30th Nov 2023 15:12
(Alliance News) - Dr Martens PLC shares slumped on Thursday as the boot maker set out a tough outlook in the US and believes it will take longer than expected to get back on the front foot in that region.
The glum outlook came in its half-year results which similarly disappointed. Shares plunged 24% to 86.85 pence in London on Thursday afternoon.
In the half-year ended September 30, pretax profit fell by 55% to GBP25.8 million from GBP57.9 million the year before. Revenue declined 5.4% to GBP395.8 million from GBP418.8 million the year before. Its top line was hurt by "an increasingly difficult consumer environment" in the US.
It said it expects full year revenue to decline by a high single-digit percentage, on a constant currency basis.
It also said it expects financial 2024 Ebitda to be "moderately below the bottom end of the range of consensus expectations" of GBP223.7 million to GBP240.0 million.
Dr Martens cautioned that a bounce in its US division will take longer to materialise than initially anticipated.
Chief Executive Officer Kenny Wilson said: "We saw a mixed trading performance in the first half of the year. We made good progress with our strategic priorities, continuing to invest in the business and our people to drive sustainable long-term growth. During the period we focused on controlling the controllables: we delivered significant supply chain savings, successfully transformed our North America distribution network, opened 25 new stores, and launched a Dr. Martens UK repair service."
Wilson added that its direct-to-consumer performance in Europe, Middle East & Africa and the Asia Pacific regions was "strong". But Dr Martens grappled with "an increasingly difficult consumer environment" in the US, however.
"We have strengthened the Americas leadership team and they are taking action, including refocusing marketing and improving our ecommerce trading capabilities. It is likely, however, that given the challenging backdrop it will take longer to see an improvement in USA results than initially anticipated. Notwithstanding the clear challenges we face in the USA market we remain very confident in our iconic brand and the significant growth opportunity ahead of us," the CEO added.
Dr Martens maintained its half-year payout at 1.56 pence per share.
Analysts at Peel Hunt commented: "Dr Martens' interims reveal a larger profit warning than expected, led by weaker US performance, and a bigger hangover through Wholesale in particular
"There is a combination of tough macro conditions and the high stock overhang from last year. We see other faster recovery stories across the sector, leaving Dr Martens on the shelf for longer."
The stock is "one to revisit in 6-12 months", Peel said. It rates it at 'hold' with a 150.0p price target.
By Eric Cunha, Alliance News news editor
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