Steven Madden’s Streak Continues

Steven Madden's Streak Continues
Edward Rosenfeld

NEW YORK — On the heels of its April announcement to raise its full-year guidance, Steven Madden Ltd.’s 68 percent profit boost in the first quarter came as no surprise to most analysts.

“This is one of the top-performing footwear brands at retail right now,” said Jeff Van Sinderen, a senior analyst at B. Riley & Co. “There’s still a lot of pressure out there, but what’s helping Steve Madden is that they’ve got a great value proposition, terrific product and great style content, thanks to Steve and his team.”

Strength in the company’s wholesale division, led by Steve Madden Women’s and Madden Girl footwear, as well as its accessories business, Daniel M. Friedman, helped the company triple its net income to $6.6 million in the first quarter.

In a conference call last Tuesday, Chairman and CEO Edward Rosenfeld also singled out the firm’s L.E.I. business with Wal-Mart as a growth prospect, as Steven Madden now expects L.E.I. to double its original sales projections for the year. “We launched [L.E.I.] in December, and as of February, we were in about 2,400 doors, and the product has been selling through very, very well,” said the CEO on a conference call. “Our initial budget was about $1.5 million of income contribution from L.E.I. in 2009, and we think we can do at least twice that based on what we are seeing today.”

The company’s men’s business was its weakest performer, with revenues for Steve Madden Men’s down 8 percent to $7.7 million for the quarter. “Driving mocs and dress shoes are performing well, but the casual category continues to be very challenging,” said Rosenfeld.

However, he noted that the company should have more than $2 a share in cash on hand by the end of the year, and is looking “more seriously” at acquisitions. While he did not name any specific targets, Rosenfeld said that any acquisitions would be “companies that we could plug in to our existing infrastructure.”

“[The company] has done a great job of focusing on one consumer all the way up,” said Sam Poser, a senior research analyst with Sterne Agee, referring to Steve Madden’s fashion-conscious teen shopper. “It will be interesting to see if an acquisition would also target that consumer.”

On May 5, Steven Madden reported a profit of $6.6 million, or 37 cents a diluted share, for the first quarter ended March 31, versus $2.1 million, or 10 cents, for the same period of 2008. Analysts surveyed on Yahoo Finance had predicted earnings per share of 36 cents a diluted share.

Net sales for the Long Island City, N.Y.-based firm were $107.4 million in the first quarter, up 7 percent from $100.5 million a year ago. Its wholesale business jumped 8 percent to $81.3 million, while retail sales rose 4 percent to $26.1 million in the quarter. Same-store sales increased 7.6 percent, compared with a 3.7 percent decrease in the first quarter of 2008.

Steven Madden also reaffirmed its guidance for net sales to range from flat to a 2 percent decline for full-year 2009, with diluted EPS to range from $1.85 to $1.95.

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