Dr Martens share price tumbles 11 per cent as pre-tax profits miss forecasts
Dr Martens will launch a share buy back programme of up to £50m as the boot maker looks to up investment following a 26 per cent slide in pre-tax profits following bottleneck issues in its US warehouse.
The London-listed retailer hit record revenues during the year of £1bn, as sales recovered post-pandemic and it opened 52 new stores world wide, however profits were offset by following disruptions in its US warehouse – which will see the brand loose £15m.
“In America, against the backdrop of a challenging consumer environment, we made operational mistakes, such as the move to our LA Distribution Centre, and how we executed our marketing campaigns and ecommerce trading,” chief Kenny Wilson said.
Profit after tax also fell 29 per cent to £128m from £181m, as the group also battled supply chain inflation.
The brand’s rocky results were forecasted by the market as Dr.Martens downgraded its profits twice during the year, with the brand telling investors that it still expects EBITDA margin in FY24 to be around two per cent lower than this year.
However, Wilson told City A.M that the share buy back programme will help with investment so the brand can move forward to “become a £2bn company”.
“[its] about investing in new stores, continuing to invest in our e-commerce platforms and investing in our supply chain,” he said.
“These full year results suggest a case of one step forward, two steps back for the UK-based boot maker,” Neil Shah, director of content and strategy at Edison Group, said.
“For the first time, 2023 saw the company reach a revenue milestone of £1bn; yet with PBT down 26 per cent from last year, this symbolic achievement is unlikely to do much by way of encouraging investors, when considered beside the not-so-symbolic drop in profit.”
Dr Martens shares were down 11.35 per cent when markets opened this morning.
The brand’s share prices has struggled since it informed markets of its two profit downgrades…
Russ Mould, investment director at AJ Bell said: “Revenue may have hit a £1bn milestone, but profit is heading in the wrong direction as the company’s margins are under strain thanks to rising costs.
“Investment in the business also accounts for some of the pressure on the bottom line and the company may reap the benefits of these in the future although previous failures in its supply chain don’t exactly inspire confidence.”