Unlock the Publisher’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
British boot maker Dr Martens said chief executive Kenny Wilson will step down by the end of its financial year as it warned of a further impact on profits, sending shares tumbling by almost a third on Tuesday.
Dr Martens said Ije Nwokorie, its chief brand officer, will replace Wilson, who spent six years in the top job.
The update came as the retailer warned that revenue is likely to fall by a single-digit percentage in the current financial year as it battles weak demand and falling orders. In the “worst case scenario”, pre-tax profits could fall to only a third of the level set the previous year, he said.
The British company has struggled to overcome problems in the United States – its largest market – including a series of distribution and marketing problems that have slowed performance. Martens said its U.S. fall/winter wholesale order book has been “significantly down” year-over-year, while its costs have been rising.
Once a favorite of youth subcultures and heavy metal music fans, Dr Martens has become a mainstream boot manufacturer. The company issued four profit warnings last year because its problems took longer than expected to resolve.
Shares in the British shoe maker slumped nearly 30% in early trading on Tuesday to around 67 cents, sending the stock down nearly 60% over the past year.
Wilson said the company’s current outlook is “exciting” and that “the entire organization is focused on our action plan to reignite demand for boots, particularly in the United States, our largest market.”
He added that “as customers gain confidence in the market we will see a significant improvement in our business performance”, although the company was “not taking this for granted” in its current financial year.
Dr Martens said it plans to invest in retaining and providing talent incentives, as well as marketing and new planning and data systems.
The group, which will publish annual results for the year to the end of March next month, said it expected such profits to be in line with market expectations. The company said there was strong growth in Asia in the fourth quarter, led by Japan.
Kate Calvert, an analyst at Investec, said: “Another downgrade is disappointing, but cash generation is solid with a substantial long-term growth opportunity.”