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Dr Martens readies stock market flotation

by LLB Editor
11th Jan 21 1:13 pm

The imminent arrival of boot maker Dr Martens to the London Stock Exchange is interesting timing, coming so soon after the Brexit trade deal and revival in the UK market with the FTSE 100 having enjoyed its best start ever to a calendar year. If ever there was a good time to market a well-known British name to investors, it is now.

“Dr Martens is a classic British brand and once the chosen footwear of rebellious teens and adults. It is an iconic name in fashion and likely to attract the attention of investors both in the UK and abroad, eager to see how sales are going.

“A few warning signs flash immediately. The first is widespread consumer criticism over a decline in product quality. Once known as being reliable, long-lasting footwear, Dr Martens’ products have more recently been accused of having sub-standard stitching and soles which peel off after short use.

“Could it be that the business has suffered under private equity ownership? Many investors are sceptical about backing companies that are being sold by private equity, for fear they might have suffered from underinvestment and subjected to a “quantity over quality” approach for production.

“In the case of Dr Martens, it is worth noting that production shifted to Asia nearly 20 years ago and some critics suggest that could a key reason behind the apparent deterioration in quality.

“Its boots may look good, but the real test for investors to part with their money is whether the shares can go the distance. While the earning growth figures may impress, it doesn’t look good when there are already holes elsewhere in the investment case.”

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