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As Dr. Martens Makes Stock Market Debut, Here’s What Experts Are Watching

As Dr. Martens wraps up an impressive first day of trading on the London Stock Exchange, insiders are keeping a close eye on the brand’s solid performance and whether it will continue on its path of growth amid the raging pandemic.

On Friday, the British footwear company’s stock surged as much as 26%, with shareholders raising 1.3 billion pounds (or nearly $1.8 billion in current exchange) through the offering. It priced its IPO at 370 pence a share, or the top end of its initial range, but saw it close at a higher 450 pence.

According to experts, investors in Dr. Martens should be watching several factors: the boot maker’s ability to leverage its celebrated heritage, its valuation compared with other brands entering today’s market and its runway for future expansion.

“It’s always interesting to see brands make a comeback in the way that Dr. Martens has,” said Taleeb Noormohamed, IPO expert and CEO of online deals marketplace Jane. “It will be a real test of the longevity of the brand … Will this be a flash in the pan as a result of short-term popularity or will investors see this as the beginning of a long-term love affair?”

Dr. Martens became the largest domestic IPO in the United Kingdom since September. (That fall month, The Hut Group sold 376 million shares at 500 pence each — 25% above its initial price — to raise 1.88 billion euros.) The offering, which comprised 350 million existing shares, valued the boot maker at 3.7 billion pounds — more than 10 times what parent Permira Holdings paid back in 2014 to own the brand.

Under the investment firm’s ownership, Dr. Martens has scaled its international presence, expanded its brick-and-mortar fleet and ramped up its e-commerce business. Today, it sells 11 million pairs of shoes each year across more than 60 countries, and its iconic 1460 boot — first introduced 60 years ago — was awarded FN’s Shoe of the Year in 2019 as it continues to propel sales and retain its “cool” factor with a dozen buzzed-about collaborations last year alone.

“Dr. Martens’ heritage and authenticity is a key driver of its success,” explained Beth Goldstein, executive director and industry analyst of accessories and footwear at The NPD Group. “While the brand has become more widely available during the last few years and the assortment has grown, it’s been managed well and not subject to a lot of discounting.”

She added, “New launches have preserved the DNA of the brand but have allowed for both more fashion-forward consumers and those that might have shied away from the traditional chunky silhouette to connect with the brand. The ‘be yourself’ and slightly irreverent attitude of the brand resonates particularly well during this time of uncertainty and also as individuality have become more celebrated.”

Even as the COVID-19 health crisis strangled retailers across the board, the boot maker has emerged as one of the sector’s winners as it capitalized on the broader trend toward more informal footwear. For the six months ended Sept. 30, Dr. Martens’ revenues increased 18% to 318.2 million pounds, while earnings before interest, taxes, depreciation and amortization improved 30% to 86.3 million pounds.

It has also benefited from a pandemic-induced surge in online shopping: While department stores like Nordstrom and Macy’s carry the brand, about 20% of its sales today come from online avenues — an uptick from just 7% back in 2015.

“In pre-pandemic times, there were few retailers that were averaging 30% of their total sales in digital,” said Jessica Ramirez, retail research analyst at Jane Hali & Associates. “In an ideal world, as we go forward with more e-commerce and less stores, we would like to see [the ratio of e-commerce and brick-and-mortar revenues at] 50-50. Dr. Martens is on the right track for that.”

Dr. Martens is also forging ahead with its physical store expansion. After opening 16 stores — including five in the U.S. market — during the 2019 fiscal year, the brand moved forward with two big U.S. debuts: one in Houston and another in Miami. As of September, it had 130 stores around the world. However, there’s still runway for growth: According to experts, the company still lacks the presence and penetration in emerging markets, particularly in mainland China.

“There are still pockets of growth for the brand,” added Ramirez. “Not all of their stores look modern and the experience is basic, but they can work on that. They can also strengthen their website, and their social media following is decent, but even though brands do well, they can always do more.”

And as the IPO race this year gets off to a running start, Dr. Martens isn’t the only fashion firm placing bets on the stock market: Two weeks ago, Poshmark began trading on the Nasdaq Composite, while Mytheresa appeared on the New York Stock Exchange last week. Similar to Dr. Martens, both Poshmark and Mytheresa saw their stocks pop on their debuts, with insiders predicting a rebound in fashion spending as COVID-19 vaccines continue to roll out, consumers gradually return to their offices and some special occasion events resume.

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