Steve Madden Was Agile in Q3, But Payless Bankruptcy Still Creating Challenges

Steve Madden sandal shoes
Steve Madden Carrson block-heel sandal.
Steve Madden

Steve Madden today reported third-quarter results that were in line with market forecasts — as it remains a relative outlier amid industrywide challenges.

The fashion footwear maker’s Q3 sales increased 8 percent to $441.2 million, while reported profits were $44.2 million, or 77 cents per diluted share. Adjusted net income at $44.5 million, or $77 cents per diluted share, was also consistent with forecasts.

“We delivered solid results in the quarter, which were in line with our expectations on a consolidated basis on both the top and bottom lines,” CEO Ed Rosenfeld told investors during a conference call today. “Strong performance in our largest segment, wholesale footwear, was partially offset by softness in retail and wholesale accessories.”

In wholesale footwear, Rosenfeld said the Steve Madden businesses were the growth drivers, particularly Steve Madden women’s, Steve Madden men’s and Madden Girl. Overall, the wholesale division was up 8.7 percent to $376.9 million.

Still, there were some challenging areas. Rosenfeld noted that retail same-store sales declined 3.8 percent during the quarter, as gains in sneakers and sandals were not enough to offset declines in the dress and boot categories. (Overall retail net sales, however, increased 4 percent to $64.3 million.)

The boot category is also off to “a very slow start,” Madden’s chief said, noting that in October, boots accounted for the entire decline in comp store sales.

Meanwhile, although Payless ShoeSource has emerged from its bankruptcy — announced in April — Rosenfeld noted that the Chapter 11 filing and 900 store closings continue to impact Madden, which produces private-label footwear for Payless.

“We took a pretty sizable hit from Payless in Q3,” Rosenfeld told investors. “But the Payless business should be back in line with our line for Q4.”

Looking ahead, Madden maintained its full-year outlook but offered cautionary statements about the year ahead.

“We anticipate that the retail environment will remain challenging, and then the boot category, in particular, will continue to be a headwind through the fourth quarter,” Rosenfeld said. “We are, therefore, taking a prudent approach as we plan the business for the holiday season, working closely with our wholesale partners and managing our inventory levels carefully.”

As of 12 p.m. ET, the company’s shares were down 9.7 percent to $38.67.