Dr. Martens lowers profit guidance, announces CFO retirement
British footwear retailer Dr. Martens has lowered its full-year profit guidance due to higher costs at its LA distribution centre and lower wholesale revenues.
The company expects EBITDA to be around £245 million, compared to £250 million –£260 million previously. In addition, Dr. Martens is maintaining its FY24 revenue guidance of mid-to-high single digit growth on a constant currency basis.
Highlights from Q4 and FY23 results
For the fourth quarter, revenue was up 6% and flat in constant currency, driven by "strong" direct-to-consumer growth in EMEA and APAC.
Direct-to-consumer revenue grew 20%, with retail up 36% and e-commerce up 8%. However, wholesale revenue dropped 4%, due to LA distribution centre operational issues and planned shipment reduction to the company’s China distributor, offset in part by growth in EMEA.
For the full year, revenue increased 10% and 4% in constant currency. Direct-to-consumer revenue grew 16%, with retail up 30% and e-commerce up 6%. Wholesale revenue increased 4%.
The company also said that in FY23, total incremental costs associated with the LA distribution centre were £15 million, higher than the £8 million – £11 million expected initially, due mainly to higher than anticipated container costs.
Kenny Wilson, CEO of Dr. Martens, said: “We took decisive action to tackle the operational issues at our LA distribution centre with shipments now back to normal levels. However, costs associated with resolving these issues were higher than our initial estimates which, in conjunction with softer Q4 wholesale revenue, means we expect EBITDA for the year to be around £245 million.
"We continue to adopt a custodian mindset, taking decisions in the best long-term interests of all our stakeholders, and I believe firmly in the DOCS strategy, the continued strength of the Dr. Martens brand and the medium to long-term growth potential of the business.”
Dr. Marten’s CFO to retire
The trading update coincides with the retirement of Jon Mortimore as CFO, after seven years at Dr. Martens. During this time, he helped deliver the company's transition from a family-run company to a listed PLC, overseeing revenue growth from £230 million to £1 billion.
Dr. Martens is now commencing an external search for a successor. Mortimore will continue in his role until a replacement has been found, helping to ensure a "smooth transfer of responsibilities".
Paul Mason, Chair at Dr. Martens, said: “I would like to thank Jon for his central role in driving the strong growth and strategic development of Dr. Martens over the last seven years.
"His knowledge of the business and understanding of the company’s value drivers have played a key part in helping develop the business during this period."
Earlier this month, Dr. Martens announced its plans to begin using recycled leather at its Northampton factory for some of its boots by early 2024, following the company's investment in an alternative materials business.
