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British bootmaker Dr Martens said chief executive Kenny Wilson would step down by the end of its financial year as it warned of a further hit to profits, sending shares down by almost a third on Tuesday.
Dr Martens said Ije Nwokorie, its chief brand officer, would replace Wilson, who has spent six years in the top job.
The update came as the retailer warned that revenues were likely to fall by a single-digit percentage in its current financial year, as it battles weak demand and falling orders. In a “worst-case scenario”, pre-tax profits could drop to just a third of the level set the previous year, it said.
The UK company has been struggling to overcome problems in the US — its biggest market — including a series of distribution and marketing issues that have dragged on performance. Dr Martens said its wholesale order book for autumn/winter in the US was “significantly down” year on year, while its costs were rising.
Once a favourite of youth subcultures and heavy metal music fans, Dr Martens has become a mainstream bootmaker. The company issued four profit warnings last year as its issues took longer than expected to resolve.
Shares in the UK bootmaker plunged almost 30 per cent in early trading on Tuesday to about 67p, taking the stock down by almost 60 per cent in the past year.
Wilson said the company’s current outlook was “challenging” and the “whole organisation is focused on our action plan to reignite boots demand, particularly in the USA, our largest market”.
He added that “when customers gain confidence in the market we will see a significant improvement in our business performance”, though the company was “not assuming that this occurs” in its current financial year.
Dr Martens said it planned to invest in retaining and providing incentives to talent, as well as in marketing and new planning and data systems.
The group, which will report annual results for the year to the end of March next month, said it was expecting those earnings to be in line with market expectations. The company said there had been strong growth in Asia, led by Japan, in its fourth quarter.
Kate Calvert, an analyst at Investec, said: “Another downgrade is disappointing, but cash generation is robust with a material longer-term growth opportunity.”
