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Pace of Sales Growth Slows at Dr. Martens, Sinking Shares 13%

Dr Martens boots | Source: Courtesy
Dr. Martens said revenue growth slowed in its third quarter. (Patrick Gunning)

Dr. Martens said revenue growth slowed in its third quarter, hammering its share price, after a drop in its wholesale business as it prioritised scarce inventory for online and retail stores channels.

Inventory levels at the British group, known for its chunky leather boots with yellow stitching, have been hurt by pandemic-linked manufacturing and global shipping delays.

Revenue grew 11 percent to £307 million ($412 million) in the three months through Dec. 31, its fiscal third quarter, slowing from first-half growth of 16 percent.

Dr. Martens shares sank 13 percent to 281 pence in late morning trading, giving it a market capitalisation of £2.82 billion.

The stock has lost a quarter of its value since listing at 370 pence in January 2021.

Earlier this month, the group’s biggest shareholder, private equity firm Permira, cut its stake by 6.5 percent to 36.4 percent, prompting a selloff.

“The shares appear increasingly wary of the remaining 36 percent private equity stake to come, noting the current lock-up expires in two months’ time,” said analysts at Peel Hunt.

The third quarter outcome reflected a 33 percent jump in revenue in the higher margin direct-to-consumer (DTC) channels of e-commerce and retail stores, offset by a 14 percent fall in the wholesale business.

On a regional basis, revenues in Asia Pacific were the most impacted by Covid-19, declining 28 percent, with Australia and China particularly badly hit by renewed restrictions.

The group opened 11 new stores in the period, ending the quarter with 158.

“Docs” or “DMs”, popularised by crop-haired skinheads in the 1960s before later being adopted by other youth groups such as punks and goths, have become mainstream fashion.

“We remain confident in achieving market expectations for our first full year as a listed business, subject to no significant Covid impact in Q4,” Dr. Martens said.

Analysts, on average, forecast full-year core earnings of £257.3 million, according to Refinitiv data, up from £224.2 million in 2020-21.

By James Davey; Editors: Alexander Smith and Bernadette Baum

Learn more:

Dr. Martens Flags Shipping Delays in US Unit, Posts Higher Profit

Boot brand Dr. Martens posted a higher first-half profit, but warned that shipping delays in its US business due to wider supply chain troubles will continue into the next fiscal year.

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