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Dr Martens share price hit a record low: Is it a value trap?

Dr Martens

UK stocks have had a strong start of the year, with the FTSE 100 index sitting at its all-time high. Not all stocks are thriving. On Thursday, the Dr Martens (LON: DOCS) share price gapped lower by more than 25% and reached an all-time low. It has plunged by more than 64% from its highest point in 2022 and by over 70% from its all-time high.

Dr Martens profit warning

Dr Martens is a well-known company that sells some of the best-known boots in the UK and other countries. The firm sells its products directly to consumers through its website and apps and in its retail stores. Further, the firm sells its products in wholesale channels. 

Dr Martens published its trading statement on Thursday. In the statement, the firm said that its revenue for the fiscal third quarter rose by 9% to £335.9 million. Its e-commerce revenue rose by 5% while its retail business jumped by 21%.

The company attributed the weakness of its business its operations in the United States which is having an impact on its business. The company is handling these bottlenecks by opening three temporary warehouses, starting a third shift at th LA facility, and reconfiguring the existing DC east coast business. 

The company also issued a profit warning because of the challenges it is facing in the United States. It also decided to change how it operates in the EMEA region. 

So, is Dr Martens a good stock to buy? DOCS has been a terrible investment for most investors since its stock has plunged by over 74% from its all-time high. Its margins have thinned and the company is seeing thinner margins across its key divisions.

Therefore, I believe that the company needs a full turnaround to see it navigate the current challenges. As I wrote in this article, it is difficult to recommend it as a good investment until it solves its key challenges.

Dr Martens share price analysis

Dr ,artens share price
DOCS shares chart by TradingView

Dr Martens stock price gapped lower on Thursday after it delivered a profit warning. As the stock tumbled, they moved below the important support level at $175.2. This was an important point since it was the lowest level on December 20 and May 12 of 2022. It has also plunged below the moving averages. 

Therefore, the outlook for the shares is still bearish since the stock could plunge to about 100p. The stop-loss of this trade is at 200p.

The post Dr Martens share price hit a record low: Is it a value trap? appeared first on Invezz.