If a CEO is buying company shares, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
In this report, we are going to highlight a large CEO purchase at Dr. Martens PLC (DOCS:LN). Dr. Martens is a UK-based footwear company that operates in more than 60 countries worldwide. It is best known for its 1460 boot, which represents over 40% of sales. The company is listed on the London Stock Exchange and currently has a market cap of around £1.4 billion.
Large CEO Purchase
2iQ data shows that on July 14, CEO Kenny Wilson purchased 309,948 DOCS shares at a price of £1.29 per share. This trade cost the insider approximately £400,000 and increased his holding to 11.5 million shares.
Mr. Wilson has over 30 years' experience building and growing global consumer brands. Before joining Dr. Martens, he was CEO of Cath Kidston for seven years. Before that, he was President, Europe for Claire's Accessories, where he doubled profitability in two years. Earlier in his career, he spent 19 years at Levi Strauss & Co where he played a major role in the company’s expansion across Europe. Given his background, he is likely to have a good understanding of his company’s prospects.
Share Buyback Announced
Dr. Martens has faced a number of challenges recently including higher costs, supply chain disruptions, and weaker wholesale revenues. These challenges are reflected in its share price, which has fallen around 45% over the last year.
The business environment appears to be improving, however. In a trading update earlier this month, the company advised that trading had been in line with expectations since the start of 2023, with strong direct-to-consumer (DTC) growth in both EMEA and APAC, good e-commerce growth, and continued strength in retail as traffic recovers post covid. On the back of the company’s solid performance year to date, Dr. Martens announced a share buyback of up to £50 million.
In light of this update, and the share buyback, we see the insider buying here as a bullish development.