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FTSE 250: Dr. Martens shares get the boot after warning

A warning that consumer pressure will hit future earnings has seen shares of footwear maker, Dr. Martens hit sideways.

(Video Transcript)

Dr. Martens shares down

Dr. Martens, the London-listed shoe and boot manufacturer, has seen its shares kick lower this morning as a result of what amounts to a warning about the outlook over the next quarter or so.

Weaker than expected demand ahead of the busy Christmas season,nicreased investments, a strong dollar, all conspiring to hit its performance profit before tax, falling to $57.9 million.

Revenue did rise by a margin of 13%, but it's all about what's happening with its margins on EBITDA and its margins on its operating performance. Dividends coming through still at the company at 1.56p per share.

Share price chart

But I think if you look at the share price chart, it says it all, and this week outlook has seen its shares drop heavily in the session in today's trade right out of the gate.

We are now 90 minutes into the trading session. The stock is down 18% and significantly for those that follow some of the big statistical analysis points on a chart, we are now lower than all the major moving averages. This is the 50-, the 100-, the 200-period moving average. And if it closes down at these levels, there is a potential for further weakness.

We're currently trading at 233, we've got support down here at 206 which is a low point you had back on the 13th of October. But I think it's important to look past this because the company says that weak demand over Christmas is going to hit its next month or two, possibly a couple of quarters.

But outside of that then, this is a brand which has a very strong following. It has a purpose. It does provide boots for the industrial wear sector as well. But it's mostly about fashion, but it does have a very strong foothold, forgive the pun, and also in a very unique place within the market.

So I think ultimately there could well be some sort of rebound to some of the highs we've seen over the last few years, trading back in June 2021 we were at £5.14. So we're round about 50% down from there.

So potentially in the longer term we could well see a recovery. But at the moment at least looking very, very fragile going into the back end of 2022 and early 2023.


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