Can Dr Martens get off on the right foot with investors this week?
All eyes remain on Dr Martens ahead of its full year results on Thursday as investors hope the boot maker can offer signs of a turnaround following disruptions in its US warehouse and its struggling share price.
The London-based bootmaker has downgraded its profit forecast twice in three months, telling the markets in April that earnings will be around £245m, compared to previously downgraded revenues of between £250m and £260m.
It’s been a tough year for the brand as it has been battling bottleneck issues in its Los Angeles warehouse, which impacted its American wholesale channel from December. The supply chain issues saw the cult bootmaker post an underwhelming update in April, with fourth quarter revenues up just six per cent.
The retailer is also currently on the hunt for a new finance chief, after its longstanding chief financial officer Jon Mortimore announced his departure last month after seven years at the brand.
“There were already concerns about the long-term growth of the brand, given the fashion world’s fickle tastes and these operational difficulties have booted in fresh problems for the company,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.
Dr Marten shares have fallen 62 per cent compared to the IPO price when it launched onto the London market in January 2021, with some believing the brand may have been overpriced when it became public.
The brand hope to revive shares this week by reassuring investors of robust consumer spending despite inflationary pressures, with the retailer reporting a 36 per cent rise in direct to consumer retail in the fourth quarter.
“Looking ahead, the company will hope to move on from the operational issues and capitalise on the cooling of inflation globally, which could free up some cash from tight budgets for the occasional ‘nice-to-have’ purchase – like Dr Marten’s pricey boots,” Myron Jobson, senior personal finance analyst at Interactive Investor, told Morning Wire
Russ Mould, AJ Bell investment director, said: “For the year to March 2023, Dr Martens has already revealed that sales rose 10 per cent on a stated basis and four per cent on a constant currency basis (but the year ended with just six per cent stated growth and no progress at all in constant currencies in the final quarter).
“The good news is that a series of disappointments mean expectations are at least low for the full-year results, especially as April’s weak fourth-quarter trading update gave a clear steer on both revenues and Dr Martens’ preferred profit metric of ebitda.”