Dr Martens makes strides on rectifying US issues, trading in line

UK bootmaker Dr Martens said progress had been made rectifying the US warehousing fiasco that led to a series of profit warnings, and trading since the start of the current financial year had been in line with expectations.

In a statement ahead of its annual shareholder meeting, the maker of the famous lace-up boots with chunky soles said direct-to-consumer operations had seen “very good growth" in both EMEA and Asia-Pacific, with continued strength in retail as traffic recovers post-Covid, along with progress in ecommerce.

“As planned, wholesale revenues were lower year-on-year, across all three regions. This includes the impact of the strategic decisions to reduce EMEA etailer supply and cease sales to the China distributor ahead of the contract end,” the company said.

“By region, the shape of trading to date is as expected. EMEA is delivering a very pleasing performance and APAC has seen good growth, driven by Japan.”

Americas revenues were lower year-on-year, driven by wholesale, and Dr Martens said addressing performance in this region remained its “number one” priority.

“In Americas DTC, the actions we're taking are progressing to plan, and we continue to expect that it will take until the second half to see a meaningful improvement here.”

Dr Martens in June warned profit margins would fall after distribution and marketing problems in the US, hitting its share price.

Operational issues at its Los Angeles distribution centre had caused bottlenecks and hit its America wholesale channel at the end of last year. The company opened three temporary warehouses to store excess stock.

AJ Bell investment director Russ Mould said: “Could Dr Martens finally be putting its best foot forward? It started life as a public company as if its laces were tied together, but the iconic footwear brand appears to have made some progress in sorting out its problem-child US business. Though, with its shares down three quarters on the price at which it listed in 2021, it still has plenty to prove to shareholders.”

Reporting by Frank Prenesti for Sharecast.com