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Dr Martens shares trade at lowest since IPO as sales growth slows

Dr Martens, known for its chunky leather boots with yellow stitching, said sales rose 11% to £397m ($412m) in the quarter to 31 December, a slowdown compared to the 16% first-half increase
Dr Martens, known for its chunky leather boots with yellow stitching, said sales rose 11% to £397m ($412m) in the quarter to 31 December, a slowdown compared to the 16% first-half increase. Photo: Edward Berthelot/Getty Images

Dr Martens (DOCS.L) fell out of favour with investors on Thursday, with shares falling to their lowest level since the company floated in London.

The British boots brand fell as much as 15% on the day after it revealed a slowdown in revenue growth in its third quarter.

Shares were trading as low as 271p, a 25% fall from the 370p initial public offering (IPO) price last year.

The company, known for its chunky leather boots with yellow stitching, said sales rose 11% to £397m ($412m) in the quarter to 31 December, a slowdown compared to the 16% first-half increase.

It recorded a 14% slump in its wholesale business due to the COVID impact on manufacturing and global shipping, while it prioritised inventory for online and retail stores, it said.

Online sales grew by 16% year on year, while retail sales surged by 72% year-on-year following a jump in footfall in October and November.

But on a regional basis, revenues in Asia Pacific were most affected by COVID, declining 28%. Australia and China had the weakest performance thanks to COVID restrictions.

Shares in Dr Martens have slumped since its IPO in January 2021. Chart: Yahoo Finance
Shares in Dr Martens have slumped since its IPO in January 2021. Chart: Yahoo Finance

Although Dr Martens said the next few months would be quieter, it confirmed it was still on track to hit expectations in its first year as a listed firm.

According to Refinitiv data, analysts are on average forecasting full-year core earnings of £257.3m, up from £224.2m in 2020-21.

Dr Martens opened 11 new stores during the period, including two in Italy and four in the US, increasing its portfolio to 158 outlets.

The news comes just a month after Permira Holdings, its largest shareholder, cut its holding 6.5% to 36.6%.

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Dr Martens first kicked off its stock market debut at the end of January 2021 attracting bumper demand in sale valuing the firm at over $5bn (£3.7bn).

Shares in the company were up as much as 19% as it began to trade in London after Permira and other investors raised $1.8bn.

The company said that its offer was over eight times oversubscribed after it weathered the economic fallout of the coronavirus pandemic well.

It repaid its furlough money back to the British government in August 2021 following good financial results.

The company sells more than 11 million pairs of shoes every year in around 60 countries.

Read more: Dr Martens valued at £3.7bn in stock market debut

"Dr Martens has put its best foot forward when it comes to e-commerce, and has prioritised direct to consumer sales over wholesale shipments to stores, where margins are higher," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

"The iconic nature of the brand, and future collaborations with the music industry with its #TeamUpOnTheTrack Instagram Reels campaign, are aimed at winning new followers and customers.

"This strategy should help it insulate it from the effects of price rises, with consumers prepared to pay more for coveted fashion, but trends do still wax and wane and there is still a risk, the pulling power of Dr Martens could fade over time."

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