FTSE 250 movers: Dr Martens trips up, Marshalls paves the way

(Sharecast News) - FTSE 250: 19,649.38, -1.21% at 1440 GMT. Dr Martens shares slumped by almost a third as the iconic bootmaker issued a profits warning after being hit by operational issues at its Los Angeles distribution centre and weaker trading in the US direct-to-consumer segment.

Chief executive Kenny Wilson said demand for Dr. Martens "remained resilient through challenging conditions" during the company's peak third-quarter trading period.

However, he said guidance has been revised downwards "due to a combination of significant operational issues creating a bottleneck at our new LA distribution centre and weaker than anticipated US DTC trading, in part due to unseasonably warm weather".

The company estimated that the impact of lost wholesale revenue and incurred costs, as a result of issues at the LA distribution centre, will reduce FY23 EBITDA by £16m to £25m, depending on the pace at which it is able to resolve the issues.

It now expects full-year revenue growth of 11% to 13% on an actual currency basis and earnings before interest, tax, depreciation and amortisation of between £250m and £260m. Previously, it had guided towards revenue growth in the high teens.

Dr Martens also said on Thursday that total revenue rose 9% in the third quarter at constant currency, driven by robust DTC trading, which grew 11%.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "This is another big migraine for the company, which was also dealing with the headache of disappointing US sales in the fourth quarter, which is viewed as a key market for growth for the company.

"Dr Martens is attempting to position itself more 'up market' by reducing the number of boots being sent to retail channels. While this may avoid too much discounting, which can damage the brand, lower volumes will also hit revenues. If Dr Martens can tread into the style books of wealthier consumers, it would offer long term benefits. However, trends do still wax and wane and there is still a risk that the pulling power of Dr Martens could fade over time."

Network International Holdings posted a jump in fourth-quarter revenues on Thursday, but warned of increasing headwinds for 2023.

The group, which provides technology-enabled payment services in the Middle East and Africa, said total revenues in the fourth quarter grew 13%. Within that, merchant solutions revenues jumped 20%, but issuer solutions were flat, hit by the delayed signing of new business streams and non-recurring revenues in the prior year.

Looking to the full-year, Network International said group revenues were set to come at $438m, a 27% jump on the previous year, or 29% once the impact of forex translation was stripped out.

Nandan Mer, chief executive, said: "We ended 2022 in a position of strength, having set out a refreshed strategy and delivering on several key commitments, including revenue growth acceleration and financial results in line with guidance."

Looking ahead, however, the firm said that while the outlook for 2023 remained strong, it faced "more challenging economic and inflationary impacts", including slowing growth in some African markets.

It continued: "We expect further EBITDA margin expansion in 2023, although this will be lower than delivered in 2022, impacted by inflationary pressure, particularly employee costs."

Landscaping and building supplies provider Marshalls said it expected to deliver full-year profits in line with expectations despite weaker market conditions in the final quarter as inflation started to hit sales.

The company said group revenue for the year to end-December came in at £719m. Like-for-like sales rose 1% over the period, including the Marley roofing products business, acquired last year, they were up 22%.

Adjusted pre-tax profit is expected to come in at £89.8m-91.1m, according to company-compiled estimates.

Marshalls said its landscape division experienced tough market conditions, with revenues falling 7% due to its exposure to the more discretionary elements of private housing repairs maintenance and improvement market.

The rate of contraction in the fourth quarter moderated to 12% in the final quarter of the year from 16% in the prior three months, reflecting a more stable inventory profile in the distribution channel, Marshalls said.

Building products operations saw some slowing of activity in the final quarter of the year with poor weather disrupting construction sites in December. Annual revenue grew by 17% to £193m, with a particularly strong performance from the bricks and masonry business.

Marley, which makes roofing products, delivered revenue of £132 million in the eight months of ownership, up 6% year on year. Sales growth moderated during the second half due to a softer market backdrop and destocking in the distribution channel, with revenue in the final quarter being in-line with 2021.

FTSE 250 - Risers

Marshalls (MSLH) 326.20p 3.69% Workspace Group (WKP) 503.50p 1.96% Direct Line Insurance Group (DLG) 175.05p 1.63% Lancashire Holdings Limited (LRE) 648.00p 1.25% TBC Bank Group (TBCG) 2,190.00p 0.92% Greencoat UK Wind (UKW) 154.20p 0.85% Apax Global Alpha Limited (APAX) 178.60p 0.79% Pennon Group (PNN) 924.50p 0.76% Bluefield Solar Income Fund Limited (BSIF) 139.00p 0.72% Fidelity China Special Situations (FCSS) 284.50p 0.71%

FTSE 250 - Fallers

Dr. Martens (DOCS) 149.10p -28.73% Network International Holdings (NETW) 285.60p -9.73% ASOS (ASC) 705.50p -7.23% AJ Bell (AJB) 344.00p -7.08% Energean (ENOG) 1,263.00p -6.31% Bridgepoint Group (Reg S) (BPT) 221.40p -5.71% Molten Ventures (GROW) 381.60p -5.50% Tullow Oil (TLW) 37.26p -4.56% JTC (JTC) 723.00p -4.37% National Express Group (NEX) 134.10p -4.15%