Dr Martens, a brand embraced by punks and skinheads as a symbol of youthful rebellion, does not seem the most natural fit for the mainstream stock market.
But six decades after its chunky, lace-up boots were first sold, the British company is preparing to walk on to the London Stock Exchange early this year. Its valuation could hit £3bn-£4bn, according to three people briefed on the process.
That would be about 20 times the company’s earnings, and would mark a tenfold return for its private-equity backers, Permira, which paid £300m for Dr Martens seven years ago. It would also seal a revival of the business that two decades ago was on the brink of bankruptcy, with the family-run manufacturer racking up annual losses in the tens of millions.
“The business was previously not managed as an iconic brand,” said Kenny Wilson, who has been chief executive for three years.
Mr Wilson is adamant that the recent problems have not been about the brand. He blamed the previous losses on the “manufacturing mindset” of the Griggs family, which founded Dr Martens in the 1901. (Bill Griggs launched the famous boot in 1960).
“I don’t mean this to sound arrogant in any way, but it’s easier to run a scaled global business when you’ve done it before,” said Mr Wilson, who has previously worked at Levi’s and Cath Kidston.
He argued that Dr Martens turned a corner when the Griggs family sold its majority stake to Permira in 2014.
Dr Martens has increased sales during the pandemic — its revenues in the nine months to December 2020 were up 14 per cent compared with a year earlier, as online sales helped ease the hit from store closures. In the year to March 2020, the business made a pre-tax profit of £101m and increased revenues by 48 per cent, to £672m.
It is a convincing recovery from the early years of private-equity ownership, when a strong run of sales growth came to an abrupt end as the company cut ties with vendors that it said “did not fully support” the strategy, by discounting, for example.
“A lot of the decisions [at that time] were taking money out of the company and putting cost in,” one person close to the company said.
David Suddens, who ended his 12-year tenure as Dr Martens’ chief executive shortly after Permira’s takeover, said the Griggs family had trusted the private-equity firm to nurture the brand and expand its network of own stores. “The results speak for themselves,” he added.
One aim for Permira was to return Dr Martens to its roots by refocusing on its “originals” range, which consists of ten classic styles of leather boots. Nearly two-thirds of sales now come from that collection, compared with just one-third when Permira invested.
“When Permira acquired the company [it] had become a fisherman sandals and rugged boots business,” Mr Wilson said,…
Read More: From skinheads to the stock market: how Dr Martens went mainstream