1st Jun 2023 09:11
(Alliance News) - Dr Martens on Thursday reported an annual rise in revenue but a fall in its profit, blaming a challenging consumer environment and operational mistakes at its Los Angeles distribution centre.
The Wollaston, Northamptonshire-based footwear and clothing brand posted a pretax profit fall for the year that ended March 31 of 26% to GBP159.4 million from GBP214.3 million the previous year.
The company said this was due to increased depreciation from system investments, a GBP3.9 million impairment charge and a GBP10.7 million charge from the foreign exchange market translation impact on its Euro bank debt.
This was worsened by the supply bottleneck at the Los Angeles distribution centre, with people and process failures leading to missed wholesale shipments, and costs of GP15.0 million in the year, with another GBP15.0 million expected in financial 2024.
"We made operational mistakes, such as the move to our LA distribution centre," said Chief Executive Officer Kenney Wilson.
"We have undertaken detailed reviews to understand why these issues occurred and have begun to embed the lessons learned into the business."
Revenue was up 10% to GBP1.00 billion from GBP908.3 million.
The company attributed this growth to increased retail revenue, which was up 30% to GBP241.7 million from GBP185.6 million the previous year.
Dr Martens proposed a final dividend of 4.28 pence per share, level with last year, and declared a total dividend of 5.84p, up 6.0% from 5.50p the previous year.
The company announced its intention to commence an initial share buyback programme of up to GBP50.0 million.
The company said it was maintaining its revenue guidance of "mid to high single digit growth" for financial 2024.
In the medium term, Dr Martens said it expects double-digit revenue growth and further margin expansion.
The company said that operational issues in the past financial year have "demonstrated that continuing to invest in our infrastructure" was essential, and therefore anticipated that the earnings before interest, tax, depreciation and amortization margin will be 1.0 to 2.0% lower in financial 2024.
"We are fixing issues in America, including a significant strengthening of the team there, and returning America to good growth is our number one operational priority," said CEO Wilson.
"The board retains its conviction in the strategy, long-term growth and cash generation of the business."
Dr Martens was trading down 12% at 137.07 pence in London on Thursday.
By Will Neill, Alliance News reporter
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