Dr Martens Limited, the renowned British footwear brand, is set to embark on an initial public offering (IPO) on the London Stock Exchange (LSE). The IPO will involve Permira, the company’s controlling firm, selling approximately 25% of Dr Martens’ shares. While the exact value of the stake and the final details of the IPO have yet to be confirmed, Dr Martens is considering listing its ordinary shares on the premium segment of the FCA’s Official List and the main market of the LSE. Despite the uncertainties surrounding the IPO, it is expected to move forward.

What sets this IPO apart is Dr Martens’ decision to list on the LSE’s main market, rather than the alternative investment market (AIM) like most fashion companies. The AIM is known for its lighter regulations compared to the main market.

Investors are drawn to Dr Martens for its impressive growth and promising future prospects. The company’s global reach is extensive, with sales of over 11 million pairs of shoes and boots annually in more than 60 countries. In the fiscal year ending in March 2020, Dr Martens generated £672 million in revenue and £184.5 million in earnings before interest, taxes, depreciation, and amortization (EBITDA), achieving an EBITDA margin of 27.4%. Despite the challenges brought about by the COVID-19 pandemic, the company experienced a year-on-year increase of 18% in group revenue, amounting to £318.2 million in the six months ending September 30, 2020. EBITDA also rose by 30% to £86.3 million during the same period. This growth is particularly noteworthy given the significant downturn faced by the fashion industry as a whole, and particularly the footwear sector.

Dr Martens’ growth can be attributed to its direct-to-consumer (D2C) strategy, which the company considers vital for expanding its brand and business. This strategy allows for more direct interaction with consumers, effective showcasing of the brand and products, access to valuable consumer data, and strategic brand management. Dr Martens also highlights the exceptional performance of its e-commerce channel, which is expected to continue driving growth in the future. Prior to the pandemic, D2C sales accounted for 45% of total revenues, with physical stores and e-tail contributing 25% and 20%, respectively. However, due to pandemic-related closures and reduced footfall, e-commerce sales dominated in the first half of the current fiscal year, contributing 34% of revenue while physical stores made up only 11%. Despite the focus on D2C, Dr Martens’ business still heavily relies on its business-to-business (B2B) operations, which accounted for 55% of revenue in the past fiscal year and 66% in the first half of the current fiscal year. The company operates through its own stores, concessions, webstore, and also has a flourishing wholesale, distributor, and franchisee business.

Geographically, the EMEA region represents 43% of sales, followed by the Americas at 37% and APAC at 20%.

Chairman Paul Mason considers the IPO as a significant milestone, commending the management team for their dedication in building the business and positioning it for future growth. CEO Kenny Wilson emphasizes the global growth potential of Dr Martens, noting its appeal to diverse consumers around the world who utilize the brand’s footwear to express their individual style. The company has heavily invested in digital and in-store experiences to connect with customers and feels confident in its ability to drive sustainable long-term growth.

In conclusion, Dr Martens’ decision to go public reflects its strong financial performance and potential for growth, even amidst a challenging market. The company’s focus on D2C and its adaptability to evolving consumer behavior position it well for continued success. As the IPO progresses, investors will have an opportunity to participate in the next phase of Dr Martens’ journey as a publicly traded company.

Useful links:
1. FT: Dr Martens Plans London Stock Market Floatation
2. Reuters: Dr Martens to List on London Stock Exchange