Dr Martens urged by major shareholder to consider sale after stock price slump
DR MARTENS has been urged by a major shareholder to consider a sale, after more than a third was wiped off the shoe company’s value over the past year.
Marathon Partners Equity Management has written to the Dr Martens board to say that staying as an independent publicly traded company “is likely no longer in the best interests of shareholders”.
In the letter, which was sent last month, Mario Cibelli, Marathon managing partner, said Dr Martens’ earnings would probably be higher if it quit the public markets or sold itself to become part of a larger, multi-brand holding company.
He said a strategic buyer could add “further scale to operations, create new synergies and eliminate unnecessary overhead”.
The letter from Marathon, which owns about 5m shares in Dr Martens, was first reported by Reuters.
Dr Martens declined to comment on the letter. However, the company is understood to agree with the sentiment that it is undervalued as a London-listed company. It follows a collapse in Dr Martens’ share price over the past few years. Its shares are down 34pc over the 12 months and have fallen almost 80pc since the start of 2022. But sources suggested that a fire sale risked the company being snapped up at an unfairly low price for its potential.
Dr Martens’ share price slump follows a series of problems in the US, its largest market, where it makes around 40pc of sales.
Early last year, it warned of chaos in its new distribution centre in Los Angeles, with stock arriving quicker than it had expected. It was forced to parachute in London supply experts to address the problems.
Last November, Dr Martens warned that demand had softened in the US, saying this was partly down to America’s milder October, which meant fewer people were buying thick boots.
The share price rout at Dr Martens comes amid wider concerns over whether UK stocks are at risk of swoops by foreign companies, who are circling for bargains.
Electronics chain Currys was targeted by US activist Elliott. One of Currys’ major investors, JO Hambro Capital, said the approach highlighted “the absurdity of UK stock market valuations”. Currys recorded sales of £9.5bn last year. Elliott’s second offer valued Currys at around £756m. Elliott later walked away from making another bid.