Dr. Martens sees disappointing Q3 results due to distribution centre glitches
British footwear retailer Dr. Martens saw small global revenue growth in Q3 due to 'operational issues' at its new distribution centre in LA.
Q3, which ended 31 December 2022, saw total revenue rise by 9%, largely driven by an 11% growth in DTC trading. Dr. Martens confirmed that sales in Europe, Middle East and Africa, as well as Asia-Pacific, matched expectations.
Revenue was "below expectations" due to slower than anticipated direct-to-consumer growth in America and the impact of significant operational issues, including a bottleneck in LA caused by excess inventory arriving and being stored at the distribution centre.
Dr. Martens estimates that lost wholesale revenue and incurred costs as a result of operational issues will reduce FY23 EBITDA by £16-25 million, depending upon the pace at which the issues are resolved.
Year-to-date, total revenue at Dr. Martens has grown 12%, largely driven by retail operations, which saw a 29% growth.
Kenny Wilson, Chief Executive Officer, commented: “Demand for Dr. Martens remained resilient through challenging conditions during our peak trading period of Q3.
“However, due to a combination of significant operational issues creating a bottleneck at our new LA distribution centre and weaker than anticipated US DTC trading, in part due to unseasonably warm weather, we now expect full-year revenue growth of 11-13% on an actual currency basis and full year EBITDA to be between £250m and £260m.”