British bootmaker Dr. Martens has warned of a severe cut to profit margins, sending its shares down by 20%.

Due to weaker than anticipated demand ahead of the crucial Christmas season, additional investments, and the strong dollar, British bootmaker Dr. Martens has warned of a severe cut to profit margins, sending its shares down by 20%.

The next few weeks running up to Christmas, according to Chief Executive Kenny Wilson, will be key, but he is certain that the company will be able to meet demand for its boots because its inventory is better supplied than it was last year.

Wilson continued, "As we move into the winter season, we notice consumers purchasing more of our famous boots, which include the 1460s and our Jadon’s.”

Despite not providing a total net figure, the group stated that it anticipates its core earnings margin to be between 100 and 250 basis points lower than last year for the entire year.

The manufacturer of the clunky 1460 boots with the yellow stitching reported record sales of 6.3 million pairs of shoes in the six months ending September 30, an increase of 400,000 from the previous year.

Demand for Dr. Martens, whose costly work boots have been in style since the 1960s thanks to fans like Who musician Pete Townshend, is still rising. Indicating that consumers are still stocking up on clothing to keep up with the reintroduction of social events following the pandemic.

The company has provided one-time payments of 500 pounds ($605) to employees making less than 45,000 pounds a year to assist them deal with growing costs and larger bills, according to Wilson.

Dr Martens added that first-half core earnings remained unchanged since a good year last year, but sales increased 13% to 418.6 million pounds as a result of pricing increases.

The interim dividend was increased by 28% to £1.56.

The stock is currently down 23%, having risen in the previous session to its highest since February.

(Sources: investing.com, reuters.com)