Dr Martens posts revenue fall on weak boot sales
Britain’s Dr Martens said its visibility over wholesale orders “remains weak” as the bootmaker posted a drop in thirdquarter revenue on Thursday after several profit warnings and a disappointing December trading period.
The company, known for its clunky boots with yellow stitching, also said Red Sea shipping diversions were adding to journey times and costs for supplies.
Dr Martens posted a drop of 21% in revenue to £267.1m for the December quarter, compared with £273.8m in the previous matching quarter.
In November, Dr Martens issued its fourth profit warning in 12 months as it struggled with customer destocking and reduced orders in the US from wholesale customers wary of macroeconomic pressures. For the quarter, US revenue was down 31% on a reported basis.
More recent concerns for retailers centre around efforts by global shipping firms to avoid the Red Sea that leads to the Suez Canal due to attacks on vessels by Houthi militants in Yemen. Ships diverting around Africa’s Cape of Good Hope are adding around two weeks to journey times and extra costs.
CEO Kenny Wilson said the company, which has a contract with Danish shipping group Maersk, sees an impact of 12 days on shipping, which will have cost implications. He did not say how much extra cost is expected or whether those costs will be passed on to consumers.
“Wholesale customers continue to have relatively low levels of in-market inventory. However, the timing and level of re-orders is unpredictable, meaning that our visibility over wholesale remains weak,” the company said.
The share price of Dr Martens, which made its market debut in 2021 with a market capitalisation of $5bn, was up 6.7% to 80.40p at mid-morning on Thursday, having more than halved in 2023.
“Today’s trading update effectively confirmed the downgrades announced previously, with the shares seeing a small relief bounce in response to no further changes to trading expectations,” Peel Hunt analyst John Stevenson said.
BRITISH COMPANY SAYS RED SEA SHIPPING DIVERSIONS ARE ADDING TO JOURNEY TIMES AND COSTS FOR SUPPLIES