How Dr. Martens and Birkenstock explain London’s stock exchange quandary
Dr Martens and Birkenstock don’t look too different on paper. But their valuations differ dramatically – with one listed in London, and the other enjoying the high life in New York
Maybe it was Barbie that did it.
Birkenstock certainly rode the wave of Margot Robbie’s footwear choices in the summer’s blockbuster. A well-received IPO – even with a slip in the share price since the firm’s float – today sees the German-headquartered sandals firm valued at just shy of $8bn.
With annual revenues of just over $1.3bn, and EBITDA margin of 30 per cent, one can see why investors are excited.
Cross the Atlantic, however, and another shoe company looks on paper to be in pretty similar health.
Dr Martens, the London-listed and Camden-headquartered boots, sandals and shoes operator has a very similar revenue profile to the sandal maker, even if the old-school 1460s in the range doesn’t necessarily suit the Barbie aesthetic.
Revs last year pushed over the £1bn mark, near enough flat with Birkenstock. EBITDA margin is lower at around 24 per cent, but the brand’s intrinsic strength remains strong – the firm ranks first in global brand recognition around boots, and it is selling more than double the number it sold just five years ago.
Now, there are a few scuffs around the edges – a shift to a new distribution centre in Los Angeles did not go to plan – but it’s inarguable that the two brands are iconic footwear operations on an upward trajectory, from not far off the same starting point.
Yet this tale of two shoes deviates once one looks at the stock market performance. Birkenstock’s circa £6.5bn valuation in New York compares favourably to Dr Martens in London, trading at a market capitalisation of £1.2bn.
One can argue the merits of putting one in front of the other, but it’s not apparent to this observer that the difference is more than £5bn.
It’s clear comparisons like this that bring home the state of London’s bruised and battered equity markets. Much action is underway to encourage long-term investors to dive in, and to bring down the burdens of listings to encourage IPOs.
But London’s biggest problem is companies of similar size and scale are simply valued more in New York than they are here, from shoes to energy companies.