Market Watch: Steven Madden, Deckers in Spotlight

Market Watch: Steven Madden, Deckers in
Inside the Steve Madden store on 34th Street in New York
FN Archives.

The Week Ahead

Tuesday, Feb. 25:
Steven Madden Ltd. Q4 and full-year fiscal 2013 results
Rocky Brands Inc. Q4 and full-year fiscal 2013 results
Fifth & Pacific Cos. Q4 and full-year fiscal 2013 results
U.S. consumer confidence for February

Wednesday, Feb. 26:
Abercrombie & Fitch Co. Q4 and full-year fiscal 2013 results
L Brands Inc. Q4 and full-year fiscal 2013 results

Thursday, Feb. 27:
Deckers Outdoor Corp. Q4 and full-year fiscal 2013 results
Ross Stores Inc. Q4 and full-year fiscal 2013 results
Gap Inc. Q4 and full-year fiscal 2013 results
U.S. initial jobless claims
U.S. continuing jobless claims

Friday, Feb. 28:
U.S. GDP revision for Q4
U.S. Chicago PMI for February
The University of Michigan Consumer Sentiment Index for February

Stock Watch

While the market has so far a downbeat earnings season following soft holiday sales and unfavorable weather conditions, analysts remain upbeat about Steven Madden Ltd.’s fourth-quarter earnings report on Tuesday.

Camilo Lyon, an analyst at Canaccord Genuity, said the company is better positioned than its competitors to navigate the tough retail environment in the U.S., due in part to the diversity of its wholesale distribution partners and consumer profiles. “We believe newness in the market — such as chunky heels, pony-hair sneakers and dress shoes — is checking well [with customers], and early spring reads in warm-weather markets have been positive,” he wrote in a note.

What’s more, after attending FN Platform and Magic Market Week in Las Vegas, Lyon said the brand is also poised to benefit from emerging fashion trends, which include a shift toward a chunkier heel and wider pant leg.

While Lyon is optimistic about Madden, like many market watchers, he remains concerned about the continuing cold weather in the U.S., which could impact shoe sales for spring.

“If retailers have ordered spring product at levels similar to last year (as we believe some have), weather must begin to cooperate soon. Otherwise these retailers run the risk of repeating another poor start to spring that will be punctuated by cancellations,” he said.

Speaking about retail sector earnings so far this season, Wells Fargo analyst Paul Lejuez said, “We believe there have been several things that have weighed on those [firms] that reported: Fiscal 2014 guidance has generally been weaker-than-expected; January and February weather is causing a major headache for management teams; [there are] concerns about e-commerce taking an increasing share of the retail pie; and several sick competitors continue to drive an overall promotional environment, with no end in sight.”

Helping to temper the market’s reaction to generally weak results, Lejuez said, was the decision by many companies to provide intra-quarter updates on fourth-quarter earnings, either through holiday sales updates, ICR presentations or quarterly pre-announcements.

Meanwhile, all eyes will be on Deckers Outdoor Corp. on Feb. 27, when the company is set to release its quarterly and full-year results.

Analysts said they believe the recent cold weather snap will benefit the firm, much as it did for Columbia Sportswear Co., which reported this past Wednesday. Analysts said retailers have placed their orders for fall earlier this year so as to ensure a full in-stock position next season.

“Consistent with our industry checks over the last few months, the demand for cold-weather boots, such as Ugg Australia, Sorel and Timberland, has not abated but rather accelerated,” Lyon said, noting that he expects Deckers to deliver earnings per share growth of approximately 30 percent in fiscal 2014.