Dr Martens has issued its fourth profit warning this year as a tough consumer environment in the US continues to affect sales of its sturdy boots.
The Northamptonshire-based footwear brand said sales fell 5% to £396m in the six months to 30 September and pre-tax profits dived 55% to £26m. While this was better than City analysts had expected, the company said the outlook for the following six months had worsened because of a slower than hoped for recovery in its US business.
Shares in the retailer plunged more than 20% after the announcement, making Dr Martens one of the biggest fallers on the FTSE 250 on Thursday. Priced at 89p, the shares are now 75% lower than the 370p float price in January 2021.
Sales for the full year are now expected to fall by about 8% and underlying profits to drop back below the £223.7m minimum expected by the City – continuing the slide seen since the company’s listing on the London Stock Exchange.
Kenny Wilson, the Dr Martens chief executive, said the group had fixed problems with its US warehouse, changed most of the management team there and was rebooting its marketing effort but added that it was proving “more challenging than expected” to return that part of the business to growth.
While the macroeconomic environment in the US is quite strong, Wilson said shoppers were holding back. “Virtually all of the big footwear and apparel brands have had difficult numbers,” he said.
In January, Dr Martens said costs had soared after a string of “operational mistakes” at its Los Angeles distribution centre, which opened in 2022. The company was forced to open temporary US warehouses in late 2022 after it bought too much stock and was affected by supply chain bottlenecks.
Wilson said Dr Martens had achieved better profits than expected in the first half of its current financial year as it had taken action to reduce costs in its supply chain that had helped offset inflation.
The brand put its footwear prices up in July, by about £10 to £169 for a classic boot, but Wilson said there would not be another price rise until at least the end of 2024 because inflation had now dropped well below the 6%.
Dr Martens continued to trade well in Europe and Asia, with sales up 8% in the UK in the half-year, helped by a return of tourists to London as well as a 4% contribution from price rises. The brand has opened a second store on London’s Oxford Street, with shoppers from the US and continental Europe returning to the capital after the coronavirus pandemic.
