But with a new CEO at the helm, an ongoing strategic pivot, and an impressive heritage that remains intact, is this fashion stock getting ready for an impressive comeback?

What happened to Dr Martens?

Running a fashion enterprise is an exceptionally difficult task. Even more so during periods of economic uncertainty. With inflation driving up costs, consumer spending on discretionary footwear hasn’t exactly been strong. And with younger generations often preferring athleisure footwear, demand for Dr Martens’ clunkier, heavier boots has suffered.

The impact quickly emerged in its US wholesale channel, which was hit by a significant revenue slowdown as retailers simply stopped re-ordering new shoes. And what followed was an inventory glut that later resulted in heavy discounting, eroding the brand’s pricing power while simultaneously harming profit margins.

Several profit warnings later, and it’s no wonder the stock took a beating. But could that all be about to change?

Ripe for a turnaround

Ije Nwokorie only moved into the corner office at the start of 2025. And while his ‘Levers for Growth’ strategy has taken a bit of time, some measurable progress has finally started to emerge.

In the group’s interim results for its 2026 fiscal year (ending in March), operating profits flipped from a loss to positive territory year on year. Combining this with various cost-savings and self-help initiatives, the subsequent margin expansion has paved the way to a steady reduction in the group’s net debt position.

Looking at the latest analyst forecasts, this recovery trajectory seems to be accelerating. While full-year revenues are expected to remain flat, underlying profits before tax (PBT) are anticipated to surge to between £54m and £74m, up from £34.1m year-on-year.

In the words of management: “We are comfortable with market expectations for FY26 PBT, which will result in significant year-on-year PBT growth”.

What to watch

Seeing margins expand is obviously encouraging and definitely a step in the right direction. However, flat sales are nonetheless potentially concerning. If the group’s footwear continues struggling to resonate with newer fashion-focused consumers, the firm’s long-term recovery could become compromised.

At the same time, debt remains a significant problem. The firm has £395m of outstanding loans & equivalents on its balance sheet, versus a £96m cash position. And while wider margins are supporting superior cash generation, the group’s financial flexibility nonetheless remains constricted by its high leverage.

So where does that leave investors? Personally, I want to see more recovery progress before considering this FTSE 250 business for my portfolio. Yet there’s no denying that Nwokorie is making the right moves.

Dr Martens is definitely a business worth watching but, for now, I’m exploring other cheap stock market opportunities.

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Yet this remains a legendary brand that’s on course to generate nearly £800m in sales in FY26. With the stock falling 12% to 66p yesterday, is Dr Martens a strong turnaround candidate staring us in the face?

Mixed-bag quarter

The culprit for yesterday’s slump was a Q3 FY26 trading statement. In the 13 weeks to 28 December, the firm reported that quarterly sales fell 3.1% to £251m (or 2.7% on a constant currency basis). This included a 7% drop in direct-to-consumer (DTC) revenue.

A key part of CEO Ije Nwokorie’s turnaround strategy has been to cut back on discounts and promotions to improve profitability. If successful, this could rebuild margins over time.

In the meantime though, inflation-weary consumers appear to be hunting for deals. During the period, which covered the run-up to Christmas, wholesale revenue was up across all regions. In Europe, the Middle East and Africa, DTC revenue fell by 12% while wholesale revenue jumped 13%.

We have continued to improve the quality of our revenue through a disciplined approach to promotions and this represents a headwind to overall revenue, particularly in e-commerce.
Ije Nwokorie.

On a positive note, there was a return to growth in the firm’s troubled Americas division, where revenue rose 2%. Year to date (April to December), Americas growth was 4.5%, which is encouraging.

Also, as part of its plan for capital-light expansion into new markets, the bootmaker extended a distribution agreement with Latin American partner Crosby to include Colombia, Costa Rica, Peru and Uruguay.

For the full year ending March, Dr Martens expects revenue to be “broadly flat” (about £788m). That’s lower than the £800m that analysts were previously anticipating.

Yet pre-tax profit growth will still be “significant“, according to management. Last year, it was £34.1m on an adjusted basis, and this year’s figure should be in the £50m-£60m range.

All in all, this quarter was definitely a mixed bag.

Huge comeback potential?

Dr Martens clearly possesses an iconic brand that’s known worldwide. However, it can be dangerous as an investor to assume that a strong brand translates into a good stock market investment. For evidence, look at Aston Martin and Nike over the past few years.

Based on current forecasts, Dr Martens stock is trading at around 18 times FY26 earnings. The multiple could fall as low as 11 by FY28, though a lot could happen between now and then.

For example, President Trump could suddenly slap higher tariffs on Vietnam, where most Dr Martens boots are made these days. And inflation remains problematic, keeping pressure on consumers’ wallets.

Given these risks, and the early stage of the company’s multiyear turnaround, I don’t think the stock is an obvious bargain. I need to see evidence that management’s strategy can produce a rebound in sales and sustainable earnings growth.

Until that happens, I still view the stock as a bit of a risky gamble. I think there are better turnaround candidates to consider in the FTSE 250.

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But despite these worrying predictions, I’m continuing to buy UK shares. Here are a couple that I recently bought.

Cheers!

Not to be confused with the US company, Coca-Cola HBC (LSE:CCH) holds the exclusive rights to distribute the American group’s drinks in 28 countries in Europe and Africa.

Analysts are expecting strong earnings growth over the next five years with emerging markets being the biggest contributor. If these forecasts prove accurate, based on a current (19 January) share price of £39.16 (€45.16), it implies a forward (2029) price-to-earnings ratio of 11.8. This would be incredibly cheap for the sector, the FTSE 100, and — based on history — for the stock itself.

A 69% increase in its dividend is also predicted, lifting the stock’s yield to 3.9%.

These forecasts were compiled before the group announced its intention to acquire 75% of Coca-Cola Beverages Africa for $2.6bn. This will give the group access to another 14 countries accounting for approximately 40% of sales volumes on the continent.

Although it remains a highly competitive industry and there are fears that weight-loss drugs could affect demand, I like the group’s policy of having a drink for every occasion round the clock. And it’s more than about Coca-Cola. Set alongside these impressive forecasts, that’s why I decided to add the stock to my portfolio and why others could consider doing the same.

A big reboot

After suffering a torrid time as a result of falling sales, distribution issues, and US tariffs, the Dr Martens (LSE:DOCS) share price has been on the back foot since its IPO.

Admittedly, the stock’s not cheap based on its current financial performance. But if it can achieve the March 2028 (FY28) forecast earnings per share of 6.1p, it’s a different story. The investment case therefore rests on whether this is achievable. I think it is.

Challenges remain. There are many cheaper alternatives out there. And it’s hard to remain relevant in the fashion industry.

However, the group’s turnaround strategy of selling more directly to customers and entering into partnerships in new markets, show signs of working. Its half-year FY26 results revealed a 33% increase in shoe volumes compared to a year earlier.

I reckon the brand retains its iconic status. And despite its woes, it’s been reducing its debt and stock levels. More will be known when the group releases its next trading update on 27 January. But I think it’s one for patient long-term investors to consider.

Lots to choose from

In my opinion, these are just two interesting UK shares. And as the table below shows, analysts appear optimistic about the prospects for the majority of stocks on the FTSE 100 and FTSE 350, with Buy recommendations of 61% and 63%, respectively.

I believe that the stock market will crash or, at the very least, experience a correction soon.

This isn’t me being gloomy. It’s an opinion based on the fact that there have been plenty in history. But the key is not to panic and keep seeking out those bargains. Taking a long-term view is essential when looking to build wealth.

The post I don’t care if the stock market crashes. I’m still buying cheap UK shares appeared first on The Motley Fool UK.

In general, the last 12 months have been a challenging period for footwear companies. But in a few cases, I think share prices look attractive heading into 2026.

Beaten-down stocks

A weak macroeconomic environment, especially in the US, has been weighing on sales across the board for footwear companies. And this has had a predictable impact on share prices. 

To some extent, companies are waiting for consumer spending to pick up. But there are some encouraging signs for 2026 with inflation starting to moderate and interest rates falling.

Even if it doesn’t materialise in the next year, though, there might be long-term value on offer for investors. And there are some companies that look interesting at an individual level.

Unforced errors have caused some stocks to fall more than they might have in the ordinary course of business. But I think they look interesting as they work to get back on the right track.

Dr Martens

It’s been another year in transition for Dr Martens (LSE:DOCS). But I think there are clear signs that the organisation is starting to move forward from its recent issues. 

Investors reacted very positively to the firm’s profits coming in ahead of expectations in the middle of the year. And there are signs the new product-focused strategy is working well.

Positive results in the firm’s e-commerce business have been a real highlight. But the stock has fallen back as trading conditions have remained tough in the second half of the year.

The result is that the stock is trading at some of its lowest valuation multiples since going public. And that means value investors hunting for opportunties might want to take a look.

Nike

It’s no secret that Nike (NYSE:NKE) has one of the most recognisable brands in the world. But that hasn’t helped the company much in 2025 as sales have struggled to rebound.

The latest issue is China. Competition from local brands with lower prices has been weighing on the firm’s ability to rebound from its previous issues and remains an ongoing risk.

The company, though, is making progress in the US. The new CEO has been working to restore relationships with retailers after an excessive focus on selling directly to consumers.

A big drop after the latest earnings results means the share price is close to 52-week lows. As a result, I think it’s worth considering as a stock to buy for the long term.

Christmas shopping

Value investors finishing their Christmas shopping might want to check out Dr Martens and Nike. The stocks are trading at low prices, but the underlying businesses are moving forward.

In both cases, this is being masked by weak consumer spending. And while it’s hard to be sure when this will turn around, I think there are positive signs in 2026.

For long-term investors, though, stocks aren’t just for Christmas. So a weak macroeconomic environment might just be a buying opportunity worth taking a look at.

The post Last-minute Christmas shopping? These shares look like good value… appeared first on The Motley Fool UK.

The reaction of investors was particularly disappointing given the group’s recent share price performance. In April, it recorded a 52-week low of 43p, as President Trump’s announcements on tariffs created uncertainty for the group with its Asian-focused manufacturing operation. Since then — and prior to the publication of the results — it had increased nearly 90%.

Yesterday, its share price closed at 74p, having fallen 9.5% over the course of the day. Sometimes it’s hard to believe that the group listed in January 2021 with an IPO price of 370p.

So what caused such a negative reaction? To be honest, I’m not really sure. Okay, the results weren’t amazing but I don’t think a near-10% fall’s warranted.

Crunching the numbers

The group reported a 0.8% drop in H1 26 revenue compared to the same period a year earlier. However, its adjusted loss before tax (LBT) improved by £7.2m to £9.4m. Historically, its performance has been heavily weighted to the second half of each financial year. A similar trend’s expected for FY26.

Significantly, the gross profit margin continues to rise. But at 65.3%, it’s now higher — or similar to some luxury brands. How much of this is attributable to price rises is unclear but the scope to continue charging more seems limited. In FY18, its margin was 53.4%. 

Compared to a year earlier, inventory levels were £45.6m lower or, expressed another way, four weeks’ less stock is now being held. Net debt (including leases) fell from £348.7m to £302.3m over the same period.

The group’s maintained its interim dividend at 0.85p a share.

Going to plan

Most importantly, the group says it’s trading in line with current expectations. Before yesterday, analysts were expecting an adjusted profit before tax for FY26 of £53m-£60m.

This excludes any estimated impact from tariffs. The company’s now confirmed that these are likely to reduce earnings by “high single-digit” millions, although around half of this is expected to be offset by mitigating actions including “tight cost control, flexible product sourcing, and targeted adjustments to our USA pricing policy”.

To be honest, I thought the tariff impact would have been much bigger.

Green shoots

Delve a little deeper and there’s more good news. The company says it’s increased the number of “purchase occasions” (surely, purchases?) made by its customers, which has resulted in a 33% increase in footwear sales.

Across all lines, pairs sold increased by 1% to 4.7m. Also, revenue in America was up 6%.

This sounds positive to me and doesn’t appear to justify yesterday’s reaction of investors. Although it’s early days, I think there’s enough evidence of a recovery to make the stock one to consider.

Time will tell if these green shoots continue to grow. And I acknowledge there are plenty of other opportunities available to investors who are looking to buy beaten-down stocks that might have turned the corner. However, I’ve always had a bit of a soft spot for Dr Martens. That’s why I hope it can recapture some of its former glories.

The post Investors are putting the boot into this FTSE 250 stock. But I reckon a recovery’s under way appeared first on The Motley Fool UK.

Investing in the right mid-cap share early enough can produce market-thumping returns.

Lost its footing

However, digging through the FTSE 250, I see a handful of names that I’m uncertain about long term. One of them is Dr Martens (LSE:DOCS).

Shares of the bootmaker have been doing well recently, rising 20% in just the past month. However, they’ve still lost half their value since the start of 2023, and more than three-quarters since listing in 2021.

The company has issued multiple profit warnings in recent years, with weak demand and warehousing problems in the US knocking investor confidence in the brand’s prospects. Profits have slumped alarmingly.

Meanwhile, Dr Martens’ fashion appeal has faded, at least for its iconic chunky boots. You don’t have to dig deep on Reddit to find users complaining about poor quality and overpriced products. Back in the day, a pair of Docs could last for life. Not so much nowadays. 

Firmer ground

However, there are green shoots of recovery emerging at the company. Indeed, CEO Ije Nwokorie has even predicted a return to growth in the current financial year (FY26).

In June, he said: “Our single focus in FY25 was to bring stability back to Dr Martens. We have achieved this by returning our direct-to-consumer channel in the Americas back to growth, resetting our marketing approach to focus relentlessly on our products, delivering cost savings, and significantly strengthening our balance sheet.”

The City is currently buying into the turnaround, with revenue forecast to rise from £788m last year to £850m by FY27. Crucially, earnings per share are expected to increase by around 40% over this time, putting the stock on a forward price-to-earnings (P/E) multiple of 16.5.

If the company can keep building from there, then I think a multiyear turnaround in the share price is possible.

Brand messaging

Dr Martens says it aspires to be the “world’s most-desired premium footwear brand“. It wants to be “democratic”, while staying true to its heritage by staying connected to youth culture and subcultural roots.

A cynic might say that the brand wants to have its cake and eat it. A global premium footwear brand doesn’t sound rebellious or subcultural to me.

At a recent punk festival in Blackpool, I asked some old-school punks about the brand. All thought it went ‘woke’ years ago, embarrassed by its historical associations with skinheads, who weren’t exactly known for being politically correct.

Yet, I noted that many still wore Docs out of nostalgia, while some younger people were wearing them. So perhaps the company is doing as well as it can to bridge the generations.

I suspect Asia is where the brand’s future growth might lie. Japan and South Korea are driven by youth fashion culture. Rebellious self-expression is arguably more mainstream there. Symbolically, there are now more Dr Martens stores in Japan (46) than the UK (34).

The stock could be a strong turnaround candidate, though US tariffs are a risk, with most of Dr Martens’ manufacturing done in Asia.

Weighing things up, there’s too much uncertainty for me to invest long term here.

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Getting the background information

For context, the Doc Martens share price has declined by 80% since the IPO in early 2021. A key driver behind this collapse has been a sharp weakening in US sales, where wholesale revenue suffered steep double-digit declines and order bookings slumped significantly. That prompted multiple profit warnings over the past few years, which have caused sharp declines in the share price on each announcement.

Decisions by management have also compounded problems. The opening of a new distribution centre in Los Angeles in 2023 created bottlenecks and elevated costs. This ended up costing the company millions and sapping operational efficiency. To make matters worse, inventory levels ballooned while net debt surged, pushing interest payments to consume as much as 25% of operating income.

However, with the stock up 25% over the past year and up 65% in three months, the winds of change could be picking up.

The direction from here

New CEO Ije Nwokorie has introduced a clear turnaround plan focused on addressing the core business issues. He’s said he’s putting the consumer first as part of his strategy. In practical terms, it aims to reduce over-reliance on boots and wholesale channels by expanding into shoes, sandals and leather goods.

Last year, the business put in place a £25m cost-saving programme. In the full-year results released in June, management confirmed that this target had been met. This, along with inventory reduction and more careful cash flow decisions, has helped slash net debt. The debt level as of the June results was £94.1m, down from the £177.5m from a year ago.

The biggest compliment I can pay the company is that management’s positioning itself for renewed growth rather than retrenchment. It acknowledges that, despite being a classic British brand with an iconic product, it needs to diversify and try new things to stay relevant. That’s one of the main reasons why I think the stock can keep going from here.

Don’t get me wrong, the US market remains an ongoing risk for the company, as do issues with fashion’s fickleness. But the company has now turned a page from the past few years, with a new CEO and a new game plan. Nwokorie’s clearly taking things seriously. As he mentioned in the latest report, he is “laser-focused on day-to-day execution, managing costs and maintaining our operational discipline while we navigate the current macroeconomic uncertainties”.

On the basis that the turnaround continues to yield results, I think it’s a stock for investors to consider buying.

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The broker claims the investment case looks “increasingly positive”. It has set a new price target of 112p, which is around 27% higher than today’s (21 August) closing value. However, both remain well below the 370p offer price when the group listed in January 2021.

A difficult period

Since floating, the company’s struggled with falling demand. In light of its difficulties, it implemented a new strategy with an emphasis on cutting out wholesalers and diversifying into other product lines.

Comparing the group’s results for the year ended 31 March (FY25) with those two earlier years reveals a 21.5% drop in revenue and an 80% fall in adjusted profit before tax (PBT).

But there’s one financial measure that’s going in the other direction. Its gross profit margin improved from 61.8% in FY23 to 65% in FY25. In FY20 — the last full year before its IPO — it was 59.7%.

On its website, the iconic 1460 boot — which still accounts for around 40% of sales — retails for £170. All other things being equal, a margin improvement of 5.3 percentage points means an additional £9 profit a pair. But a fall in sales means this hasn’t translated into a better bottom line. The group sold 0.6m fewer pairs of boots and sandals in FY25 than it did in FY20.

Mixed messages

And I think the group’s margin is an important issue to consider.

Its advertising targets a young, cool and trendy demographic yet its 65% margin is typical of a luxury brand. For example, it’s better than the 62.5% Burberry reported during its last financial year. And it’s not far behind the 67% achieved by LVMH, owner of Louis Vuitton and Dior, in 2024.

This is a far cry from Dr Martens’ working-class roots. In 1960, shortly after the company was launched, its boots were sold to factory workers at £2 a pair. At today’s prices, this would be equivalent to just under £59. 

But the group has an ambition to become the world’s “most-desired premium footwear brand” so it’s clearly no accident that it’s seeking to move to upmarket status.

Green shoots

Dr Martens most recent update describes trading in America as “positive”. Asia’s also doing well. By contrast, the UK market is described as “challenging”.

Even so, the group confirmed it expects to deliver an adjusted PBT of around £56m for FY26. Yet despite its recent problems, it retains a global brand with an instantly-recognisable design. With an addressable market worth £179bn, the potential’s huge if it can get things right.

Personally, although I acknowledge that the business is going in the right direction, I can’t see it recapturing its former glories. I think price rises are taking it away from its core market. Also, with much of its manufacturing base in the Far East, its US imports are vulnerable to President Trump’s erratic trade policy. 

I wish the group well but it’s not for me. I’m not sure how it can embrace its reputation for “rebellious self-expression” with its desire to be viewed as a manufacturer of premium footwear.

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A lot has gone wrong for the firm since its IPO in 2021, but there are clear signs things are changing. And the current situation reminds me of Rolls-Royce back in 2023.

Darkest before the dawn

In 2023, Rolls-Royce was in a difficult position. A lot of that was due to an unusually difficult trading environment, but some of it was of the company’s own making.

Travel restrictions during Covid-19 were obviously a big problem. But the firm had already been having trouble with its engines before the start of the pandemic.

In other words, more or less everything was going wrong. But as air travel returned and a new CEO took over, all of the negative forces began to change at the same time.

The results have been spectacular. And I think Dr Martens might be in a similar position to where Rolls-Royce was just before things started getting better.

Out of fashion

The footwear market has clearly been tough recently. Nike, Deckers Outdoor (which makes Hoka trainers) and VF Corporation (which makes Vans) have all seen sales falter.

Given this, it’s probably not a big surprise that Dr Martens has seen revenues decline in the last couple of years. But the firm has also made problems for itself.

The company’s move to sell directly to consumers (rather than through retailers) has created inventory issues with well publicised problems at an American distribution centre. And this has driven up costs, cutting into profits.

Nike has also been demonstrating the risks of focusing on distribution over product development. But, in the case of Dr Martens, I think there’s reason for optimism.

Making a comeback

First, there are positive signs for the wider industry. VF’s earnings report last month was better than expected and JP Morgan analysts have upgraded Nike shares to Buy.

On top of that, Dr Martens has a new CEO and a new strategic direction. Ije Nwokorie is looking to focus primarily on products, rather than distribution channels.

If it works, this could fix a lot of the FTSE 250 firm’s recent problems. And while there are no guarantees, I think the business is on the right track – and I’m not the only one.

The latest move in the share price was largely driven by broker Peel Hunt upgrading its price target from 80p to 112p. That’s 38% higher than where the stock is now.

The next Rolls-Royce?

The big risk is that the challenges Dr Martens has been facing prove more durable than I’m expecting. And that possibility is something investors have to take seriously.

I’ve been following the company for some time and I’ve probably been a bit too optimistic. But there are signs things are finally starting to turn around.

I think the similarities between Dr Martens now and Rolls-Royce in 2023 are striking. An improving trading environment is one part of the picture.

Another is the new CEO’s shift in strategy. I’m not forecasting a 1,000% return for the FTSE 250 stock, but I feel it’s worth considering at today’s prices.

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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. 

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