Dr Martens share price came under intense selling pressure on Thursday as concerns about its future resumed. DOCS shares plunged to a low of 203p, which was the lowest level since May 22. It has plunged by more than 50% from its highest level in January this year. As a result, the firm’s market cap has plunged to about 2.1 billion pounds.
Profit and margin warning
Dr Martens is one of the leading iconic brands in the footwear industry. The company manufactures boots for both grownups and children. Its original brand represents about 51% of its total revenue. It is then followed by fusion, casual, kids, and accessories. Dr Martens operates in EMEA, the Americas, and APAC.
DOCS share price plunged after the company published its earnings on Wednesday. The firm said that it sold 6.3 million pairs of shoes in the first half of the financial year. That performance was n line with what it sold in the same period in 2021. In total, its revenue jumped from £356 million to £418 million/. Its EBITDA remained the same at £88.8 while profit before taxes slipped to £57.9 million.
Most of its revenue came from its wholesale segment while its e-commerce and retail sales rose by 8% and 38%, respectively. These results were not encouraging as growth stalled and profitability waned. Therefore, the firm said that it will shift to increase prices of its products. That will see the price of its classic boot rise by £10 to £159.
Dr Martens is facing challenges that most British companies are going through. Wage inflation is expected to grow in all its locations, which saw it pay a £500 cost of living bonus to most of its workers. Some employees even went on strike to protest low wages.
Dr Martens share price plunged after warning of variable trading recently, which is expected to hit its profit margin. Therefore, for investors, it is relatively difficult to recommend buying the dip in the stock because of its lackluster performance and the possibility for weak sales after price increases.
Dr Martens share price forecast
The daily chart shows that the DOCS share price was in an upward trend ahead of the company’s earnings. It then plunged hard, making it the worst performer in the FTSE 250. As it dropped, it retested the important support level at 203.4p, which was the lowest level on November 4 It also moved below the important support level at 229p and all moving averages.
The Dr Martens share price will likely continue falling as sellers target the next key support level at 190p. A move above the resistance level at 240p will invalidate the bullish view.