Another profit warning issued by Dr Martens

Dr Martens issued its third profit warning in five months on Friday, as it struggled with higher-than-expected costs at a new Los Angeles, US distribution centre.

The British company, whose pricey work boots have been fashionable since the 1960s, also said its CFO, Jon Mortimore, would leave once the company found a replacement.

Mortimore's resignation comes as Dr Martens issued its third profit warning since November, when it flagged a sharp hit to profit margins on weaker-than-expected demand before Christmas.

In January, the maker of the clunky 1460 boots with yellow stitching commonly known as “DMs” had flagged lower core profit after struggling with bottleneck issues at its Los Angeles distribution centre, affecting its capacity to meet wholesale demand.

Shipments from its Los Angeles operation were back to normal levels, it said on Friday.

Shares in Dr Martens, which made its market debut in 2021 with a market capitalisation of $5bn, were up about 2% to 144.1 pence at 7.50am GMT. They have fallen by nearly two-thirds from their initial public offering price.

The bootmaker has also been grappling with softer demand in the US, its second-largest market by revenue, with the fourth quarter seeing revenue grow 6%, mainly driven by Europe, Middle East and Africa as well as Asia Pacific.

Dr Martens had said the problems at its Los Angeles distribution centre, which opened about nine months ago, were due to a “combination of people and process issues”, and sent members of its EMEA and global supply chain teams to fix the issues.

Incremental costs in Los Angeles were about £15m, above the £8m-£11m expected initially, as container costs were higher than anticipated, it said.

The London-based firm now expects core profit for the year ending March to be about £245m, down from its earlier forecast of £250m-£260m.

Reuters