Dr Martens issues profit warning amid challenging US backdrop
The group stated that trading in the second half to date has also been mixed, with the start of the Autumn/Winter season impacted by warm weather across all three regions and weaker traffic overall
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Dr Martens has issued a profit warning due to challenging headwinds in the US.
The British footwear brand’s profit before tax fell 55% to £25.8m for the six months ending 30 September.
The group also reported that its EBITDA fell 13% and revenues declined 5% from £418.6m to £395.8m primarily driven by weakness in US wholesale.
Its wholesale revenue was also impacted by planned strategic decisions to reduce volumes into EMEA etailers and exit of the China distributor.
The group stated that trading in the second half to date has also been mixed, with the start of the Autumn/Winter season impacted by warm weather across all three regions and weaker traffic overall.
Looking ahead, the business said it expects full year revenue to decline by a high single-digit percentage year-on-year, and full year EBITDA will be moderately below the bottom end of the range of consensus expectations of £223.7m to £240m, as problems with the US market continue.
Kenny Wilson, chief executive officer, said: “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. The DOCS strategy of brand control and prioritising more profitable sales via our own stores and websites continued to deliver, with Direct to Consumer (“DTC”) revenues up 11% in constant currency, representing half of group revenues.”
He added: “We saw a continued strong DTC performance in EMEA and APAC. In the USA, where there is an increasingly difficult consumer environment, our results have been more challenged, led by weakness in wholesale. 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.”
