The Dr Martens share price: bargain basement or style over substance?

Grab a hammer. Put them in the freezer. Stuff them with damp newspapers. Just some of the ways to break in your Dr Martens (LSE: DOCS) shoes, according to an article in Metro last month.

And Dr Martens boots seem to be everywhere — I’ve noticed articles in GQ, InStyle and British Vogue over the past month alone. So as the nights draw in and winter weather approaches, could the shoemaker be in for a bumper season and should I buy some shares?

Stumbling share price

Dr Martens made its stock market debut in January, at 370p per share. This was at the top end of its expected range after investor demand for the footwear firm meant that the offer was eight times oversubscribed. After reaching a high of 500p in February 2021, the Dr Martens share price juddered around the 475p mark until June, when it saw a period of slow decline. It’s now sitting back around 370p. 

Could winter weather, Black Friday sales and Christmas shopping season give it a boost?

Big strides

Despite retail stores being closed for a good chunk of the year, its half-year report looked pretty strong. On a two-year basis, e-commerce revenue for the firm was up 155%.  There’s also encouraging potential for future growth — revenue grew 46% in China despite the disruption of the pandemic. 

In terms of strategic priorities, Dr Martens is looking to reduce its reliance on third-party sellers and open between 20 and 25 of its own stores over the coming year. It’s also a growing player in the vegan shoe market, now offering six animal-friendly styles to customers. Using a vegan alternative upper material derived from mushrooms and a sugarcane-derived cushion are strategic priorities for the coming decade. 

Putting my foot in it?

But there are risks. Firstly, nationwide fuel shortages mean that materials deliveries are under threat. There’s even a risk that Dr Martens might not even be able to fulfil bumper orders if they materialise this winter.

Secondly, materials costs could squeeze margins if leather prices increase due to growing global demand. Dr Martens could also prove vulnerable to higher costs if inflation starts to bite — prices should adjust in the longer term, but there could be a period of discomfort in the medium term. 

And finally — fashion is fickle. The brand’s look is very much characterised by one thick soled, clumpy boot. These are hot properties in 2021 with the wider trend being all about heavy boots with chunky soles. And while Dr Martens also has timeless classic appeal (like a pair of Levi’s 501s), the company is still vulnerable to changing tastes over the coming years. There’s very little scope for diversification when a signature style is your calling card. 

It looks as though post-IPO enthusiasm may have worn off. With Dr Martens shares now almost back where they started in January, is it a good time for me to pick up a bargain? If the fashion press are to be believed, they could be a sensation over the winter, which could help to drive the share price back up. But I’m reluctant to put my foot in it. I won’t be adding this stock to my portfolio.