Dr Martens drops in value as US shoppers feel squeeze
MORE than a fifth has been wiped off the value of shoe brand Dr Martens as it warned of pressure on US shoppers ahead of the Christmas period.
Dr Martens shares plunged by 23pc – its sharpest drop ever – as it said it had experienced “softening” demand in the US. The country is its largest market, where it makes around 40pc of sales.
Pre-tax profits slipped 5pc to £57.9m
in the six months to the end of September, the retailer said, adding that sales which it made direct to consumers had grown slower than expected.
Morgan Stanley analysts said the results suggested that the company was “not immune to macro softness and the impact accelerating inflation has on the spending power of the middle class”.
Dr Martens said that the softness was in part down to the milder October weather in the US, which meant fewer people were buying thick boots, but this demand was starting to come back.
Kenny Wilson, Dr Martens’ chief executive, said: “Obviously, we’re getting into that really important six weeks of the year from Thanksgiving through to Christmas, and actually we feel pretty confident. Even in a difficult economic environment, people see Dr Martens as a considered purchase that will last.”
Dr Martens raised its prices for boots in the last financial year, and said it was expecting to increase them again in line with the cost inflation it was seeing. This is expected to mean a 6pc price rise over the next year, Mr Wilson said.
He added: “We understand that consumers are under pressure, whether it’s their food bills going up, or their heating bills going up. So we’re only trying to offset our inflation with price increases.”
The fall in its share price comes after months of pressure from investors.
Earlier this year, major investor Permira slashed its holding in the company, in a move which sent Dr Martens’ share price 13pc lower. At the time, that was its largest share price fall.
Dr Martens floated on the London Stock Exchange in early 2021 at 370p a share, valuing it at almost £4bn.
The company’s shares ended down 65p at 221.4p yesterday, leaving it worth £2.2bn.