Dr. Martens’ e-commerce offering represented 30% of total revenue in the nine months to Dec. 31, 2020
Dr. Martens is planning an initial public offering on the London Stock Exchange, as the iconic shoe-and-boot-maker looks to expand its footprint in the £341 billion global footwear market.
The British company — known for its signature stomping boots worn by celebrities including top model Gigi Hadid and Hollywood actress Kristen Stewart, could be valued at around £3 billion ($4 billion), according to analysts.
The float, which would be one of the first big IPOs of the year, would come more than seven years after the Griggs family sold Dr. Martens for £300 million to Permira. The private equity group plans to sell down its stake as part of the IPO.
“The announcement of our intention to float reflects the great achievements of the Dr. Martens team and brand over the last seven years,” said Dr. Martens Chief Executive Kenny Wilson. “Even more important is the significant global growth potential for Dr. Martens in the future,” he added.
Created by army doctor Klaus Märtens, who designed the air-cushioned sole to help relieve his back pain, Dr. Martens — known as ‘Docs’ in the U.S. — first hit the British retail market in the 1960s. The classic 1460 eight-eyelet boot in cherry-red leather was initially aimed at workers who spent all day on their feet, but they were soon adopted by youth subcultures making an anti-fashion statement.
The brand was elevated to cult status after Pete Townshend, lead singer of rock band The Who, said he would go to bed on tour with two things: “A cognac bottle and Dr. Martens boot.” But in 2003, it fell victim to changing fashion tastes and, under pressure from falling sales, stopped all production in the U.K. and moved its factory to China and Thailand.
Today, Dr. Martens sells more than 11 million pairs of shoes and boots every year in more than 60 countries. In the year to March 2020, Dr. Martens generated revenue of £672 million ($907 million), with earnings before interest, tax, depreciation and amortization of £184 million.
AJ Bell investment director Russ Mould said the IPO would likely attract the attention of investors both in the U.K. and abroad, eager to see how sales are going. “Its boots may look good, but the real test for investors to part with their money is whether the shares can go the distance.
“While the earning growth figures may impress, it doesn’t look good when there are already holes elsewhere in the investment case,” Mould added.
Since taking control of the company, Permira has invested in expanding its e-commerce offering, which has been one of the key contributors to substantial growth in recent years, representing 30% of total revenue in the nine months to Dec 31, 2020.
“We have invested massively to ensure that we deliver the
best digital and store experiences to connect with our wearers, and through
this we are driving our long term, sustainable growth,” the company said.
However, Dr. Martens is still underrepresented in some key global markets, including the U.S. and China, where it sold 12 and less than 1 pairs of boots per 1,000 population, respectively, in 2020, compared with 31 pairs per 1,000 population in the U.K.
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News of Dr. Martens’ planned flotation will raise hopes of a revival in the European IPO market, which has lagged behind the record-breaking run of technology IPOs in the U.S. last year. In December, shares in food-delivery startup DoorDash
and home-rental company Airbnb
soared as much as 115% on their first day of trading in New York.
Companies looking to list their shares in London have been encouraged by last year’s IPO of online health-and-beauty retailer The Hut Group
which has seen its shares rise almost 60% since its market debut.
Those considering IPOs include Moonpig, whose private-equity owner Exponent Private Equity looks to cash in amid increased demand for digital greeting cards during the COVID-19 pandemic. The business could be valued at around £1 billion, according to a report by Sky News.
Another company rumored to be looking at an IPO is food-delivery business Deliveroo, which analysts at Hargreaves Lansdown said could target a valuation of £3.2 billion.
Dr. Martens has appointed Goldman Sachs
and Morgan Stanley
as joint global coordinators for the IPO, and Barclays
Bank of America
and RBC Europe are joint bookrunners. Lazard is acting as financial adviser to the company.