Warm Weather and Warehouse Issues Stomp on Doc Martens’ Profits

Bootmaker Dr. Martens is blaming balmy weather and warehouse troubles for declining profits.

In a trading update Thursday (Jan. 19), CEO Kenny Wilson said that while demand for the brand’s famous eight-eyelet boots remained resilient, its third-quarter revenue fell short of the British company’s expectations, leading it to rethink its digital strategy.

Wilson said missed expectations were due to a combination of “significant operational issues creating a bottleneck” at its distribution center in Los Angeles and weaker-than-expected direct-to-consumer (D2C) sales, caused in part by “unseasonably warm weather.”

The company’s stock, down nearly 60% since Dr. Martens went public in 2021, dropped again following the news. The report showed Dr. Martens’ anticipating full-year profits of between $308 million and $320 million, a figure about $32 million lower than earlier projections.

Dr. Martens said the impact of its distribution issues in Los Angels “and a more uncertain economic environment are likely to impact FY24 revenue growth.”

The company said it has been reviewing the benefits of selling into “pure-play wholesale eCommerce accounts”, especially in Europe, Africa and the Middle East, and have decided to scale back the volume of those sales.

“Over time, the benefit will be to underpin [direct-to-consumer] mix expansion but in FY24, revenue growth will be impacted,” the company said. “These factors together lead us to believe FY24 revenue growth will be mid to high single digits on a constant currency basis.”

Earlier this week, PYMNTS examined the pitfalls D2C brands can face by remaining digital-only in an interview with Joey Zwillinger, co-founder and co-CEO of D2C footwear company Allbirds.

While Allbirds has a traditional retail presence, Zwillinger said physical channels could be vital to fostering trust in the brand, while third-party retailers attract new consumers.

“Brands need to give new customers who might be on the fence about buying their products an opportunity to feel and test out the product,” he said. “Being purely D2C can hinder long-term potential because reach is limited. Brands must meet consumers where they are. At Allbirds, we’ve held an omnichannel vision for the company ever since we started.”

Zwillinger noted that Allbirds launched 22 stores last year. The company’s partnerships with traditional retailers like REI, Dick’s Sporting Goods and Nordstrom — which has also worked with Dr. Martens — have exposed the brand to new customers.

Still, some innovations can improve eCommerce channels’ ability to connect with consumers. Zwillinger pointed to digital try-on and metaverse options as technologies that could “shrink the gap in immersive-ness” between digital and physical sales.

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