Dr Martens PLC (LSE:DOCS) shares fell 13% this morning after the bootmaker reported slower growth in what is normally its strongest quarter as direct-to-consumer sales were prioritised in response to supply chain issues.
Revenues rose 11% to £307mln in its third quarter, the three months ending 31 December, with wholesale revenues down 14% as direct-to-consumer sales rose 33% and accounting for 64% of the footwear brand's overall sales during the period.
Shop footfall increases in October and November led to an increase of 72% in retail sales, though the rise in December of the Omicron Covid variant curtailed the improving trend.
Chief executive Kenny Wilson said: "We continued to put our long-term custodian approach at the heart of decision making and proactively managed the business against a changing Covid backdrop, prioritising the higher margin direct-to-consumer channels in line with our strategy."
Risk for full year
While Wilson said he is confident that the company will meet market expectations for the full year, its first as a public company, analyst Russ Mould at AJ Bell said that as the company heads into a typically quieter fourth quarter, it faces a risk that it falls short of expectations.
He said the statement, on the face of it, looked fairly robust "however, look just a little bit closer and the stitching starts to fray".
But he said management’s response "has probably been quite sensible" and this “fits with the strategy pursued by other major brands and in the future might give the company greater control over its own destiny", with another positive being that the group has also "done a good job" of boosting its e-commerce footprint.
“The company has already had an unsteady start to life on the stock market and tripped over in early January as one of its private equity holders sold shares at a discount.
“The stock is now down by a quarter from the price at which it floated just under a year ago and nearly 40% from the price at which closed on an exuberant first day of trading,” Mould noted.