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The share price of Dr Martens (LSE:DOCS), the renowned FTSE 250 bootmaker, has risen 17.9% over the past four trading days. The catalyst appears to be a note from Peel Hunt stating that the group is “making headway”.
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%.
| Measure | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (£m) | 1,003.3 | 877.1 | 787.6 |
| Adjusted profit before tax (£m) | 174.0 | 97.2 | 34.1 |
| Gross margin (%) | 61.8 | 65.6 | 65.0 |
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.
| Year | Pairs sold (m) |
|---|---|
| FY20 | 11.1 |
| FY21 | 12.7 |
| FY22 | 14.1 |
| FY23 | 13.8 |
| FY24 | 11.5 |
| FY25 | 10.5 |
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.
