Bootmaker Dr. Martens’ margin warning knocks shares down 20%
By Radhika Anilkumar
(Reuters) – British bootmaker Dr. Martens has warned of a sharp hit to profit margins due to weaker than expected demand ahead of the key Christmas season, increased investments and the strong dollar, sending its shares down some 20%.
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Chief Executive Kenny Wilson told Reuters the next few weeks leading up to Christmas would be crucial but he was confident of meeting demand for its boots as the company’s inventory is better stocked than last year.
“Going into the winter season, we see people buying more of our iconic boots which (are) … the 1460s and our Jadons,” Wilson added.
The group said it expects its core earnings margin for the full year to be between 100 basis points and 250 basis points lower than last year, though it did not give a total net figure.
The maker of the clunky 1460 boots with yellow stitching said it sold about 6.3 million pairs of shoes in the six months ended Sept. 30, up 400,000 from last year and a record level.
Dr. Martens, whose pricey work boots have been fashion items since the 1960s after being favoured by the likes of Who guitarist Pete Townshend, said demand was still growing, suggesting customers are still restocking their wardrobes to keep pace with the return of social events post-pandemic.
To help employees cope with rising prices and dearer bills, the company has offered a one-off payments of 500 pounds ($605) to employees earning less than 45,000 pounds a year, Wilson said.
First-half core profit was flat compared with a strong year ago period, the company said, while revenue rose 13% to 418.6 million pounds, helped by price hikes. The interim dividend was raised 28% to 1.56 pence.
The stock was down 21.2% at 225.6 pence by 1137 GMT, having risen the previous session to its highest since February.
($1 = 0.8260 pounds)
(Reporting by Radhika Anilkumar in Bengaluru; Editing by Rashmi Aich and David Holmes)