(Reuters) -British boot brand Dr Martens warned on Thursday its full-year results would be hit by U.S. import tariffs, sending its shares down as much as 11% despite assurances that it would absorb the costs fully from the year after.
The company, known for its chunky lace-up boots, said it expected to manage around half of its tariff-related costs – expected to be in the high-single-digit millions of pounds – in the year ending March 2026.
It plans to hike prices in the U.S. from January, and has shifted production from Laos, which is subject to a higher U.S. import tariff, to Vietnam, saying it expects to offset all tariff-related costs from fiscal 2027 onwards.
“Where we see that a product has room to take a bit of price (increase) and still be competitive, we would do that,” CEO Ije Nwokorie said in an interview.
The impact of the production shift will only be felt in the spring and summer next year, the company said, as products now in stores were brought in before U.S. tariffs on Vietnam and Laos changed.
“Consumers everywhere are cautious at the moment so they’re doing two things: looking for a deal, many of them … but importantly they’re being much more considered, there is a flight to quality and a trading down from luxury,” Nwokorie added, saying Dr Martens’ $320 ‘Weekender’ leather bag was selling well.
As many consumers spend less on non-essential items, brands are trying to target wealthier shoppers. Levi’s, for example, is expanding its $300 jean range to more stores.
Dr Martens shares were down more than 10% to 73.4 pence at 1250 GMT as RBC analysts said first-half revenue of 322 million pounds missed consensus estimates, and Peel Hunt analysts cut their full-year profit forecast for the company.
Dr Martens has been pulling back on discounts and expanding into shoes, sandals, and bags as it aims to return to profit growth this financial year.
The company, which makes most of its sales in autumn and winter, reported an adjusted pretax loss of 9.2 million pounds for the six months to September 28, versus a 16.6 million pound loss a year earlier.
Dr Martens in 2019 shifted its supply chain away from China, which previously accounted for 50% of its production, and now sources shoes from Vietnam, Laos, Thailand, Pakistan, and the UK.
($1 = 0.7657 pounds)
(Reporting by Simone Lobo and Shashwat Awasthi in Bengaluru, Additional reporting and writing by Helen Reid. Editing by Sherry Jacob-Phillips and Mark Potter)
