(News Bulletin 247) – Famous for its unbeatable 1460 model, the British shoe manufacturer falls on the London Stock Exchange after announcing duller prospects for its 2024-2025 financial year due to persistent difficulties in the United States.

The British shoe brand Dr. Martens, which continues to be weighed down by its difficulties in the United States, fell by almost 30% on the London Stock Exchange, after also announcing the upcoming departure of its boss Kenny Wilson.

The outlook for the annual financial year which started at the beginning of April “is difficult and the entire company is focused on our action plan to revive demand for shoes, particularly in the United States, our largest market”, summarized Kenny. Wilson, the general manager, in a press release.

A “pessimistic” scenario

The brand of famous orthopedic shoes with thick rubberized soles has been suffering for months from higher costs than expected, particularly in its Los Angeles distribution center, and from lower consumer spending in the United States.

In particular, it envisages a “pessimistic” scenario where its pre-tax profit would be “around a third of the level” of the previous one for the shifted financial year 2024-2025.

Dr. Martens, a brand founded in 1960 and inseparable from the punk movement, will publish its results on May 30 for the year ended at the end of March. These will be “in line with forecasts” with in particular “good growth” in the Europe, Middle East and Africa region, “a stable result” in the United States and “a very solid result” in the Asia Pacific region, ” led by Japan,” argues the company.

But we will still have to wait to see the situation improve, while “wholesale sales in the United States are expected to experience a double-digit decline” this year, according to Dr. Martens, who specifies that this decline will have “a significant impact on profitability.

Additionally, “Kenny Wilson has decided that this will be his last year as CEO of the company,” Dr. Martens announced in a separate statement. He will be replaced before the end of the current financial year by Ije Nwokorie, currently brand director.

A difficult consumer context

These announcements caused the group’s stock to plunge by 29.81% to 66.65 pence on the London Stock Exchange. Since its first steps on the stock market in January 2021, the stock has lost 85% of its value.

“The company issued four profit warnings in 2023, in a difficult consumer context which did not help. But it was also the author of its own misfortunes with a series of operational problems, including poor management of stocks,” says Danni Hewson, analyst at AJ Bell.

“Dr Martens remains an iconic brand and if the new boss cannot resolve the company’s problems, an opportunistic buyer may come and take advantage,” believes the analyst.

(With AFP)