Dr. Martens shares plunge to all-time lows as shoemaker cuts guidance on weak U.S. sales

By Louis Goss

Shares in Dr. Martens PLC plunged to all-time lows on Thursday after the British shoemaker cut its guidance and reported a 57% drop in its first-half profits following a sharp slowdown in its U.S. business driven by caution around the state of the American economy.

The FTSE 250 shoe seller, which is best known for its iconic AirWair boots, reported a 5% drop in firm-wide revenue to GBP395.8 million, following a 22% drop in sales to U.S. wholesalers due to "widespread macro-economic caution."

Shares in Dr. Martens (UK:DOCS) fell 23% on Thursday with stock in the company having lost 56% of its value over the past year and 88% of its value since its initial public offering in January 2021.

The Northamptonshire shoemaker said sales to its wholesale customers worldwide - which account for half of its total revenues - fell 17% year-on-year, to GBP199.4 million, primarily due to the 22% drop in its U.S. wholesale division.

The drop in wholesale revenues offset slightly higher sales across its retail and e-commerce divisions, which were bolstered by increased revenues from Dr. Martens' European/Middle Eastern and Asia-Pacific businesses, even as U.S. sales across both its retail and e-commerce arms fell.

The higher EMEA and APAC sales saw revenues from Dr. Martens' retail business increase 15%, to GBP104.7 million, and sales from the shoemaker's e-commerce segment increased 3%, to GBP91.7 million.

These increases, however, failed to offset the plunge in Dr. Martens' U.S. business, as sales from the company's Americas arm plunged 18%, to GBP147.7 million.

Looking ahead, Dr. Martens warned it now expects "that it will take longer to see a material improvement in USA performance than initially anticipated," despite encouraging signs of an uptick in consumer spending over the Black Friday weekend.

The British firm, in turn, withdrew its guidance for the financial year 2025, as it also warned that it now expects firm-wide revenues to "decline by high single-digit percentage year-on-year" in 2024, leading to earnings "moderately below the bottom end of the range of consensus expectations," where the sellside consensus was for EBITDA between GBP223.7 million and GBP240 million.

In July, Sky News reported activist investor Sparta Capital, which was started by former Elliott fund manager Franck Tuil, had started building a stake in Dr. Martens.

-Louis Goss

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11-30-23 0602ET

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