Dr Martens stamps down profit guidance after warehouse headache

Bootmaker Dr Martens has seen its sales step up but cut its profit expectations after forking out to tackle problems at its Los Angeles warehouse. The shoe brand downgraded its outlook after taking about a £15 million hit from supply delays at the distribution centre. It now expects to make about £245 million in earnings this financial year, which ended on March 31, due to higher costs and lower wholesale revenue. Direct to consumer retail sales – those from its own stores – surged by more than a third in the fourth quarter of its financial year. Yet sales in America have remained “soft” and wholesale revenue was down, which helped drag on total revenues. The company was plagued by operational problems at its warehouse earlier this year, with stock building up after other US wholesalers used it to store some of their shipments. It had to open three temporary warehouses to release excess shipping containers and store stock away from the LA warehouse. But after incurring higher than expected costs to deal with the issues, the bottleneck eased and shipment volumes were now back to normal levels, Dr Martens told investors on Friday. It is set to incur another £15 million hit over the next financial year amid plans to maintain the temporary warehouses. The business has struggled with waning consumer demand and unseasonably warm weather in the US last year which led it to caution investors over lower-than-anticipated revenues. Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said Dr Martens had been impacted by “operational headaches”. She added: “Ultimately, Dr Martens has a strong brand, but investors would like to see some further momentum on both the top and bottom line. “The shares have fallen almost 70% since they listed in 2021, which was partly a function of a frothy valuation, but also raises questions about the long-term growth trajectory for the famous shoe brand.” Meanwhile, Dr Marten’s chief financial officer Jon Mortimore announced his retirement after seven years at the business. The company is now looking externally for Mr Mortimore’s successor.