Some other peers you might want to look at for your valuation. $CROX $SKX. Both trade at more similar valuations to $DOCS.L and have been growing. I also wouldn't comp to Nike, Nike is the golden standard when it comes to athletic wear brands.
I do think whenever you buy a fashion brand like this you need to worry about the fashion risk. I wouldn't think something like $DOCS.L is going to go away. But it's fashion ability and sales to go in waves.
Good point Jacob. I'll add those peers to my model. Comparing to Nike is perhaps a bit of a stretch, too.
I actually looked up the exact same 2004-present GT data but unfortunately didn't include it in the write-up. From it, I concluded that people seem to purchase Docs in the Q4 autumn & winter period, but the overall cyclicality was less clear (though I think it still applies). I need to find a better method to measure this.
On the google search trends. The thing that looks worrying to me with DOCS is that November and December search trends for this year look worse than last year. Which might imply that sales growth is starting to slow/decline.
It's worth confirming that there is actually a correlation between google search trends and sales. I own $CROX and when researching them I found a pretty decent correlation between google search popularity and sales in a quarter.
Yep, it's not an unexpected decline given the current macro outlook (something has to depress the valuation, after all). I ran the correlation a minute ago and it came out at .83, so it seems you're right in your prediction. The data set was quite limited as sales are available since 2014 (not 2004). It will be interesting to see how this plays out in the full year results.
Thanks for the read. Seems like an interesting company. Would be nice to own when FCF yield gets into the 8-10% range.
There is lots of trading down and purchase differment that is happening right now with weak consumer strength. I'd expect to see a sales and margin decline into the coming recession. Be careful of that downside risk if you are long currently.
Nice write up. Still could be more pain as consumer discretionary but margins will improve as inflation decreases next year. When I did a google trends company search it seems to be more popular in the last few years so might be some reversion to the mean or am I reading this wrong? Low adoption in China and if it becomes fashionable there it will be top performer.
always imagined what could happen here if there ever was 'Levi's' era where this icon was embraced worldwide for decades for cultural aspirations, not due to overpaid fly-by-night celebrity athletes.
on a personal note, docs were the most comfortable office shoe i ever had, and fell apart after 6 years only because i was lazy and slipped them on\off (collapsed at achilles support).
Thanks! I think the brand is super strong here, but sadly there is something intangible and unpredictable about brand takeoffs. What pair were those? I'm planning to wear the black 1461 shoe for work (without yellow stitching, though now I wish I had bought them with).
Some other peers you might want to look at for your valuation. $CROX $SKX. Both trade at more similar valuations to $DOCS.L and have been growing. I also wouldn't comp to Nike, Nike is the golden standard when it comes to athletic wear brands.
I do think whenever you buy a fashion brand like this you need to worry about the fashion risk. I wouldn't think something like $DOCS.L is going to go away. But it's fashion ability and sales to go in waves.
Two pieces of data on this.
1) Google search trends look to be down this year compared to last for the important Holiday period. https://trends.google.com/trends/explore?date=all&q=%2Fm%2F0_sxs8v,%2Fm%2F064bsmc
2) When I went to my local mall for Christmas shopping the Dr. Marten's store was packed.
Good point Jacob. I'll add those peers to my model. Comparing to Nike is perhaps a bit of a stretch, too.
I actually looked up the exact same 2004-present GT data but unfortunately didn't include it in the write-up. From it, I concluded that people seem to purchase Docs in the Q4 autumn & winter period, but the overall cyclicality was less clear (though I think it still applies). I need to find a better method to measure this.
On the google search trends. The thing that looks worrying to me with DOCS is that November and December search trends for this year look worse than last year. Which might imply that sales growth is starting to slow/decline.
It's worth confirming that there is actually a correlation between google search trends and sales. I own $CROX and when researching them I found a pretty decent correlation between google search popularity and sales in a quarter.
Yep, it's not an unexpected decline given the current macro outlook (something has to depress the valuation, after all). I ran the correlation a minute ago and it came out at .83, so it seems you're right in your prediction. The data set was quite limited as sales are available since 2014 (not 2004). It will be interesting to see how this plays out in the full year results.
Thanks! My girl-friend says this brand is very popular now! Need to read and research!
Thanks for the read. Seems like an interesting company. Would be nice to own when FCF yield gets into the 8-10% range.
There is lots of trading down and purchase differment that is happening right now with weak consumer strength. I'd expect to see a sales and margin decline into the coming recession. Be careful of that downside risk if you are long currently.
Thanks again.
Nice write up. Still could be more pain as consumer discretionary but margins will improve as inflation decreases next year. When I did a google trends company search it seems to be more popular in the last few years so might be some reversion to the mean or am I reading this wrong? Low adoption in China and if it becomes fashionable there it will be top performer.
I agree. As to the Google trends, Dr. Martens invested a lot into SEO and digital marketing in recent years. It’s in the prospectus.
great read! too illiquid on otc, but...
always imagined what could happen here if there ever was 'Levi's' era where this icon was embraced worldwide for decades for cultural aspirations, not due to overpaid fly-by-night celebrity athletes.
on a personal note, docs were the most comfortable office shoe i ever had, and fell apart after 6 years only because i was lazy and slipped them on\off (collapsed at achilles support).
Thanks! I think the brand is super strong here, but sadly there is something intangible and unpredictable about brand takeoffs. What pair were those? I'm planning to wear the black 1461 shoe for work (without yellow stitching, though now I wish I had bought them with).
www.drmartens.com/uk/en_gb/vegan-1461-dark-red/p/14046601#details
not sure leather would have lasted longer with the heel abuse; i also put 1-2 outside miles on them each weekday for lunch in all kinds of weather.
Will read this later. Bro you beat me to a Dr Martens write up 🤣😂
Next time it'll be you beating me! I'll have a look at some of your write-ups too.
Thanks I appreciate it. Let me know what you think 😁