Dr Martens PLC (LSE:DOCS) tumbled 6.2% as broker RBC Capital Markets put the boot in ahead of the iconic shoemaker's full year results on Thursday.
Shares fell to 151.30p as the broker downgraded the stock to sector perform from outperform and reduced its price target to 180p from 230p.
“Whilst we view the longer term growth potential for Dr Martens as attractive, we are mindful of nearer term challenges particularly for the US market (37% revenues), which do not appear to be adequately reflected in company FY24E revenue guidance or consensus,” RBC commented.
It admitted its call on Dr Martens “has not been the best” up to now, and for a variety of reasons (de-rating, UK exposure, US DC execution) it sees the potential for further deceleration/earnings downside.
“The US is the least attractive region currently from a consumer discretionary growth perspective for well flagged reasons, whilst wholesale distribution which is higher in the US vs group average is contending with elevated inventories, more cautious buying and promotional activity,” RBC said.
It highlighted the recent read-across from US (footwear) peer group reporting has been unfavourable, with Hibbett Sports, VF Corporation and Foot Locker all lowering guidance on slowing US retail trends in the past week.
The broker has lowered estimates by 8%/9% for financial year 2023 revenue and EPS and sits 8%/4% below consensus.