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Dr Martens shares sank on Thursday after the group issued its fourth profit warning since joining the stock market in 2021 and posted a drop in earnings for its first half.
The retailer's shares fell 25.22 per cent or 28.95p to a record low of 85.85p on Thursday morning, having sunk over 57 per cent in the last year.
The group, which became the biggest FTSE 250-listed faller on Thursday, said warm weather and 'weaker traffic' hampered sales of its autumn and winter lines, though sales have improved in certain markets in the last few weeks.
Sales for the full year are now expected to drop by around 8 per cent and underlying profits look set to slip below the £223.7million set as the lowest end of previous analyst forecasts.
Share shift: Dr Martens shares fell sharply after the group published its half year results
In the six months to 30 September, Dr Martens' pre-tax profit fell to £25.8million, down from £57.9million at the same point a year ago.
During the period, the company's revenue fell 5 per cent, from £418.6million to £395.8million. The group increased prices by 4.5 per cent during the period.
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The group said that while some of its markets had seen an improvement in sales in the last few weeks, the US continued to be sluggish.
It said: 'In the USA, the consumer environment has become more challenging in recent months.
'Although we have seen some encouraging signs in very recent DTC trading, including over the Black Friday weekend, we expect that it will take longer to see a material improvement in USA performance than initially anticipated.'
Dr Martens said the 'most challenging' element of its US business was its wholesale arm, amid 'widespread macro-economic caution'.
The group's wholesale order book is, as a result, 'weaker' than in previous years.
Looking ahead, Dr Martens expects its full-year revenue to fall by 'high single-digit percentage' year-on-year on a constant currency basis.
It added: 'Assuming this revenue outturn, we expect FY24 EBITDA to be moderately below the bottom end of the range of consensus expectations, with PBT also impacted by c.£5milllion higher net finance costs in addition to this lower EBITDA.
'Given macro-economic uncertainty, we are withdrawing our previous guidance of high single-digit revenue growth in FY25. Our medium-term expectations are unchanged, underpinned by the significant white-space growth opportunity and our iconic brand and product range.'
Russ Mould, investment director at AJ bell, said: 'Dr Martens' problems continue to be centred on the US, in particular wholesalers are reluctant to stock large volumes of its boots and shoes. That suggests a lack of confidence in US consumer spending power and a headwind the bootmaker could do without.
'Understandably the share price has taken another knock, putting it at a new all-time low around 90p, a fraction of the 370p IPO price in 2021.
"When times are good, Dr Martens has shown it is possible to make decent returns from its iconic products. But when the economic outlook is more uncertain, the company suffers from having its products priced slightly above the level at which someone wouldn't think too hard about paying.'
He added: 'While the market backdrop is not currently in its favour, when the winds change it should be in a stronger position to capitalise on the growth opportunity.'
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The retailer's shares fell 25.22 per cent or 28.95p to a record low of 85.85p on Thursday morning, having sunk over 57 per cent in the last year.
The group, which became the biggest FTSE 250-listed faller on Thursday, said warm weather and 'weaker traffic' hampered sales of its autumn and winter lines, though sales have improved in certain markets in the last few weeks.
Sales for the full year are now expected to drop by around 8 per cent and underlying profits look set to slip below the £223.7million set as the lowest end of previous analyst forecasts.
Share shift: Dr Martens shares fell sharply after the group published its half year results
In the six months to 30 September, Dr Martens' pre-tax profit fell to £25.8million, down from £57.9million at the same point a year ago.
During the period, the company's revenue fell 5 per cent, from £418.6million to £395.8million. The group increased prices by 4.5 per cent during the period.
RELATED ARTICLES
Previous
1
Next
Metro Bank axing 20% of its workforce and 'reviewing' seven... Saudi Arabia snaps up 10% of Heathrow as it steps up its... Farewell to Charlie Munger, 99: The investing wisdom of... Major Selfridges shareholder files for insolvency just weeks...
Share this article
Share
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Dr. Martens share price ad data available here
The group said that while some of its markets had seen an improvement in sales in the last few weeks, the US continued to be sluggish.
It said: 'In the USA, the consumer environment has become more challenging in recent months.
'Although we have seen some encouraging signs in very recent DTC trading, including over the Black Friday weekend, we expect that it will take longer to see a material improvement in USA performance than initially anticipated.'
Dr Martens said the 'most challenging' element of its US business was its wholesale arm, amid 'widespread macro-economic caution'.
The group's wholesale order book is, as a result, 'weaker' than in previous years.
Looking ahead, Dr Martens expects its full-year revenue to fall by 'high single-digit percentage' year-on-year on a constant currency basis.
It added: 'Assuming this revenue outturn, we expect FY24 EBITDA to be moderately below the bottom end of the range of consensus expectations, with PBT also impacted by c.£5milllion higher net finance costs in addition to this lower EBITDA.
'Given macro-economic uncertainty, we are withdrawing our previous guidance of high single-digit revenue growth in FY25. Our medium-term expectations are unchanged, underpinned by the significant white-space growth opportunity and our iconic brand and product range.'
Russ Mould, investment director at AJ bell, said: 'Dr Martens' problems continue to be centred on the US, in particular wholesalers are reluctant to stock large volumes of its boots and shoes. That suggests a lack of confidence in US consumer spending power and a headwind the bootmaker could do without.
'Understandably the share price has taken another knock, putting it at a new all-time low around 90p, a fraction of the 370p IPO price in 2021.
"When times are good, Dr Martens has shown it is possible to make decent returns from its iconic products. But when the economic outlook is more uncertain, the company suffers from having its products priced slightly above the level at which someone wouldn't think too hard about paying.'
He added: 'While the market backdrop is not currently in its favour, when the winds change it should be in a stronger position to capitalise on the growth opportunity.'
DIY INVESTING PLATFORMS
Stocks & shares Isa
Stocks & shares Isa
Easy investing
Capital at risk. Isa rules & T&Cs apply.
Investment ideas
Free fund dealing
Free fund dealing
0.45% account fee capped for shares
Flat-fee investing
No fees
£9.99 monthly fee
One free £5.99 trade per month
Social investing
Social investing
Share investing
30+ million global community
Model portfolios
Investment account
Free fund dealing
Free financial coaching
Affiliate links: If you take out a product This is Money may earn a commission. This does not affect our editorial independence.
> Compare the best investing platform for you
If you loved this post and you wish to receive more information concerning we highly recommend to check them out my grandparents sign with them please visit our site.