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Dr Martens chief to exit as shares hit record low after profit warning
Julia Kollewe
Tue, 16 April 2024
Dr Martens issued four profit warnings last year.Photograph: Dr Martens/PA
Shares in Dr Martens plummeted to a new low as the UK bootmaker warned on profits and poor performance in the US, and announced the departure of its chief executive.
The brand, known for its yellow-stitched thick-soled boots, warned sales would fall by a single-digit percentage in the year to the end of March 2025, compared with a year earlier. Profit before tax could be just a third of last year’s £159m in a worst-case scenario.
It was the latest in a string of profit warnings at the brand, which issued four last year, and prompted the shares to plunge by a third on Tuesday to a record low of 62p.
The company expects US wholesale revenues (for shoes sold via other retailers in their stores) to fall in double digits, explaining that its autumn/winter order book, which makes up most of the second half of its US sales, is significantly down year on year. This will result in a £20m hit to pre-tax profits, with a further £35m hit from cost pressures, including wage bills.
“We do not anticipate increasing prices further this year, and therefore this year we are unable to offset cost inflation as we have in prior years,” Dr Martens said.
Analysts at Peel Hunt said the warning was not a surprise, “but the scale of the impact is much greater than feared”.
The chief executive, Kenny Wilson, who has spent six years at the helm, is to leave at the end of the financial year and will be replaced by Ije Nwokorie, who has served as chief brand officer in the past year, and previously worked as a senior director at Apple Retail.
Wilson described the outlook as “challenging”, adding: “The whole organisation is focused on our action plan to reignite boots demand, particularly in the US, our largest market. The nature of US wholesale is that when customers gain confidence in the market we will see a significant improvement in our business performance, but we are not assuming that this occurs in the [current] financial year.”
The boots were first created in 1945 by a young German army doctor, Klaus Märtens, who designed an air-cushioned sole to help his recovery from a broken foot. They made their debut in Britain in 1960 when a Northamptonshire footwear maker started producing them. Their sturdy design made them popular among postal delivery workers and factory staff, and was later embraced by skinheads and punks. These days, Dr Martens is a mainstream bootmaker.
Julia Kollewe
Tue, 16 April 2024
Dr Martens issued four profit warnings last year.Photograph: Dr Martens/PA
Shares in Dr Martens plummeted to a new low as the UK bootmaker warned on profits and poor performance in the US, and announced the departure of its chief executive.
The brand, known for its yellow-stitched thick-soled boots, warned sales would fall by a single-digit percentage in the year to the end of March 2025, compared with a year earlier. Profit before tax could be just a third of last year’s £159m in a worst-case scenario.
It was the latest in a string of profit warnings at the brand, which issued four last year, and prompted the shares to plunge by a third on Tuesday to a record low of 62p.
The company expects US wholesale revenues (for shoes sold via other retailers in their stores) to fall in double digits, explaining that its autumn/winter order book, which makes up most of the second half of its US sales, is significantly down year on year. This will result in a £20m hit to pre-tax profits, with a further £35m hit from cost pressures, including wage bills.
“We do not anticipate increasing prices further this year, and therefore this year we are unable to offset cost inflation as we have in prior years,” Dr Martens said.
Analysts at Peel Hunt said the warning was not a surprise, “but the scale of the impact is much greater than feared”.
The chief executive, Kenny Wilson, who has spent six years at the helm, is to leave at the end of the financial year and will be replaced by Ije Nwokorie, who has served as chief brand officer in the past year, and previously worked as a senior director at Apple Retail.
Wilson described the outlook as “challenging”, adding: “The whole organisation is focused on our action plan to reignite boots demand, particularly in the US, our largest market. The nature of US wholesale is that when customers gain confidence in the market we will see a significant improvement in our business performance, but we are not assuming that this occurs in the [current] financial year.”
The boots were first created in 1945 by a young German army doctor, Klaus Märtens, who designed an air-cushioned sole to help his recovery from a broken foot. They made their debut in Britain in 1960 when a Northamptonshire footwear maker started producing them. Their sturdy design made them popular among postal delivery workers and factory staff, and was later embraced by skinheads and punks. These days, Dr Martens is a mainstream bootmaker.
Dr. Martens names new chief executive amid sales slump in the US
Laura McGuire
Tue, 16 April 2024
An activist investor in boot brand Dr Martens has urged the company to undergo a strategic review and possibly even sell the company.
Dr Martens will see a change at the top as it looks to turn the tide on a miserable couple of years.
Aberdonian Kenny Wilson will step away from the top job after six years to be replaced by the iconic shoe manufacturer’s chief brand officer Ije Nwokorie.
Wilson’s tenure began with a bang, taking the shoe manufacturer public in early 2021 with a near £4bn valuation.
However, operations issues at an LA distribution centre and then weak consumer demand in the States took their toll on the share price, which now sits at around a fifth of the offer price.
Though the share price has slipped, revenues have spiked under Wilson, doubling the numbers of pairs sold during his tenure.
PICTURED: New CEO Ije Nwokorie:
Wilson said the time had come to step away.
“Dr. Martens is an incredible brand powered by our fantastic people. After six years in the role, I feel that the time is right to hand over this year, and I am excited that Ije will be my successor. I have enjoyed working with Ije, both as a Board member and in the executive leadership team in recent months, and I have seen his brand knowledge and passion first-hand. I look forward to working with him closely in the year ahead.”
In a separate announcement, Dr Martens said it was trading in line with expectations but was continuing to be weighed down by lagging sales in its US market.
The iconic shoe maker said for the year ahead USA wholesale revenue is anticipated to be double-digit down year-on-year.
Dr Martens said: “We have recently finalised the Autumn/Winter order book, which makes up the majority of the second half of USA wholesale, and this is significantly down year-on-year.”
The firm said a decline in wholesale has a significant impact on profitability, and could result in £20m hit on profit-before-tax.
America is one of the business biggest markets but it faced a number of challenges in the region, including the hangover from bottleneck issues in its Los Angeles warehouse.
Dr Martens said: “Given the ongoing challenging performance of our USA wholesale business, we expect to continue to require the additional inventory storage facilities in this market through FY25, and therefore the majority of the £15m of additional costs incurred in FY24 are expected to repeat in FY25.”
FY24 results expected to be in line with guidance with profit before tax reaching of £97.4m
It comes after an investment firm, which owns roughly five million shares of Dr Martens, wrote to the board last month and suggested the company would perform better as a private company or as part of a larger, multi-brand holding company.
New York based Marathon Partners Equity Management, LLC argued the company’s stagnant growth and 83 per cent slide in share price since its IPO three years ago have not valued the company at its true worth.
Shares in Dr Martens are down 26 per cent in early trade.
Laura McGuire
Tue, 16 April 2024
An activist investor in boot brand Dr Martens has urged the company to undergo a strategic review and possibly even sell the company.
Dr Martens will see a change at the top as it looks to turn the tide on a miserable couple of years.
Aberdonian Kenny Wilson will step away from the top job after six years to be replaced by the iconic shoe manufacturer’s chief brand officer Ije Nwokorie.
Wilson’s tenure began with a bang, taking the shoe manufacturer public in early 2021 with a near £4bn valuation.
However, operations issues at an LA distribution centre and then weak consumer demand in the States took their toll on the share price, which now sits at around a fifth of the offer price.
Though the share price has slipped, revenues have spiked under Wilson, doubling the numbers of pairs sold during his tenure.
PICTURED: New CEO Ije Nwokorie:
Wilson said the time had come to step away.
“Dr. Martens is an incredible brand powered by our fantastic people. After six years in the role, I feel that the time is right to hand over this year, and I am excited that Ije will be my successor. I have enjoyed working with Ije, both as a Board member and in the executive leadership team in recent months, and I have seen his brand knowledge and passion first-hand. I look forward to working with him closely in the year ahead.”
In a separate announcement, Dr Martens said it was trading in line with expectations but was continuing to be weighed down by lagging sales in its US market.
The iconic shoe maker said for the year ahead USA wholesale revenue is anticipated to be double-digit down year-on-year.
Dr Martens said: “We have recently finalised the Autumn/Winter order book, which makes up the majority of the second half of USA wholesale, and this is significantly down year-on-year.”
The firm said a decline in wholesale has a significant impact on profitability, and could result in £20m hit on profit-before-tax.
America is one of the business biggest markets but it faced a number of challenges in the region, including the hangover from bottleneck issues in its Los Angeles warehouse.
Dr Martens said: “Given the ongoing challenging performance of our USA wholesale business, we expect to continue to require the additional inventory storage facilities in this market through FY25, and therefore the majority of the £15m of additional costs incurred in FY24 are expected to repeat in FY25.”
FY24 results expected to be in line with guidance with profit before tax reaching of £97.4m
It comes after an investment firm, which owns roughly five million shares of Dr Martens, wrote to the board last month and suggested the company would perform better as a private company or as part of a larger, multi-brand holding company.
New York based Marathon Partners Equity Management, LLC argued the company’s stagnant growth and 83 per cent slide in share price since its IPO three years ago have not valued the company at its true worth.
Shares in Dr Martens are down 26 per cent in early trade.
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