Bootmaker Dr Martens has warned that weaker demand for its products will hit profit margins this year, made worse by the strong dollar.
The historic Northamptonshire brand said sales from its own websites and stores had been worse than expected over the last few months as shoppers tightened their belts during the cost of living crisis.
Nevertheless, chief executive Kenny Wilson told the PA news agency he was positive about the peak Christmas trading period.
He said: “The business is well set for Christmas.
“Last year, we did not have enough inventory and trading in Europe was heavily impacted by pandemic closures so we are well-positioned to perform well against that period.
“Although there are economic challenges ahead, we are well positioned for future growth.
“We will continue to drive growth investment to deliver the Docs strategy, mainly in new stores, marketing, people, technology and inventory.”
The company said revenues were up 13 per cent to £418.6 million in the six months to September, compared with a year before.
However it said pre-tax profits had gone down by 5 per cent to £57.9 million.
The group increased its interim dividend payment by 28% to 1.56p per share but shares in the business were down 20 per cent today.
Russ Mould, investment director at online stockbroker AJ Bell said the iconic footwear maker had tripped up in a big way.
He said: “The main reason the company has lost a bit of shine and polish is news that margins are under significant pressure.
“While external factors such as a stronger dollar are playing a part, the company is also suffering from weakening demand and there are at least hints that its pricing power isn’t what many might have hoped given the apparent strength of the brand.
“Growth in the lucrative direct-to-consumer sales channel is slipping and that matters because building out this part of the business is a key thread of the strategy.
“Hopes that a hefty increase in the dividend would keep the market sweet have proved forlorn, though one item which is hitting profitability, but which should earn Dr Martens a bit of credit, is the investment in the business.
“Taking a short-term hit to profit now to support growth in the future is what any business should be doing, and Dr Martens will hope this will help it put its best foot forward from here.”
