There are two FTSE stocks that have crashed over the past 12 months. As well as being British icons, both are in the fashion business. I wonder if the time has come to bag myself a bargain.
1. Dr Martens Since listing in January 2021, ( ) has issued five profits warnings. Unsurprisingly, the company’s share price has fallen 84% since its IPO.
Over the past 12 months, it’s down 51%. The company’s most recent downgrade cautioned that for the year ending 31 March 2025 (FY25), earnings before tax could be one third of what they were in FY24. And analysts are forecasting earnings per share of just 2.
9p in FY25 (FY24: 7p). If correct, the shares currently have a forward of 24. This means they’re not cheap.
But if the prediction for FY27 proves accurate, the shares are currently trading on a multiple of just 9. For a company in the fashion industry, that would be something of a bargain. And there are good reasons why Dr Martens’ fortunes could soon improve.
Some of its problems appear to be temporary ones. The leasing of additional warehouse space and one-off costs incurred in upgrading its planning system are unlikely to be repeated. But I’m concerned that the company may be caught in a ‘doom loop’ where it has to increase its prices to help offset the impact of falling sales.
The result is a further reduction in turnover and the temptation to increase prices even more. The chart below shows how the number of pairs of boots, shoes and sandals sold in FY24 was 18% lo.