Dr Martens’ fourth profit warning sends shares tumbling 27%

By Eva Mathews

(Reuters) -Shares in Dr Martens dived more than 27% on Thursday after the company issued its fourth profit warning in 12 months, blaming lacklustre demand from U.S. wholesalers for its clunky boots and a slower start to the autumn-winter season.

Shares in the British company, which made their market debut in 2021, hit a record low of 79.10 pence after the firm also scrapped its fiscal 2025 revenue guidance.

The maker of the 1460 boots with yellow stitching, commonly known as “DMs”, has been struggling with customer destocking and reduced orders in the United States from wholesale customers wary of macroeconomic pressures. For the first half of the year, the company said its wholesale revenue dropped 17% to 199.4 million pounds.

“The big issue that we’ve had in the U.S. has been our big wholesale customers, who given the tough consumer environment, are ordering less boots and from other brands,” CEO Kenny Wilson told Reuters, adding that the timing of new orders was unpredictable.

Dr Martens’ classic lace-up boots, priced from 159 pounds ($200.94) upwards, have been a fashion statement since the 1960s but rising inflation and economic uncertainty recently have curbed shoppers’ appetite for luxury spending and they are now looking for value purchases.

The company, which recently forayed into retail, said it has offered small discounts on seasonal colours but will not mark down prices on its flagship black shoes.

It expects revenue for the year ending in March 2024 to decline by a high single-digit percentage while full-year core profit is seen “moderately below the bottom end of the range” of market expectations, it said.

Analysts forecast a range of 223.7 million pounds to 240 million pounds, according to a company-compiled consensus.

Wilson said the company had, however, seen steady demand in its home market the UK, as well as the rest of Europe and the Asia Pacific after new store openings and increased tourism, which is expected to continue over the key Christmas trading period.

“There is a high-margin, heritage brand at the core, but we see faster recovery stories across the sector, leaving DOCS on the shelf for longer,” Peel Hunt analysts said.

($1 = 0.7913 pounds)

(Reporting by Eva Mathews in Bengaluru; Editing by Rashmi Aich, Sharon Singleton and Susan Fenton)