Dr. Martens in crisis:Counterfeit Scandal causes drop in value
8:13 PM EDT, April 19, 2024
The renowned shoe brand Dr. Martens has announced financial struggles, with its shares hitting an all-time low. The significant drop in value is attributed to counterfeit products sold through Chinese online platforms.
Dr. Martens has forecasted a sharp decrease in its wholesale revenue in the USA by 2025, expecting a double-digit decline from the previous year due to a reduced number of orders for the fall and winter seasons, as reported by CNBC.
On Tuesday, April 16, the company revealed a 30 percent drop in its share value, marking a historic low.
Shoe giant in trouble
Looking ahead to 2025, Dr. Martens anticipates a single-digit percentage drop in revenue year over year. This forecast comes amid challenges to counteract inflation without plans to increase prices further.
“We have built an operating cost base in anticipation of a larger business, however with revenues weaker we are currently seeing significant deleverage through to earnings," stated CEO Kenny Wilson, who is set to resign in March 2025, according to the portal.
Brand director Ije Nwokorie will succeed him. Analysts expressed a pessimistic view on the company's stock, emphasizing the focus on 2025 outlooks. They noted that the mid-size consumer segment, already squeezed by inflation, might experience a further sales downturn, as CNBC highlighted.
Counterfeits harm the brand
In early April, CNBC reported that Dr. Martens took legal action against the Chinese online marketplace Temu, accusing it of manipulating Google search results to favor counterfeit listings over genuine products.
In 2021, Dr. Martens and other brands filed a lawsuit against Shein, alleging the company's deliberate intention to sell counterfeit products.
