Dr Martens said it has struggled to sell its chunky lace-up boots in the US and admitted attempts to correct “mistakes” in its American supply chain had triggered a slide in its annual profits.
The British bootmaker said it had faced falling demand in the US, blaming what it called a “challenging consumer environment”, as shoppers reined in their spending in the face of high inflation.
First created in 1945 by a young German army doctor, Klaus Märtens, who designed an air-cushioned sole to help his recovery from a broken foot, the boots were first introduced to Britain in 1960 by a Northamptonshire footwear maker.
Their sturdy design meant they were initially adopted by postal delivery workers and factory staff, but the classic eight-holed 1460 boots also quickly found favour with punks.
In the past 12 months, the footwear group has been battling growing costs of £15m at its Los Angeles distribution centre, which opened last year.
This caused its annual profit before tax to tumble by 26% to £159m, as a result of slower sales growth, investment in new stores, marketing and staff, as well as rectifying the US warehouse problems.
Dr Martens blamed “operational mistakes” including the move to its LA warehouse for some of its problems across the Atlantic, including supply chain bottlenecks that forced it to open temporary US warehouses in late 2022 to deal with stock.
Kenny Wilson, the Dr Martens chief executive, said the company had “undertaken detailed reviews to understand” why it had experienced problems in the US, the brand’s largest country by revenues.
“We are fixing the issues in America, including a significant strengthening of the team there, and returning America to good growth is our number one operational priority,” he said.
The news sent Dr Martens shares tumbling by as much as 14% during morning trading on Thursday, before recovering some of their losses.
The company first floated two-and-a-half years ago, in January 2021, debuting at 370p a share, giving it a valuation of £3.7bn. They are now trading at about 140p, more than 60% lower than their opening price, and have almost halved over the past year, amid profit warnings.
The bootmaker’s underlying annual profits slid 7% to £245m, below the £260m forecast it made last November after two profit warnings in the space of a few months.
Sales of its boots were healthier in Europe, the Middle East and Africa, as well as its key market of Japan, the company’s third largest.
Annual sales reached £1bn for the first time during the 12 months to the end of March, a 10% increase on a year earlier.
The company has brought in price rises for the past two years, announcing a 6% increase last November to cover higher costs of energy, labour and the leather and bouncy soles used to make its footwear.
The latest price rise, which will come into force this autumn, will add about £10 to the cost of its classic boot, from £159 now.
Despite the high price for its footwear, Dr Martens is well placed at a time of squeezed consumer finances, said Julie Palmer, a partner at the insolvency firm Begbies Traynor.
“Its big-selling, big-soled boots and shoes may be expensive, but are built to last and what shoppers increasingly wanting durability as well as fashion are seeking out,” she said.
“Supply chain costs are also on the rise but management say they will be able to cover these with price increases, something consumers are likely to absorb because of the products’ premium price tag.”
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