Shares of Dr. Martens took a dive on Tuesday after the boot maker put out a cautious outlook for 2025 that suggested persisting weakness in the U.S. wholesale market.

Ahead of its official full-year earnings report on May 30, British footwear company shared what it described as a “prudent” outlook for 2025. The company expects U.S. wholesale revenue to be down double-digits in 2025 compared to the prior year, a drop which it said will impact profitability to the tune of about 20 million euros before tax. While there is a chance that wholesale sales improve from in-season re-orders, Dr. Martens said that is not a guarantee. Given this challenge, the brand is also investing in additional storage facilities to hold its products in the U.S., its largest market.

In tandem with the business update, Dr. Martens announced that its chief executive officer Kenny Wilson would step down and be replaced by chief brand officer Ije Nwokorie.

Results for fiscal year 2024 were in line with expectations, Dr. Martens said. DTC sales grew in the high single digits in Q4, driven by growth in EMEA and APAC. Overall wholesale sales were in line with expectations as well.

Shares of Dr. Martens were down more than 30 percent by early afternoon on Tuesday.

In a statement, Wilson said the company is “focused on our action plan to reignite boots demand,” especially in the U.S., which has been a consistent challenge for the brand throughout fiscal year 2024. Wilson added that the company’s U.S wholesale business will likely improve when consumers gain confidence in the market, which is something he does not expect to occur in the next fiscal year.

Overall, Dr. Martens expects fiscal year 2025 revenues to decline in the single-digits versus the prior year. The company also said it will not be able to offset cost inflation in 2025 as it invests more in talent while not increasing prices, though the company is still looking to cut costs where possible.

“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,” Wilson said. “Against this backdrop, we will be laser-focused on driving cost efficiencies where possible. We also have a number of ongoing investment projects which will deliver results in outer years. We continue to believe in our DTC-first strategy and the considerable headroom for growth. Our brand remains strong, and we have a compelling product pipeline. These all give us confidence as we look beyond this transition year into future years.”

New York-based investment firm Marathon Partners Equity Management, LLC, which owns more than 5 million shares of Dr. Martens common stock, earlier this month sent a letter to Dr. Martens chairman Paul Mason and the board of directors urging the company to begin evaluating “alternatives for the business with the goal of maximizing shareholder value.” This includes a potential sale of the business, the letter read.

Since its IPO in 2021, shares of Dr. Martens have dropped almost 83 percent. Given the company’s stalled earnings progress and investor coolness, Marathon argued that Dr. Marten’s tenure as a public company is no longer serving shareholders in the most productive way.