Dr Martens warns on hit from US ports squeeze regardless of income soar

Dr Martens has posted a soar in income however the iconic British shoemaker mentioned delays at US ports and manufacturing unit closures in Vietnam had held again gross sales and warned that disruption would proceed into subsequent yr.

The corporate on Thursday mentioned pre-tax income rose 46 per cent yr on yr to £61.3m for the six months to the top of September. That was on the again of gross sales that had been 16 per cent larger at £369.9m as Dr Martens benefited from shops reopening and rising ecommerce revenues.

Dr Martens mentioned, nonetheless, that challenges in getting inventory into the US, its largest market, meant it had missed out on £15m of wholesale revenues from the Americas in the newest quarter.

Kenny Wilson, chief govt, mentioned some retailers had suffered shortages within the run-up to Christmas as transport congestion at US ports hampered distribution and anticipated the issues to proceed into subsequent yr.

Shares fell nearly 8.5 per cent to 366.8p in morning commerce, under the 370p at which it floated on the London Inventory Change in January.

The corporate mentioned its “greatest operational problem” within the first half of the yr was the closure of three third-party factories attributable to a lockdown in Vietnam, which represented a few third of manufacturing capability, and difficulties in reserving containers and ships.

“Transit lead occasions from south-east Asia to all US ports, however particularly west coast ports like LA, have been more difficult,” Wilson mentioned. The corporate mentioned it benefited from a choice to enter the yr with excessive inventory ranges, nonetheless.

Revenues within the Asia-Pacific area had been down 2 per cent in contrast with the earlier yr, as state-of-emergency measures in its largest retail market, Japan, weighed on gross sales.

Gridlock at Los Angeles’ ports, the place about 40 per cent of transport containers imported to the US are dealt with and a few ships have been ready to dock for weeks, continues to hamper provide chains.

However Wilson mentioned he had seen an “enhancing image” in latest weeks after President Joe Biden introduced in October that Los Angeles’ ports would function 24 hours a day to clear the backlog.

The corporate mentioned it was assured of assembly market expectations, with first-half on-line gross sales up 10 per cent up from the identical interval final yr. Retail gross sales, together with within the firm’s 147 personal shops, rebounded to 2 per cent above pre-Covid 19 ranges.

The corporate pays its first interim dividend at 1.22p per share in February 2022, a payout ratio of 25 per cent.

With prices rising, nonetheless, Wilson mentioned that Dr Martens would enhance costs within the US and Europe for the primary time in two years to offset inflation.

“Every little thing is rising around the globe: uncooked materials prices are rising, transportation prices are rising,” he mentioned. “Essentially, worth will increase are wanted to cowl that inflation.”

From July, the UK worth of a pair of the corporate’s 1460 boots, first designed as sturdy boots for employees in 1960 however now ubiquitous style objects, would rise from £149 to £159, he added.

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Written by colin


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