There is not a shoe more iconically British than the classic Dr Martens. According to a filing on Monday, the company will soon go public. It would be one of the first big initial public offerings for 2021 on the London Stock Exchange.
Dr Martens: a company outlook
The boot company sells over 11 million pairs every year in over 60 countries. It was taken private in 2013 when it was bought by the private equity group Permira in a £300 million deal.
The group has 130 stores around the world, and over half of its revenue comes from selling products to other retailers. They made sales of £672 million in the year to March 2020 and turned a profit of £102 million. Now, they not only sell boots, but also loafers and heels.
They have also been working on their online offering, which represented around a fifth of its revenue last year. During the pandemic, developing their online store was a crucial step to keep the company afloat. This proved to be a success. Over 5.5 million pairs sold until the month of September, a 14% increase for the same period the previous year – or 700'000 more. This is probably mostly thanks to the online store, where sales jumped 74%.
A short history of Dr Martens
The brand was brought to the high streets of Britain in the 1960s by the Griggs family, who thought the classic model would make for an excellent working shoe.
The original model was created by a German army doctor called Klaus Märtens – the same doctor who designed the air cushion to ease back pain. Production began 2 years later, and the model was initially very popular with "older women" due to their great comfort. It was then worn by the working class, postmen and workers, for the same reason.
Early Dr Martens shoes (source: Camden Markets)
In the 1960s, the boot was largely adopted by skinheads and quickly became one of the pillars of rebellious youth culture. Adoption by the punk scene and being worn by The Who's Pete Townshend (who wanted to emphasize his working-class status!) saw the Dr Marten boot quickly became a cultural symbol.
The 1970s was the decade of glam, punk and early goth, and although different, they all adopted the same boot, as it stood for difference and pride. Whether you were a skinhead, a punk or a rock lover, wearing Dr Martens was a way to show that you were a rebel, and the brand made the British youth culture its home. They kept accompanying various under-tribes and were eventually brought back to the US by hardcore rockers, which opened a whole new market to the brand.
When you think about it, it is quite amazing that a shoe designed in 1945 is still fashionable, making it all the way to our present day, 75 years later. Whether you like it or not, you must admit that a pair of Dr Martens mixes the solidity of an army shoe with an imposing, crushing style.
They were then adopted by many more communities, such as goths, rebellious schoolgirls, American grunge musicians as well as many celebrities such as Drew Barrymore, Miley Cyrus, Rihanna and Gigi Hadid, who all contributed to making the shoe more popular.
Dr Martens's first years (Source: Dr Martens website)
Not everything is green for Dr Martens
However, things were not always easy. Fashion brands are always exposed to, well, changes in fashion. Entering the 2000s, the company was brought close to bankruptcy as consumers did not enjoy army boots as much as they used to. Thankfully, the popularity of Dr Martens quickly picked up again.
Sales picked up again in 2003, when high fashion designers began to tune the brand to their taste. The resurgence was also fueled by the original Cobbs Lane factory in Northampton, which recommenced the manufacture of handmade Dr Martens originals.
In 2019, many fans reported quality defects, such as soles and stitching coming off, and they suggested that this was due to the offshoring of the manufacturing, which now takes place in China. Permira argues that this is nonsense, as the transition was made over a decade and a half ago by the Griggs family.
Dr Martens' IPO filings and outlook
The Permira group, which owns around 75% of the company, plans to float around 25% of the company, and no new shares should be issued.
The group plans to benefit from a still very bullish market, which would translate into a bullish outlook for the UK IPO market. Indeed, the Brexit trade deal in addition to the early rollout of the Covid-19 vaccine have boosted sentiment towards UK investments, according to senior investment analyst at Hargreaves Lansdown, Susannah Streeter. The FTSE did lose 14.3% this year – contrasting with the S&P 500 up 16.3% – but is up 5.5% this year.
"The interest in IPOs has also been boosted by the frenzy surrounding the Airbnb and Doordash IPOs in the US which were hugely oversubscribed," said Streeter. "Dr Martens has profited from a shift towards online shopping during the pandemic, but it is also reliant on "fickle fashion tastes". That is, as mentioned, a risk to take with all fashion brands with a very narrow line of products.
In 2013, the Griggs family sold their stake to Permira for about $400 million. The private equity group has been thinking of a sale or a public offering throughout most of last year and have high hopes for a great deal. Private equity group Carlyle, which sold Golden Goose boots to Permira in February for just under EUR 1.3 billion, has considered buying Dr Martens, according to sources. In the meantime, Dr Martens has hired Goldman Sachs and Morgan Stanley as joint coordinators, as well as RBC Europe, Barclays, HSBC, and Merrill Lynch as bookrunners.
CEO Kenny Wilson expressed himself to the press "The brand has a significant global growth potential in the future. Our iconic brand appeals to a diverse range of consumers around the world who wear our footwear to express their individual style. Indeed, maybe that is the life saver of the brand: they have few products, but it managed to seduce a wide variety of people.
Dr Martens owner Permira plans IPO of cult bootmaker, in the Financial Times
Boot brand Dr. Martens is considering a London IPO, in CNN Business
Doc Martens history, in the Dr Martens Website
Blogposts, newsletters, podcasts and any other content published by FlowBank SA (hereinafter “FlowBank”) reflect the opinions of the authors only and do not reflect the views of Flowbank or any of its subsidiaries or affiliates. These contents are meant for informational purposes only and aim to offer new ideas and perspectives. They are not intended to serve as a recommendation to buy or sell any type of financial instrument, whether that be through a Flowbank account or any other trading account. They are not to be considered as research reports and are not intended to form the basis of any investment decision. Any third-party opinion expressed, and information provided therein do not reflect the views of Flowbank or of any of its subsidiaries or affiliates. We emphasize that all investments involve risk, and past results are not a guarantee of future performance. While diversification does help to lower and spread the risk, it does not ensure a protection against loss. Investing in securities or other financial products always involve a risk of losing money. Prices fluctuate with the market in sometimes unpredictable ways, and investors should be aware that their losses might exceed their initial deposit. Flowbank SA, a FINMA regulated company.