‘It feels like the brand is strong enough for Dr Martens to stand tall on the stock market and the current management team may come under increasing pressure if they don’t deliver soon.’

Neil Shah, director of content and strategy at Edison Group, added: ‘Along with the universally felt macroeconomic issues, which have been troubling the consumer sector over the past year, Dr Martens has suffered from additional operational challenges that led to two successive downgrades in profit forecast in a three-month period.’

This post first appeared on Dailymail.co.uk