Axios Pro Exclusive Content

Multi-brand buyer fits Dr. Martens best

Illustration of a boot full of cash.

Illustration: Aïda Amer/Axios

Rebel bootmaker Dr. Martens would thrive under a multi-brand owner like Deckers or a luxury holding company, Marathon Partners' Mario Cibelli tells Axios in an interview.

Why it matters: The activist investor is calling for a strategic review that Cibelli expects will lead to an eventual sale of the company.

What they're saying: "A multi-brand owner could actually be better at figuring out what other countries this brand works in, where it could go or get to faster," Cibelli says.

  • Such an owner would have better negotiating power with vendors, he adds.
  • A strong mono brand like newly public Birkenstock would also make a logical suitor. "Most assuredly there's more profitability as a subsidiary of a larger company," he says.

Caveat: "Not every potential buyer is ready to bid at the time that a company might want to go through a process," Cibelli adds.

  • Ideally an auction would attract a healthy mix of "semi-strategic" financial suitors like L Catterton or private serial acquirers of brands that could motivate strategics to act more quickly, Cibelli says.

Catch up quick: Permira acquired the company in 2014 for $485 million and took it public in 2021 at a £3.7 billion valuation. Permira still owns about 38.5% of shares.

  • Its shares have since taken a tumble by about 75%, which Cibelli's letter attributed to "declining earnings, lowered projections and changed market dynamics" for small public companies.

By the numbers: The company's current market value stands at around $1.1 billion.

  • Dr. Martens's EBITDA for the trailing 12 months ended Sept. 2023 was $276 million, giving the company a current EV-to-EBITDA of 6.3x.
  • "As far as profitable footwear companies go, that have some substantial scale, we haven't found one that has a lower valuation than Dr. Martens," Cibelli says, adding that the business is worth at least $2 billion.
  • Dr. Martens is trading at about half the 12x median multiple of peers like Deckers, Crocks, Skechers, On Holding, Steve Madden, Birkenstock and Wolverine World Wide.

What's next: A potential sale isn't the only option on the table if they consider a strategic review.

  • The board could decide to cut costs to protect profits, buy back more shares, increase their dividend or maybe even buy something — though Cibelli thinks that third option is unlikely.

Permira and Dr. Martens didn't respond to a request for comment.

Go deeper