Analysts praised Steven Madden Ltd.’s recent $4 million acquisition of the rights to the Wild Pair brand, saying the move may be small but could pack a punch.
They also raised price targets for the Long Island City, N.Y.-based firm.
“While small relative to recent deals, this transaction is yet another example of Madden doing what it does best: buying brands on the cheap with the intent of leveraging its wholesale distribution relationships to gain shelf space at retail,” said Camilo Lyon, an analyst at Canaccord Genuity.
Analyst Oliver Chen at Citi Investment Research agreed, writing in a research note that “Wild Pair caters to young, fashion-focused women, which coincides well with the Steve Madden consumer.”
The licensing deal was signed with Bakers Footwear Group Inc., which has been struggling with liquidity and disappointing comparable-store sales. It follows a $5 million debt and equity investment by Madden in 2010 in exchange for a 20 percent stake in Bakers.
“Madden has wanted Wild Pair for a while. Bakers was focused on selling it through retail, but Madden has confidence that this is a strong, unique brand with a big opportunity to sell through the wholesale channel, perhaps in national chains such as Macy’s, Kohl’s and Target,” said Citi’s Chen. The deal does not preclude Bakers from continuing to offer the branded footwear in its retail stores and online.
“Ultimately, we believe Wild Pair can be an exclusive shoe for one of Madden’s mid-tier retail partners at minimal cost to it,” added Chen.