Dr. Martens Share Discussion Threads

[disc0dave46] 26/1/2024 18:02

Could be.Some resistance around 90

[castleford tiger] 26/1/2024 17:47

I think the fall maybe over

[essentialinvestor] 26/1/2024 14:46

As mentioned previously the aggressive physical store roll out may well come back to bite them?.

Fine if shop sales develop to plan, arguably a difficult position if they do not.

[woozle1] 26/1/2024 14:43

That's interesting but I've a bit of experience with companies managing the wholesale channel. Games Workshop went through a very similar process and got rid off of non performing accounts. The wholesale channel is easy sales and difficult to manage in terms of pricing, which is critical in terms of brand management (which is where Mulberry have got into trouble). If you have a wholesaler discounting that undermines the investment in the brand. Wholesale do not invest in the brand, they sell.

Most of the examples you have selected bear little or no resemblance to Docs. The only people buying Hornby trains (and is a hobby) are blokes over 60 (i'd recommend going to a convention); Clarks shoes are not worn by the young and don't have an identity; not sure there's much kudos when an Antler suitcase comes off the carousel in an airport; and Stanley Gibbons is collectibles and not a retailer.

The only example you give that has any similarities is Mulberry and, I agree, the jury is still out. They are going through a similar process of retrenching and doing much more DTC. As I said, you have to take a view on the brand. If you think it has no future then so be it but I do (and that's why there's a market in these shares).

[clocktower] 26/1/2024 14:13

Woozie1 I have the absolute opposite view to you about reducing wholesale channel and dropping accounts.

While Doc's will not go away they like Super Dry will have to re-invent themselves, and that is going to be painful.

In my time, I have seen so many wonder boys come in to put things back to return the super times, and I have seen 90% or more fail miserably, in all sorts of industries.

Just look at Hornby as another example, look what occurred at Stanley Gibbons, Clarks, Antler Luggage,and how many other big brands have suffered the same fate ?

Mulberry is another one on the slippery slope.

[woozle1] 26/1/2024 13:46

The issue of wholesale or 3rd party retailers is an interesting point, in particular in the US.

Reducing the wholesale channel is a good thing as it gives DOCS greater control over pricing and discounting and will almost certainly result in a drop in revenues and profitability in the short term. The US requires a dual strategy (DTC and 3rd party) because the economics of its stores only stack up in the major metro areas. Physical shoe retailing is also a tough gig as it requires a large range and a lot of dead space for stocking.

I suspect that DOCS is tightening up on the terms of trade and dropping accounts that don't sell much. Games Workshop went through a similar process some years ago. It requires nurturing the retailers that do the best job and this is not as easy as it sounds because it means having the right people (i.e. good account managers, good salespeople, and a sound marketing strategy).

Foreign companies often struggle to attract good local talent as locals prefer to work for US brands and US companies which means one often gets 2nd and 3rd rate applicants. It's the key reason that UK companies find it so hard in the US and why to get around this problem it's best to buy a US company where you can lock into the entrepreneurial drive of a hungry start-up with high-caliber individuals. The hope here is that Docs is a good enough brand to attract better talent than would usually be the case for a foreign company.

I'm pretty sure that this is a much better brand than Super Dry. It has much more cross-generational appeal (in London I see older blokes, middle-aged and young women, and kids wearing these shoes), it's been around much longer and management is investing heavily in it.

If you believe that DOCS isn't going away, this is a great entry point. Yes, the peaks will be inlfated fashion but the troughs are supported by a loyal customer base whose identity (see themselves as rebellious and independent thinkers)is tied up with the brand.

As ever, DYOR.
PSDOCS ceased to be work wear some time ago.

[mozy123] 26/1/2024 12:53

Disco - they guided moderately below sell side consensus (GBP128.7m), now - £5m

Depends on what moderately means!

Given the price today and full year eps of 8p (website) and top end maybe 10p.

PE in the range of 8-10ish

Results from LVMH showing some resilience so hopefully Docs can get their channel execution corrected and start improving this share price

[disc0dave46] 26/1/2024 11:25

clocktowerCan't disagree with the points you've made, all valid opinions. I would just say that they've not been "workwear" for some time, it's moved on!.

[disc0dave46] 26/1/2024 11:18

Thanks MozyI must be missing something - FY24 pbt £105m? (is that this FY24?, the consensus forecasts they have at their interims in Nov had "PBT range GBP128.7m to GBP148.0m."Even deducting the £5m for fx gives a low of £123.7.I've taken the median of £133m which at 25% tax (could be 26% as per H1), and 1bn shares is eps 10p (even the low f/cast gives 9.3p).

[clocktower] 26/1/2024 11:05

disc -

Thank you for corrections and comments however when I said a reduction in the number of outlets, I was not speaking of their own. I was referring to all the very small boutiques or small retailers plus of course the amount of workwear builder type outlets that used to stock a range of safety boots that now I believe also have a thin steel strip in the sole.

I checked out a few builder type outlets and none now had Docs.

I am very negative about their recovery as like Super Dry fashions and groups move on to the next thing.

Your info about the profile of females said it all impo.

DYOR.

[disc0dave46] 26/1/2024 10:56

Thanks, will have another look but been updating my numbers on each update, and 10p was based on their latest median forecast. Perhaps sites such as Stockopedia haven't been updated?.

[mozy123] 26/1/2024 10:55

Consensus on the Docs site

YE 23 24 25 26
Revenue (£m) £1,000.3 £901.6 £938.9 £1,009.0
EBITDA (£m) £245.0 £205.2 £223.3 £245.8
PBT (£m) £159.4 £105.0 £117.2 £134.2
EPS 12.9p 8.0p 8.9p 10.2p
DPS 5.8p 4.6p 4.8p 5.0p

[disc0dave46] 26/1/2024 10:36

CTNo problem. I've taken the £5m to reduce eps to 10p, but from Stockopedia they have consensus of 7.6p. Will have to check mynumbers.Have you got any thoughts on what their earnings will be?.

[castleford tiger] 26/1/2024 08:16

Disc0
Sorry I thought it mentioned 2 lots of 5 m
I was only skim reading though

[clocktower] 25/1/2024 18:36

The troubles with the company impo are: ( If I am mistaken please correct me and I will amend this post)

1) The company stopped making (supplying steel toe protective boots) workers boots.

2) They relied a lot upon women’s fashion design boots.

3) Most of the products are made in China or the far east and delivery of high fashion goods cannot be made promptly when they find a model that was flying off the shelves it took them at least 12 weeks to replenish stock and by that time customers were looking at the next latest thing.

4) The reduced the number of outlets selling Dr M goods.

Much of their goodwill came from small businesses whom built the brand, many of these small businesses have struggled and rather than support them they pulled the rug.

A lot of business was due to the Punk Fashion boom that took place pre-Covid and I am not sure how you can recover the volume or margin unless you find new products.

Dr Martins were mainly bought because of the thick sole originally as it gave an air type cushioning and comfort to the wearer.

How they are going to resolve these problems might be very difficult and costly as well, which does not give one much confidence in the medium term.

[disc0dave46] 25/1/2024 14:34

CTI took it that the £5m fx hit was for the year so not too certain why you've said £10m?.Given Q3 should have been their peak trading quarter then the numbers don't look very good at all, getting worse. Plus as you've flagged, they opened 13 new stores but it's unclear if their comparable percentage change numbers are on a LFL basis, they don't say, I'm assuming they are if not they would be a lot worse.

[1ups1de] 25/1/2024 13:19

The bull sh*tree at the helm needs replacing. Someone who is a global operator not spinner.

[disc0dave46] 25/1/2024 09:54

Taking a couple of previous Q4 revenues it does look like they will hit their guidance (high single digit decline - which gives them some scope as well).So could be a decent recovery play?

[the white house] 25/1/2024 07:56

Weak USA performance, as expectedShameful comment

[clocktower] 25/1/2024 07:55

The writing was on the wall the day they started to reduce the number of wholesale outlets they were willing to deal with.

Whenever I hear a business state the are just dealing with fewer but quality clients (2023 statement), it is the day to run well away, as what these clueless directors that implement these schemes do not seem to realise, is that they loose all the goodwill and also set the wheels in motion to give their rivals a boost.

They anger former customers by taking away a leading brand, which then makes them determined to punish them as they determined them not worthy of representing the brand/company.

They bring their downfall upon themselves.

[babbler] 25/1/2024 07:41

They can't guide. It's not looking great unfortunately but how much priced in. That's the question

[jubberjim] 25/1/2024 07:23

Those air cushioned soles are certainly getting a good workout

Further rocks in the road ahead

[castleford tiger] 25/1/2024 07:14

nothing great in there to kick this forward in my opinion.

The good news is that things have not got worse.

Wholesale revenue is a disaster.
Retail despite new shops is flat.

The only other negative is a further possible £10m fx hit.

So its anyone's guess but should not move far.

tiger