Dr Martens warns on profits amid US disruption
With this disruption the retailer's total revenue for the three months ended 31 December 2022 rose 9%, 3% on a constant currency basis, which was below expectation
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Dr Martens has warned that its profits and revenues could drop after it faced “significant operational issues” at its new distribution centre in Los Angeles.
The retailer has blamed people and process errors which caused a stock bottleneck. It has opened three temporary facilities to deal with the issue.
The company expects the issue to reduce wholesale revenue by £15m-25m and underlying earnings by £16m-25m with £8-11m worth of supply chain costs. It also expects its full year EBITDA to be somewhere between £250m-260m
The footwear retailer also expects the problem to have a knock-on effect in FY24 but expects this to stabilise in the first half of FY24.
With this disruption the retailer’s total revenue for the three months ended 31 December 2022 rose 9% and 3% on a constant currency basis, which was below previous expectations.
CEO Kenny Wilson said: “Demand for Dr. Martens remained resilient through challenging conditions during our peak trading period of Q3.
“However, due to a combination of significant operational issues creating a bottleneck at our new LA distribution centre and weaker than anticipated US DTC trading, in part due to unseasonably warm weather, we now expect full year revenue growth of 11-13% on an actual currency basis and full year EBITDA to be between £250m and £260m.”
