When Madden last reported, one of fashion footwear’s biggest names pulled off a slight Wall Street beat after several quarters that were challenged by trend softness.
In the second quarter’s report, released on July 30, profits came in at $24.5 million, down 13 percent from the previous year’s Q2, while total sales increased 9.4 percent, to $323.6 million. But it was the company’s same-store sales growth — up nearly 19 percent year-over-year — that sparked much of Wall Street’s praise.
Despite some weakness in the stock in recent weeks, Canaccord Genuity Inc. analyst Camilo Lyon remains confident in his buy rating heading into Q3. The analyst projects Q3 earnings per share of 68 cents on 10 percent comp growth.
“While warm weather has seemingly delayed the start of fall shopping, we believe [Madden] saw an uptick in demand in October as spurts of colder weather spurred traffic,” wrote Lyon on Oct. 26. “In our view, [Steve Madden] is best positioned to navigate through this choppiness with its on-trend fashion footwear and tight inventory controls. We also expect a healthy 2H15/2016 sales contribution from Dolce Vita, Blondo and Freebird, as the consumer response to the fall product lines has been very encouraging.”
Lyon also noted hat while a warm September likely delayed boot sales at Steve Madden retail stores, it helped sandal sales.
Ahead of Q3, Sterne Agee CRT analyst Sam Poser says the company remains “best-in-class.”
“Even in the past two years, with a lack of trend in women’s fashion, Steve Madden has weathered the storm better than its competitors, gained market share in its core business and also via the Dolce Vita and Blondo acquisitions,” Poser wrote on Oct. 26. “As trends improve, which we believe is now occurring, [Steve Madden] will continue to gain market share. Based on our checks, [Steve Madden] has gained additional floor space within Macy’s, Dillard’s, Nordstrom, and others, and will likely continue to gain incremental space with Dolce and Blondo in 2016.”
For Q3, Poser predicts EPS of 67 cents, up 8.1 percent; revenue of $429 million, up 9.3 percent (including $12 million for Dolce Vita and $10 million for Blondo acquisitions); organic wholesale revenue growth estimate of 2 percent; and same-store sales growth of 5 percent, compared with a decline of 7.4 percent last year.
While he pared down his full-year EPS estimates and price target, saying that prior estimates were “too aggressive,” Poser said he is confident Steve Madden will return to mid-teens EBIT margin by the end of 2016, versus 12.5 percent in FY14.