Operational issues in US lead to plunging Dr Martens share
The UK-based bootmaker also revised down its annual revenue forecast to growth of 11%-13% on an actual currency basis
19 January 2023 - 18:09
byYadarisa Shabong
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A pair of Dr. Martens boots seen through the window of a Dr Martens shop in London, Britain. File photo: SIMON NEWMAN/REUTERS
British bootmaker Dr Martens issued a profit warning on Thursday, citing significant operational issues at its new distribution centre in the US that sent its shares plunging by more than a fifth.
Those issues could reduce annual core profit by £16m-£25m and have knock-on effects in the year after, it said in a statement.
It now expects earnings before interest, taxes, depreciation and amortisation (Ebitda) of £250m-£260m for the year ending in March, which compares with a figure of £263m in the previous year.
Dr Martens said the problems at its Los Angeles distribution centre were due to a “combination of people and process issues” including inventory arriving more quickly than anticipated. That has created a bottleneck, which is limiting its capacity to meet wholesale demand and fourth-quarter shipment forecasts.
It said it has opened three temporary warehouses nearby to help resolve the issues.
"This is another big migraine for the company, which was also dealing with the headache of disappointing US sales in the fourth quarter, which is viewed as a key market for growth," Hargreaves Lansdown analyst Susannah Streeter said in a note to clients.
The London-based company also revised down its annual revenue forecast to growth of 11%-13% on an actual currency basis, which compares with an earlier prediction for a jump in the high-teens.
In November, it had flagged a sharp hit to margins due to weaker-than-expected demand ahead of the key Christmas season and a strengthening dollar.
It shares slumped 21% in morning trade, at one point hitting a record low.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Operational issues in US lead to plunging Dr Martens share
The UK-based bootmaker also revised down its annual revenue forecast to growth of 11%-13% on an actual currency basis
British bootmaker Dr Martens issued a profit warning on Thursday, citing significant operational issues at its new distribution centre in the US that sent its shares plunging by more than a fifth.
Those issues could reduce annual core profit by £16m-£25m and have knock-on effects in the year after, it said in a statement.
It now expects earnings before interest, taxes, depreciation and amortisation (Ebitda) of £250m-£260m for the year ending in March, which compares with a figure of £263m in the previous year.
Dr Martens said the problems at its Los Angeles distribution centre were due to a “combination of people and process issues” including inventory arriving more quickly than anticipated. That has created a bottleneck, which is limiting its capacity to meet wholesale demand and fourth-quarter shipment forecasts.
It said it has opened three temporary warehouses nearby to help resolve the issues.
"This is another big migraine for the company, which was also dealing with the headache of disappointing US sales in the fourth quarter, which is viewed as a key market for growth," Hargreaves Lansdown analyst Susannah Streeter said in a note to clients.
The London-based company also revised down its annual revenue forecast to growth of 11%-13% on an actual currency basis, which compares with an earlier prediction for a jump in the high-teens.
In November, it had flagged a sharp hit to margins due to weaker-than-expected demand ahead of the key Christmas season and a strengthening dollar.
It shares slumped 21% in morning trade, at one point hitting a record low.
Reuters
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