Dr Martens has warned that “unseasonably warm weather” and problems at a US warehouse hit sales in the run-up to Christmas forcing the company to issue its second profit warning in two months.
The British bootmaker said it now expected to make underlying full-year profits of no more than £260m, £26m less than previously expected as it had been forced to open temporary warehouses in the US after becoming overwhelmed with stock, partly because deliveries had arrived more quickly than expected.
Dr Martens said it forecast up to £11m in additional supply chain costs to fix the bottlenecks and could lose up to £25m of wholesale sales as a result of the hold-ups in LA. The firm said warmer than usual weather in October and November also hit sales.
The company, based in Wollaston, Northamptonshire, expects the problems in the US and “a more uncertain economic environment” to hit the coming year’s sales as well.
Shares plunged by 19% to 169p after the update on Thursday morning.
The warning came just two months after Dr Martens told the City that its profit margins would be lower than expected amid higher costs and delays to £10m of sales because of strikes at the port in Felixstowe and staff shortages at its distribution centre in the Netherlands.
The company is also putting the price of its main boots up by 6% this year because of rising material and manufacturing costs.
Kenny Wilson, the chief executive, said “demand for Dr Martens remained resilient through challenging conditions during our peak trading period” but admitted profits would be lower than hoped because of “a combination of significant operational issues creating a bottleneck at our new LA distribution centre and weaker than anticipated US [direct to consumer] trading, in part due to unseasonably warm weather”.
The warning came despite strong trading in Europe where sales rose 8% in the three months to 31 December, as sales accelerated in the final weeks before Christmas once the cold snap hit.
However, overall sales growth slipped to just 3% in constant currency, down from 11% in the previous quarter, as sales in the US rose just 1%, once the effect of currency exchange rates was stripped out, as a result of a warm autumn and the US warehouse problems. Sales in Asia were down 4% with trading in China hit by Covid disruption.