Traders put the boot into Dr Martens shares after the maker of the iconic footwear beloved by punks warned that higher investment, softer demand and a strong dollar would hit profits for the full year.
Stock in the London-listed group
DOCS,
which joined the market in January 2021 at 370 pence per share, fell 24% to 218 pence.
The maker of the cherry red calf-length bovver boots popular since the 1970s said pre-tax profits fell almost 6% to £58 million ($70 million) in the six months to the end of September..
The dip was mostly the result of higher depreciation and amortization costs following investment in new stores and IT systems.
Revenue in North America rose 31%, contributing to a total of 6.3m shoes and boots sold over the period. However, increased costs will squeeze margins, while there are signs that consumers are being more cautious amid the cost of living crisis, the company warned.
“Dr Martens expects its annual earnings before interest, tax, depreciation and amortization margin to be 100 to 250 basis points lower than the previous year, due to investments as well as the appreciation of the dollar, which dilutes the margin,” noted Russ Mould, investment research director at AJ Bell.
“Hopes that a hefty increase in the dividend would keep the market sweet have proved forlorn, though one item which is hitting profitability, but which should earn Dr Martens a bit of credit, is the investment in the business,” Mould added.
