Investment firm Marathon Partners Equity Management wants British boot maker Dr. Martens to hire bankers and begin an immediate strategic review that could lead to a sale of the company, according to a letter seen by Reuters.

The New York-based firm argues Dr. Martens’ stalled earnings growth and sharp share price drop of 83 percent since its public listing in 2021 have decoupled its valuation from its intrinsic value.

“Maintaining Dr. Martens as an independent publicly traded company is likely no longer in the best interests of shareholders,” Mario Cibelli, Marathon Partners’ managing member, wrote to the company’s board last month.

Dr. Martens, known for its chunky soled boots with yellow stitching popular with teenagers and rock stars, would likely produce higher earnings as a private company or as part of a larger, multi-brand holding company, the letter said.

The letter, addressed to Dr. Martens board chairman Paul Mason and dated March 15, was seen by Reuters this week.

While the company has a current market value of about $1.1 billion, its exceptionally strong brand could make it attractive to potential buyers who might be willing to spend at least $2 billion to acquire the asset, Cibelli said.

The investment firm owns roughly 5 million shares, making it one of the 30 largest investors in Dr. Martens. The company’s shares closed at 87.75 pence on Monday.

A representative for Dr. Martens did not respond immediately to a request for comment.

Cibelli, in an interview with Reuters, said he had spoken with management and board members several times. In his letter, he said he worried the company would have a “very difficult time earning its way to a share price that well exceeds what could reasonably expected to result from an auction process.”

A strategic buyer “could add further scale to operations, create new synergies and eliminate unnecessary overhead,” the letter added.

Cibelli also expressed support for CEO Kenny Wilson in the letter, describing him as “an open-minded and talented executive.”

Dr. Martens was bought by private equity firm Permira in 2014 and in 2021 it was listed publicly again. Permira still owns roughly 38.5 percent of Dr. Martens and Cibelli argued the firm should “support a strategic alternative process to maximise shareholder value for a company that has effectively become stranded and orphaned in the public markets.”

A representative for Permira did not respond immediately to a request for comment.

But Cibelli warned Dr. Martens directors should “stay vigilant” to avoid any potential conflicts of interest that may arise from their private equity sponsor being in the market for a sale or initial public offering of another branded footwear company, Italian luxury sports shoe brand Golden Goose.

By Svea Herbst-Bayliss; Editing by Jamie Freed

Learn more:

Dr Martens Issues Fourth Profit Warning of Year Amid Weak US sales

Dr Martens has issued its fourth profit warning this year as a tough consumer environment in the US continues to affect sales of its sturdy boots.

Shein, the online fast fashion retailer founded in China, has more than doubled its profits to more than $2 billion as it awaits approval for a stock market listing in New York or London.

The company, which is growing rapidly around the world by using social media to promote its goods, recorded sales of about $45 billion last year, according to a report in the Financial Times based on information from sources close to the company.

Shein, which has moved its headquarters to Singapore, is among the most profitable fashion companies in the world, the figures suggest, making more than the Swedish fashion group H&M and the UK’s Primark and Next. However, profits at Inditex, the Spanish owner of Zara, Bershka and Massimo Dutti, remain higher at €6.9 billion last year.

The UK chancellor, Jeremy Hunt, reportedly held talks with the Shein boss, Donald Tang, in February to try to persuade him to float the company on the London Stock Exchange. The company is thought to be considering a London listing because it believes that the US Securities and Exchange Commission is unlikely to approve its initial public offering. If it were to go ahead, it would be one of London’s biggest ever corporate listings, valued at up to $90 billion.

The rapid rise of Shein, which bought the Missguided online brand from Mike Ashley’s Frasers Group last year after recording sales of £1.1 billion in 2022 for its UK entity, has piled pressure on UK online fashion specialists including Asos and Boohoo. The new competitor is gaining ground just as the UK online groups grapple with a squeeze in the market after the pandemic boom.

Shein partly benefits from sending goods directly to shoppers, including to the UK and US, from China so they attract fewer taxes. The tactic has proved controversial, prompting calls for a change in tax rules.

Founded by the entrepreneur Chris Xu, the company continues to run most of its operations from China but sells all its goods outside the country. It reached a valuation of $100 billion in an April 2022 fundraising round, making it the third most valuable startup in the world.

By May last year the company’s value had dropped to just over $60 billion, but Shein has reportedly told investors it is hoping for a valuation of as much as $90 billion if it goes ahead with a public listing.

Shein declined to comment.

By Sarah Butler

Learn more:

Shein Files for US IPO in Major Test for Investor Appetite

Goldman Sachs, JPMorgan Chase and Morgan Stanley have been hired as lead underwriters on the initial public offering (IPO), and Singapore-based Shein could launch its new share sale some time in 2024, the sources said.

MUMBAI – Nars Cosmetics, Rare Beauty, Kylie Cosmetics, Dr Dennis Gross, Sol de Janeiro, Laura Mercier and Urban Decay were just some of the international players that entered India’s $23.7 billion beauty playground in 2023. Ask any Millennial or Gen-Z with an interest in beauty about this list, and they’ll tell you it’s the reckoning of a distant dream. Still, that same shopper doesn’t feel as deprived as they did a few years ago when acquiring their favourite creamy concealer or multi-action cream which required a distant cousin visiting from abroad and a pricey flight. That’s because in the same universe that large prestige beauty lines are landing in the subcontinent, there is a crop of homegrown brands making their presence felt.

“Homegrown beauty has evolved. Dedication to transparency, ingredients, packaging, marketing and conscious thinking from the founder’s side is driving this change,” said Bianca Louzado, a makeup artist and founder of Code Beauty, a cosmetic sanitising brand.

Louzado said 20 percent of her professional makeup kit is now made up of homegrown brands like Asa Beauty, Aminu and Daughter Earth. And she isn’t alone. Out of the 6,200-plus brands retail giant Nykaa sells, over 400 brands represent Indian ingenuity. That number is growing daily.

According to Euromonitor, India’s per capita gross income is set to rise more than 130 percent through 2040. The Indian consumer, besides spending more on makeup and skincare due to increased disposable income, is also more aware of their needs and open to trying new things, with 42 percent strongly agreeing that they enjoy discovering new beauty and grooming products, according to a report by market intelligence firm Mintel.

Tanya Rajani, principal analyst, beauty and personal care at Mintel India said the “desire for novelty, combined with increased internet consumption and digital engagement, has fuelled the growth of home-grown beauty brands in India.”

A ripe market and a willing consumer are great bait, but in order to succeed, home-grown Indian brands need to have strong strategic foresight and create products with perfect market fit without creating clutter. But above all, new items need to be increasingly guided by its users. To be chosen by the discerning Indian beauty shopper, what, when and how a brand launches a new product will make all the difference.

“India as a market is still at a nascent stage, I don’t think it’s saturated. There is a constant premiumisation happening,” said Aman Mohunta, co-founder of skincare line Aminu. “A brand needs to focus on which strata they want to operate in.”

Identifying a Gap

Oftentimes, the Indian beauty entrepreneur is the Indian beauty consumer, with a deep-rooted craving to find and fix what’s amiss. Identifying a gap has become the basis of product development for founders like Karishma Kewalramani, who launched FAE (Free and Equal) Beauty in 2019.

“While the penetration of new brands had begun, I didn’t see anyone making products that were working for brown skin at an affordable price,” she said.

FAE retails for an average of Rs 220 to Rs 750 ($2.65 to $9.04) and is sold online at Nykaa, Tira Beauty, Kindlife and Myntra, along with quick commerce platform Blinkit and its own e-commerce website. The line launched with multi-use sticks based on two consumer behaviour learnings: people wanted products that took them from day to night and worked for their lips, cheeks and lids. Customers also cared deeply about a matte finish.

Though the brand had customer data at the ready, evolving consumer preferences meant FAE had to continuously evolve. The brand entered the liquid lipstick category in September 2023 with Lip Whip in 10 nude shades. A mousse-like matte formula ensured it stayed on the lips for six to 12 hours, a chief concern of shoppers. But quickly thereafter, FAE phased out its multisticks because they didn’t have the performance that customers were looking for.

“In India, people tend to think that if it doesn’t last long, it’s not worth my money,” said Kewalramani.

Thanks to brands like The Ordinary, which familiarised a global audience with ingredients like AHAs and BHAs, Shamika Haldipurkar launched D’you in 2020 with a single product, a serum called Hustle that’s formulated with 11 actives. Hustle targets acne, dehydration and premature ageing among other skin concerns, and retails for Rs 3,200 ($38.58) on its website and at Nykaa, Tira and Amazon. Haldipurkar saw an appetite for premium products with sophisticated formulation, but also discovered that multi-step routines caused confusion among Indian shoppers. Hustle came without a side of overwhelm.

Though entering a price sensitive market with one product at a premium price was risky, the product helped D’you become profitable within three months of launch; it also has a 45 percent retention rate. Today, D’you’s portfolio includes five products, including its latest launch, the Unkissed sunscreen, its most requested product.

“It was a key product missing from our portfolio for consumers who wanted a complete D’you skincare routine,” Haldipurkar said, who noted that the flurry of sunscreen launches in the market is due to category awareness and consumption in the country. “Insights from our retailers show that it’s the number one category trending year on year … A lot more people have adopted the use of sunscreen.” Beyond its Lip Whip, FAE also launched a SPF Juice, a sunscreen that doesn’t leave a white cast. The brand has had its best year since launch, with 350 percent growth.

Meeting the Consumers All the Way

Increased interest in functional skincare has spurred the entry of brands like Minimalist and Aminu, which focus on high performance, science-backed formulas.

Minimalist has taken an educational approach to its marketing. Its website features a skin analyser tool to help a shopper build a routine and its social media is populated with skincare science. Minimalist acknowledges that products like its Tranexamic 3% or Sepicalm 3% Moisturiser could require some extra hand holding.

“All our products are clinically tested and we share those results on our website. Our transparency in sourcing, manufacturing processes and educating our customers wins us consumer trust,” said chief executive Mohit Yadav.

While seemingly commonplace in the West, brands have realised the importance of educating shoppers directly with platforms like TikTok banned.

Aminu, meanwhile, aims to build on the philosophy of personalised skincare by providing individualised regimens based on the skin’s age, hydration, oil production levels, barrier strength and other such factors through free consultations with experts. It includes over 200 ingredients to create multi active blends; its Melting Balm Cleanser, which sells for Rs 1,200 ($14.47), includes 12-plus seed and enzyme oils

“Our approach is to help you understand what your skin needs at that moment first, then advise on a regime that has the ingredient profile from our portfolio to suit those needs,” said Mohit. “We’re not claiming we found a miracle ingredient that works brilliantly on [all] subcontinental skin.”