Dr Martens has blamed operational issues at its US distribution centre and “unseasonably warm weather” for its latest profit warning as direct-to-consumer growth slowed.

Dr Martens boots display

Dr Martens said there was a ‘bottleneck’ at its LA distribution centre

For the three months to December 31, 2022, the boots specialist’s revenue rose 9% – equivalent to 3% on a constant currency basis – to £335.9m.

Despite “robust direct-to-consumer trading” across its markets internationally, the company blamed slower growth than anticipated in the US, combined with “significant operational issues” at its Los Angeles distribution centre, for hampering its performance.

The retailer also flagged “unseasonably warm weather” across the States in October and November for poor trading. 

Dr Martens described the issues at its LA warehouse as a “bottleneck”, having transferred too much stock and it “arriving more quickly than anticipated”.

The business said the “bottleneck is significantly impacting throughput” and has not only restricted its ability to meet wholesale demand but also set back the company’s fourth-quarter shipment forecasts.

Dr Martens also set out plans to fix the issues at its LA distribution centre, including the opening of three temporary warehouses, reconfiguring its East Coast distribution centre and relocating “the most experienced members” of staff from Europe to LA to help support its plans.

As a result, Dr Martens reduced its EBITDA forecast to between £250m and £260m, and said it anticipated a reduced revenue growth of 11% to 13% for the full financial year.

The retailer predicts its sales could continue to be impacted into the 2024 financial year.

Chief executive Kenny Wilson said: “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% to 13% on an actual currency basis and full year EBITDA to be between £250m and £260m.” 

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