Traders buy the boot into Dr Martens shares

After the maker of the iconic footwear beloved by punks warned that higher investment, softer demand and a strong dollar would hurt profits for the full year, traders put the boot into Dr Martens shares.

The stock in the London-listed group DOCS, which joined the market in January 2021 at 370 pence per share, fell 24% to 218 pence.

The maker of cherry red calf-length bovver boots, popular since the 1970s, said pre-tax profits fell almost 6% to 58 million $70 million in the six months to the end of September. The dip was mostly due to higher depreciation and amortization costs after investment in new stores and IT systems. Revenue in North America went up 31%, leading to a total of 6.3 million shoes and boots sold over the period. There are signs that consumers are being cautious amid the cost of living crisis, which will squeeze margins, according to the company. Dr Martens expects to have an annual earnings before interest, tax, depreciation and amortization margin to be 100 to 250 basis points lower than the previous year due to investments as well as the appreciation of the dollar, which dilutes the margin, said Russ Mould, investment research director at AJ Bell. Mould said that the investment in the business should earn Dr Martens a bit of credit because of the hopes that a hefty increase in the dividend would keep the market sweet.