Dr Martens’ share price fell more than 10 percent on Thursday after its former owner, Permira, sold part of its stake in the first of several expected sales by the private equity firm.
Permira dropped a 6.5 per cent stake on Thursday which enabled it to recover £ 257m while retaining a significant 37 per cent stake in the business. Goldman Sachs placed 65 million Dr Marten shares at 395p each.
The private equity firm is expected to sell more of its stake, analysts said. Both Permira and Dr Martens declined to comment.
Although shares in Dr Martens shares fell 10.7 percent to 376.2p, John Stevenson, an analyst at Peel Hunt, said the sale was “standard private equity behavior”, adding: “When there is a placement of that scale, it will typically be done at a discount. ”
If further sales are handled in an “orderly manner”, investors will continue to show interest in the bootmaker, Stevenson said. “The basics are very attractive, the brand has a great long life. With the high level of cash generation, it can lead to special dividends over time.”
The Northamptonshire-based bootmaker has a successful initial public offering last year, with stocks jumping to a 14 percent premium above its 370p offer price. The stock exceeded the 500p mark in February 2021, but has since lost more than a quarter of its value.
In the first half-year results in December, Dr Martens recorded a 46 per cent increase in pre-tax profit compared to the previous year, thanks to strong retail and e-commerce revenues.
But supply chain disruptions held back sales as restrictions closed Dr Martens’ production facilities in Vietnam.
Backlogs at Los Angeles ports left some retailers with inventory shortages ahead of the holiday season, helping to push back £ 20m in wholesale revenue after the second half of the year.
The disruption will lead to price increases. CEO Kenny Wilson told the Financial Times December: “Everything is rising around the world: raw material costs are rising, transport costs are rising. . . fundamentally, price increases are needed to cover that inflation. ”
From July, the UK price of some of the company’s iconic 1460 boots will rise from £ 149 to £ 159, he added.