Steven Madden Ltd. struck again Friday, acquiring its Canadian licensee, Steve Madden Canada Inc., for $29 million in cash.
The deal, subject to a working capital agreement, is for all the assets of the privately held firm, whose sole business is to market Steve Madden products in Canada on a wholesale basis as well as in Steve Madden-branded retail stores.
Net sales for SM Canada, established in 1995 by Thomas Alberga, for the year ended July 31, 2011 totaled approximately $32 million. The transaction is expected to add about 5 to 7 cents a share to Madden’s diluted EPS for fiscal 2012.
Edward Rosenfeld, chairman and CEO of Steven Madden, said in a statement, “Canada is a strong and growing market for the Steve Madden brand. Upon the completion of this transaction, we intend to enhance our presence in major department stores and specialty stores, expand our portfolio of Steve Madden stores and further build the infrastructure to support [the] growing business.”
Scott Krasik, analyst at BB&T Capital Markets, said in a note to investors that the deal makes sense. “As Madden’s largest international market, Canada was an ideal first step toward taking ownership of its brand outside the United States.”
Noting international sales have been growing at a more than 50 percent clip for several quarters now, Krasik added, “Expect similar deals to be announced for Latin America and Asia over the next few years.”
Camilo Lyon, analyst at Canaccord Genuity, agreed, adding, “Only the Steve Madden brand is in international markets today, so the growth opportunity of the key portfolio brands — such as Betsey Johnson, Big Buddha, and Report — is vast.”