Investing
Bootmaker Dr Martens warns on profit as finance chief walks
Global Banking & Finance Review®
Company
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)
A profit warning is a notification issued by a company to inform investors that its earnings will fall below expectations, often due to unforeseen circumstances affecting financial performance.
A Chief Financial Officer (CFO) is a senior executive responsible for managing the financial actions of a company, including financial planning, risk management, record-keeping, and financial reporting.
Profit margins represent the percentage of revenue that exceeds the costs of goods sold. It indicates how efficiently a company is managing its expenses relative to its sales.
Market capitalisation is the total market value of a company's outstanding shares of stock, calculated by multiplying the current share price by the total number of shares.
Revenue growth refers to the increase in a company's sales over a specific period, indicating the company's ability to expand its business and increase its market share.
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