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Bootmaker Dr Martens warns on profit as finance chief walks

by Staff GBAF Publications Ltd
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Bootmaker Dr Martens warns on profit as finance chief walks

By Prerna Bedi

(Reuters) -Dr Martens issued its third profit warning in five months on Friday, as it struggled with higher-than-expected costs at a new Los Angeles (LA) distribution centre.

The British company, whose pricey work boots have been fashionable since the 1960s, also said its Chief Financial Officer Jon Mortimore would leave once it finds a replacement.

Mortimore’s resignation comes as Dr Martens issued its third profit warning since November, when it flagged a sharp hit to profit margins on weaker-than-expected demand before Christmas.

In January, the maker of the clunky 1460 boots with yellow stitching commonly known as “DMs” had flagged lower core profit after struggling with bottleneck issues at its LA distribution centre, affecting its capacity to meet wholesale demand.

Shipments from its LA operation were back to normal levels, it said on Friday.

Shares in Dr Martens, which made its market debut in 2021 with a market capitalisation of $5 billion, were up about 2% to 144.1 pence at 0750 GMT. They have fallen by nearly two-thirds from their initial public offering price.

The bootmaker has also been grappling with softer demand in the United States, its second largest market by revenue, with the fourth quarter seeing revenue grow 6%, mainly driven by Europe, Middle East and Africa as well as Asia Pacific.

Dr Martens had said the problems at its LA distribution centre, which opened about nine months ago, were due to a “combination of people and process issues” and sent members of its EMEA and global supply chain teams to fix the issues.

Incremental costs in LA were about 15 million pounds ($18.80 million), above the 8-11 million pounds expected initially, as container costs were higher than anticipated, it said.

The London-based firm now expects core profit for the year ending March to be around 245 million pounds, down from its earlier forecast of 250 million pounds to 260 million pounds.

($1 = 0.7980 pounds)

(Reporting by Prerna Bedi in Bengaluru; editing by Uttaresh Venkateshwaran and Alexander Smith)