Bootmaker Dr Martens warns annual profits could plunge by two-thirds

  • Dr Martens is known for its association with various youth subcultures
  • It partly blamed the bleak outlook on falling wholesale revenues in the US

Dr Martens shares plummeted on Tuesday after the bootmaker unveiled a major profit warning and the upcoming departure of its chief executive.

The iconic shoe brand, known for its association with youth subcultures like mods and punks, said its pre-tax profits could slump by about two-thirds this financial year.

It blamed the bleak outlook on falling wholesale revenues in the US, which are forecast to drop by double-digit percentage levels, and the anticipation that it will not raise prices to offset cost inflation.

Departing: Bootmaker Dr Martens announced that its chief executive, Kenny Wilson (pictured), would stand down later this financial year

Dr Martens expects the former factor to cost it around £20million in earnings should there be no ‘meaningful’ in-season re-orders from customers, while the latter is set to result in a £35million hit to profits.

Shares in Dr Martens shares plunged by 29.9 per cent to 66.55p in early trading as a consequence, making them the biggest faller by far on the FTSE 250 Index.

The Northampton-based firm added that its results for the year ending March 2024 would be in line with expectations, thanks to a rebound in direct-to-consumer sales during the fourth quarter.

Kenny Wilson, chief executive of Dr Martens, said: ‘The whole organisation is focused on our action plan to reignite boots demand, particularly in the USA, our largest market.

‘The nature of USA wholesale is that when customers gain confidence in the market, we will see a significant improvement in our business performance.’

Alongside this outlook update, the company revealed that Wilson would stand down later this year, having overseen a transformational six-year period at the bootmaker.

Wilson joined Dr Martens in May 2018 following a seven-year stint running the floral fashion retailer Cath Kidston, whose intellectual property was acquired by Next last year.

Since taking over, the group’s sales have nearly tripled to £1billion as the popularity of its chunky 1460 boots enjoyed a revival among a young social media-savvy crowd.

Unlike many retailers, it weathered the Covid-19 pandemic quite well despite being forced to temporarily close its UK stores by tough lockdown restrictions.

In January 2021, Dr Martens listed on the London Stock Exchange with a value of £3.7billion, landing Wilson, many other executives and private equity group Permira a considerable windfall.

However, Dr Martens shares have declined by around 82 per cent since then due to cost-of-living pressures, unfavourable weather conditions, and supply chain constraints, including operational issues at its Los Angeles distribution centre.

Wilson’s replacement as chief executive is Ije Nwokorie, who only just became Dr Martens’ chief brand officer in February and was formerly the head of global branding company Wolf Ollins and a senior director at technology giant Apple.

Wilson said: ‘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.’