27th Jan 2022 18:06
(Alliance News) -Â Shares in Dr Martens PLC dropped on Thursday with investors worried the boots maker may fail to hit full-year expectations after a slowdown in growth in the third quarter.
The stock fell 9.0% to 294.00 pence in London on Thursday, taking the stock 21% below its IPO price of 370p in February last year.
The Wollaston, England-based footwear and clothing company on Thursday reported that revenue in the three months to December 31 had grown 11% year-on-year to GBP307.0 million, as expected. It said e-commerce had seen strong growth, and retail made a good recovery.
However, this 11% growth in the third quarter marked a slowdown from the 16% rise reported for the first six months of its financial year.
The third quarter period is typically the strongest for direct-to-consumer sales, which grew by 33% over the previous year, Dr Martens said.
However, as Covid hit manufacturing and global shipping, Dr Martens took the decision to prioritise inventory for direct-to-consumer sales. This caused wholesale performances to drop by 14% over the previous year. The decline of wholesales offset a strong direct-to-consumer performance in the Americas, with revenue in the region up only 4%.
In comparison, revenue in Europe, the Middle East & Africa was up 40%, as e-commerce grew, retail recovered, and wholesale performed well in the region. Its Asia-Pacific region put in the worst performance, with a revenue decline of 28%. Third-party sales were hit particularly hard by renewed Covid restrictions, especially in Australia and China.
AJ Bell's Russ Mould highlighted that the firm is now heading into a typically quieter fourth quarter with slowing sales growth, "raising the risk that it falls short of expectations in its first full year as a public company."
However, broker Peel Hunt remained upbeat on its outlook. If it wasn't for supply chain challenges, Peel Hunt said it would have been looking at upgrades this year.
"4Q numbers need the wholesale deliveries to land, but overall momentum in the business remains impressive, as does the two-to-three-year outlook," the broker said.
By Lucy Heming;Â [email protected]
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