Dr. Martens shares plunge 30% to all-time low, trading briefly halted on weak outlook
- Shares plunged 30% to a record low in early deals and trading was temporarily suspended on the London Stock Exchange.
- Dr. Martens also announced CEO Kenny Wilson will step down in March 2025 and be replaced by Chief Brand Officer Ije Nwokorie.
- The shoemaker said its 2024 full-year results would be in line with estimates.
Shares of Dr. Martens plunged 30% on Tuesday to hit a record low, after the shoemaker flagged a challenging 2025 outlook on the back of weaker revenues.
Trading in the company shares was temporarily suspended on the London Stock Exchange after the firm issued an unscheduled trading update. By the close, shares had pared losses slightly but were still down by 28%.
Dr. Martens said it expects its wholesale revenue in the U.S. in 2025 to be down by double-digits year-on-year, given that its order book for autumn and winter — which represents half of the company's wholesale proceeds in the region — is "significantly" down.
The business assumes revenues in 2025 will decline by a single-digit percentage year-on-year, citing an inability to offset next-year inflation amid no further intentions to increase prices.
"We have built an operating cost base in anticipation of a larger business, however with revenues weaker we are currently seeing significant deleverage through to earnings," said CEO Kenny Wilson, who will step down in March 2025.
Chief Brand Officer Ije Nwokorie is set to replace him in the top position.
In a Tuesday note, analysts at RBC flagged a negative sentiment on the stock and said that markets would focus on the 2025 guidance in the short term. With mid-market consumers under pressure from inflation, there may also be trading down within the category, the analysts said.
Analysts at Investec meanwhile said in a Tuesday note that they do not anticipate evidence of a recovery in Dr. Marten's performance in the U.S. until the end of the second half of the year, while separately acknowledging the British shoemaker's "robust" capital generation and its longer-term growth potential.
Google ads lawsuit
Dr. Martens filed a High Court claim last week accusing Temu of manipulating Google searches so that products which look similar to the bootmaker's brand goods appears above them, according to a report from the Sunday Times.
It's not the first time the shoemaker has taken such legal action. Dr. Martens and other brands previously sued fast-fashion brand Shein in 2021, accusing it of a "clear intent to sell counterfeits", according to a report from the Financial Times.
Dr. Martens, Shein and Temu have yet to respond to CNBC requests for comment.
— CNBC's Ganesh Rao contributed to this report.