Interactive Investor

FTSE 250 shares round-up: Dr Martens crashes again

Investors in the beleaguered bootmaker and another mid-cap that listed within days of each other in 2021 were left disappointed today as shares plunged.

16th April 2024 15:47

by Graeme Evans from interactive investor

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Dr Martens store, London Getty 600

Mid-cap investors who backed Dr. Martens Ordinary Shares (LSE:DOCS) or Auction Technology Group (LSE:ATG) during 2021’s flurry of stock market flotations were nursing more disappointment today.

The pair, who listed within days of each other in early 2021, topped this afternoon’s FTSE 250 fallers board after suffering valuation falls in the double-digit percentages.

The fifth in a series of profit warnings by Dr Martens left its shares at a record low, while a mixed update by Auction Technology returned its shares below their 600p IPO launch point.

The group, which last year facilitated 86,000 auctions across its eight marketplaces, topped 1,500p at the end of its debut year before a reversal to 450p by January.

A reassuring AGM trading update then sparked a recovery to last week’s 625p, only for some of that progress to be undone by the disclosure of tougher trading at Proxibid.

The largest online marketplace in North America, which lists items from agricultural machinery to classic cars, has seen the normalisation of used asset prices in some industrial and commercial categories but remains hopeful of an improved trajectory.

Shares fell 90p to 533p but broker Peel Hunt continues to value the shares at 784p after reiterating its “Buy” recommendation following today’s half-year update.

It highlighted positive trading across most of the company’s brands, which also include BidSpotter and The Saleroom.

The company expects full-year revenues in the range of $175 million and $180 million (£140 million-£145 million), which implies organic growth of 2%-5% and a strong contribution from the February 2023 acquisition of EstateSales.Net.

Peel Hunt said: “On the face of it, this is another warning but one nipped in the bud early. Moreover, the core strategy continues to do well.”

The outlook at Dr Martens appears more uncertain after the boot maker said there were a wide range of potential outcomes for the new financial year. In its worst case scenario this could see 2025 profit at around one-third the level of the 2024 financial year.

Shares fell another 30.95p to 64p, which compared with 370p when the company was valued at £3.7 billion in its 2021 flotation.

The company’s planning assumptions include for wholesale revenues in the US to be down by double-digits year-on-year and for single-digit inflation in its cost base.

Chief executive Kenny Wilson said, “The 2025 financial year outlook is challenging, and the whole organisation is focused on our action plan to reignite boots demand, particularly in the US, our largest market.

“The nature of USA wholesale is that when customers gain confidence in the market, we will see a significant improvement in our business performance, but we are not assuming that this occurs in FY25.”

Alongside the update, Dr Martens revealed that Wilson intends to step down after six years in charge. He will be succeeded by the company’s chief brand officer Ije Nwokorie, who was previously senior director for Apple Retail.

Senior independent director Lynne Weedall said: “Ije is an inspirational leader and his experience in helping drive direct to consumer-led growth at Apple will be highly relevant in the coming years.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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