Iconic bootmaker Dr Martens issues profit warning

Chief executive Kenny Wilson said demand for Dr. Martens "remained resilient through challenging conditions" during the company’s peak third-quarter trading period.

However, he said guidance has been revised downwards "due to a combination of significant operational issues creating a bottleneck at our new LA distribution centre and weaker than anticipated US DTC trading, in part due to unseasonably warm weather".

The company estimated that the impact of lost wholesale revenue and incurred costs, as a result of issues at the LA distribution centre, will reduce FY23 EBITDA by £16m to £25m, depending on the pace at which it is able to resolve the issues.

It now expects full-year revenue growth of 11% to 13% on an actual currency basis and earnings before interest, tax, depreciation and amortisation of between £250m and £260m. Previously, it had guided towards revenue growth in the high teens.

Dr Martens also said on Thursday that total revenue rose 9% in the third quarter at constant currency, driven by robust DTC trading, which grew 11%.

At 0855 GMT, the shares were down 21% at 164.90p.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "This is another big migraine for the company, which was also dealing with the headache of disappointing US sales in the fourth quarter, which is viewed as a key market for growth for the company.

"Dr Martens is attempting to position itself more ‘up market’ by reducing the number of boots being sent to retail channels. While this may avoid too much discounting, which can damage the brand, lower volumes will also hit revenues. If Dr Martens can tread into the style books of wealthier consumers, it would offer long term benefits. However, trends do still wax and wane and there is still a risk that the pulling power of Dr Martens could fade over time."