By Eva Mathews
(Reuters) -Britain's Dr Martens (LON:DOCS) said its visibility over wholesale orders "remains weak" as the bootmaker posted a drop in third-quarter revenue on Thursday following several profit warnings and a disappointing December trading period.
The company, known for its clunky boots with yellow stitching, also said current Red Sea shipping diversions were adding to journey times and costs for supplies.
Dr Martens posted a drop of 21% in revenue to 267.1 million pounds ($340 million) for the three months ended Dec. 31, compared with 273.8 million pounds in the same period last year.
In November, Dr Martens issued its fourth profit warning in 12 months as it struggles with customer destocking and reduced orders in the United States from wholesale customers wary of macroeconomic pressures. For the quarter, Americas revenue was down 31% on a reported basis.
More recent concerns for retailers centre around efforts by global shipping firms to avoid the Red Sea that leads to the Suez Canal due to attacks on vessels by Houthi militants in Yemen. Ships diverting around Africa's Cape of Good Hope are adding around two weeks to journey times and extra costs.
CEO Kenny Wilson said the company, which has a contract with Danish shipping group Maersk, was currently seeing an impact of 12 days on shipping, which would have cost implications. He did not specify how much additional cost was expected nor comment on whether those costs would be passed on to consumers.
"Wholesale customers continue to have relatively low levels of in-market inventory, however the timing and level of re-orders is unpredictable, meaning that our visibility over wholesale remains weak," the company said.
Shares in Dr Martens, which made its market debut in 2021 with a market capitalisation of $5 billion, were up 6.7% to 80.40 pence at 1020 GMT, having more than halved in 2023.
"Today’s trading update effectively confirmed the downgrades announced previously, with the shares seeing a small relief bounce in response to no further changes to trading expectations," said John Stevenson, Peel Hunt (LON:PEEL) analyst.
($1 = 0.7859 pounds)