Dr Martens CEO to step down amid bleak profit outlook

16th Apr 2024 07:03

(Sharecast News) - UK bootmaker Dr Martens said chief executive Kenny Wilson has decided to step down as the company issued another profit warning for the current financial year amid continuing woes in the US, its biggest market.

Wilson will be replaced by brand officer Ije Nwokorie before the end of the current financial year, Dr Martens said in a statement.

"There is a wide range of potential outcomes for full-year 2025 given that we have only recently started the year. However, we have assumed that revenue declines by single-digit percentage year-on-year and ... we could see a worst-case scenario of profit-before-tax of around one-third of the 2024 level," it added.

The company issued four profits warnings last year as a tough consumer environment in the US continues to affect sales of its famous boots.

On Tuesday it said USA wholesale revenue was expected to be down by double digits year-on-year, with its autumn/winter order book - which makes up the majority of the second half of US wholesales - forecast to be "significantly" down and hitting profits by £20m.

There would also be a further one-off £35m hit from single-digit cost base inflation and retaining staff.

"As previously communicated, we do not anticipate increasing prices further this year, and therefore in full-year 2025 we are unable to offset cost inflation as we have in prior years," the company said.

"Given the ongoing challenging performance of our US wholesale business, we expect to continue to require the additional inventory storage facilities in this market through 2025, and therefore the majority of the £15m of additional costs incurred in 2024 are expected to repeat."

Reporting by Frank Prenesti for Sharecast.com