Dr Martens PLC on Thursday reported a drop in its half-year earnings, said it expects lower full-year revenue and added that a recovery in the key US market will take than it first expected.
Shares in Dr Martens slumped 25% to 86.20 pence each in London on Thursday morning.
The Northamptonshire, England-based boot manufacturer said in the half-year ended September 30, pretax profit fell by 55% to £25.8 million from £57.9 million the year before.
Earnings before interest, tax, depreciation and amortisation fell 13% to £77.6 million from £88.8 million a year prior.
Revenue declined 5.4% to £395.8 million from £418.8 million the year before. Its top line was hurt by ‘an increasingly difficult consumer environment’ in the US.
Dr Martens maintained its interim dividend at 1.56 pence per share.
Chief Executive Officer Kenny Wilson commented: ‘We saw a mixed trading performance in the first half of the year. We made good progress with our strategic priorities, continuing to invest in the business and our people to drive sustainable long-term growth. During the period we focused on controlling the controllables: we delivered significant supply chain savings, successfully transformed our North America distribution network, opened 25 new stores, and launched a Dr Martens UK repair service.’
Looking ahead, the company said it remains confident in its long-term growth prospects and its ‘cash generative nature’. Nevertheless, it said it expects full year revenue to decline by a high single-digit percentage, on a constant currency basis.
It also said it expects financial 2024 Ebitda to be ‘moderately below the bottom end of the range of consensus expectations’ of £223.7 million to £240.0 million.
In financial 2023, it achieved an Ebitda of £245.0 million and revenue of £1.00 billion.
Dr Martens also added that pretax profit for the year will be hurt by higher net finance costs of around £5 million.
Dr Martens cautioned that a bounce in its US division will take longer to materialise than initially anticipated.
‘We have strengthened the Americas leadership team and they are taking action, including refocusing marketing and improving our ecommerce trading capabilities. It is likely, however, that given the challenging backdrop it will take longer to see an improvement in USA results than initially anticipated. Notwithstanding the clear challenges we face in the USA market we remain very confident in our iconic brand and the significant growth opportunity ahead of us,’ added CEO Wilson.
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