Dr Martens 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 shoe maker said it now expected to make full-year core profits of no more than £260m, £26m less than previously expected, as it was forced to open temporary warehouses in the US after being overstocked, in part because supplies had arrived faster than expected.
Dr Martens said it forecast up to £11m of additional supply chain costs to fix the disruptions and could lose up to £25m of wholesale sales as a result of the delays in Los Angeles. The firm said warmer-than-usual weather in October and November also affected sales.
The company, based in Wollaston, Northamptonshire, expects problems in the US and a “more uncertain economic environment” to also affect sales next year.
Shares in Dr Martens fell as much as 25% to 156p in morning trading on Thursday.
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 up to £10m in sales due to strikes at Felixstowe port and shortages of staff at the distribution center in the Netherlands.
The company is also raising the price of its basic boots by 6% this year due to rising material and manufacturing costs.
Kenny Wilson, chief executive, said “demand for Dr Martens remains resilient in challenging conditions during our peak trading period” but admitted profits would be lower than expected due to “a combination of significant operational issues, creating a bottleneck at our new distribution center in Los Angeles and weaker than expected from the US [direct to consumer] trade, partly because of the unusually warm weather.’
The warning came despite strong trading in Europe, where sales rose 8% in the three months to December 31, as sales accelerated in the final weeks before Christmas after the cold snap.
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However, overall sales growth fell to just 3% in constant currency, down from 11% in the previous quarter, as US sales rose just 1% after the effect of currency exchange rates was stripped out, as a result of a warming autumn and the US warehouse issues. Sales in Asia were down 4%, with trade in China hit by Covid disruption.
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