Few fashion brands have stood the test of time like Dr Martens (LSE: DRM). The black boots with their iconic yellow stitching have been around since 1960 – and are still going strong! It’s hard to go a few stops on the tube without spying someone sporting a pair. The Dr Martens Instagram account has over 3m followers. The revival in popularity in recent years has seen the boots adorn Gen Z mega-celebs that even I’ve heard of like Kendall Jenner or Olivia Rodrigo. With such timeless charm, I’d surely have expected the shares in the firm that makes the boots – named Dr Martens – to be surging to ever greater heights!
Well, they aren’t. Not even slightly.
How much?
After a few years under the aegis of private equity firm Permira, Dr Martens was listed on the London Stock Exchange in an IPO in January 2021. The shares then crashed. A 450p initial offering price was falling within months and stands at just 82p at the time of writing.
A bullish investor putting £10,000 into the stock back then would have watched on in horror as the stake was whittled down to just £1,987.
Not only has the popularity of the firm’s boots on Gen Z social media videos not translated into a boom for the company’s stock market listing, but it’s occurred against the backdrop of investors losing four-fifths of their money. A lesson in there, perhaps.
So what happened? Well, sales have stayed strong. Folks are still buying their boots in line with what I’d expect from social media buzz. Yearly revenue has remained around the £800m-£900m range for the last few years.
Profits, however, have nosedived. Earnings of £180m in 2021 and £130m in 2022 crashed to just £20m in 2024.
There are several reasons for this, largely revolving around inflation hurting supply costs and a mini-disaster with extra stock in the US. The key detail for budding investors though is that the turnaround looks to be in full swing. Earnings are growing and a forward price-to-earnings (PE) ratio of 18 looks like good value.
Buy the dip?
Is this a chance to buy the dip? I’d say so. The shares have been rising this year, up nearly double in 2025. Earnings are expected to rise in the years ahead. Prospects look decent, all things considered. Caveats remain, including the fairly large drawback of this being a fashion stock at the whims of a capricious customer base. Fashion brand Superdry’s fall from grace stands out as a cautionary tale here.
Personally, I’m not interested in adding this type of stock to my portfolio for the aforementioned reason. But for anyone who likes the value and is going into it aware of the risks, this could be a stock to consider.
