Dr. Martens issues profit warning after US distribution problems

British footwear manufacturer Dr. Martens plc has lowered its profit guidance for the third time in five months as operational issues at its new Los Angeles distribution centre continued to impact earnings.

It now expects EBITDA for its latest financial year to be around £245m.

The company opened three temporary warehouses to help resolve bottleneck issues at the LA facility.

Revenue for the full year was up 10% with Q4 up 6%. In constant currency, full-year revenue grew by 4% and Q4 was level with last year.

Wholesale revenue declined by 4% in the fourth quarter, and by 11% in constant currency.

“We took decisive action to tackle the operational issues at our LA DC with shipments now back to normal levels,” said CEO Kenny Wilson.

“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 £245m.”

Looking ahead, Dr. Martens is sticking with its guidance for revenue growth of “mid to high single digits” on a constant currency basis in FY24.

As in FY23, incremental costs associated with the LA DC are expected to be approximately £15m as the company now plans to maintain temporary warehouses for the full year, offset partly by lower year-on-year container and handling costs.