Dr Martens warns on full-year profits, shares tumble

Dr Martens warned on profits on Thursday as it said the Autumn/Winter season has been hit by warm weather, weaker traffic and softer trading in the US, sending shares in the iconic bootmaker tumbling.

The company now expects FY24 revenue to decline by high single-digit percentage year-on-year, on a constant currency basis.

Assuming this revenue outturn, earnings before interest, tax, depreciation and amortisation are expected to be "moderately" below the bottom end of the range of consensus expectations, with pre-tax profit also impacted by around £5m higher net finance costs.

Analysts were expecting FY EBITDA of between £223.7m and £240m and pre-tax profit of £128.7m to £148m.

Dr Martens said trading in the second half to date has been mixed, with the start of the Autumn/Winter season dented by warm weather across all three regions and weaker traffic overall.

However, in EMEA and Asia Pacific trading has improved in more recent weeks, and it expects trading for the rest of the year to be broadly in line with previous expectations in these two regions.

In its results for the six months to the end of September, the bootmaker said pre-tax profit fell 55% to £25.8m, while EBITDA was down 13% at £77.6m. Revenue declined 5% to £395.8m.

Dr Martens pointed to a mixed performance, with a continued strong direct to consumer performance in EMEA and APAC. However, trading in the US was weaker amid an increasingly difficult consumer environment, led by weakness in wholesale.

Chief executive Kenny Wilson said: "We have strengthened the Americas leadership team and they are taking action, including refocusing marketing and improving our ecommerce trading capabilities.

"It is likely, however, that given the challenging backdrop it will take longer to see an improvement in USA results than initially anticipated. Notwithstanding the clear challenges we face in the USA market we remain very confident in our iconic brand and the significant growth opportunity ahead of us."

At 0915 GMT, the shares were down 24% at 87.60p.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Investors have put the boot into Dr Martens after it kicked hopes of revenue growth into touch. They’d already been disappointed by the bootmakers lack of progress this year but now shares have had another kicking, falling around 20% in early trade to a record low. It’s been a dismal year for the company and investors are highly unimpressed with the lack of detail on a turnaround.

"Fashion followers are fickle and although Dr Martens has had a strong following, appetite has waned for the distinctive chunky black boots. The company is blaming a maelstrom of problems, from unseasonably warm weather and economic headwinds to unpredictable ordering from wholesalers. There has always seems to be a stone in the shoe for Dr Martens ever since its IPO 2021. Earlier this year the company was beset by operational problems at its Los Angeles distribution centre. Once again, hopes of a rebound in sale have been booted away and long-term growth for the brand looks highly uncertain."