Madden Delivers Another Strong Quarter

While many footwear companies are reporting healthy second-quarter results, Steven Madden Ltd. continues to stand out from the pack.

In addition to solid growth in its core U.S. wholesale business, the company is seeing momentum in non-footwear categories, as well as internationally.

In Asia, for example, Chairman and CEO Edward Rosenfeld said business emerging from the region is “about double this year versus last year in the second quarter.” He called the region “a big driver” of future revenue growth.

“We have another big third quarter [coming up] with [growth that is] north of 50 percent. We’re seeing a lot of traction there and see this as a big opportunity for us moving forward,” said the exec on a conference call with analysts.

The Long Island City, N.Y.-based firm said its international business contributed approximately $25 million to the top line as of the last 12 months ended June 30, and it is currently in discussions with potential partners to enter Benelux and South Africa.

Analysts said the firm also is finding success in handbags. The company acquired Big Buddha earlier this year and is growing its Madden Zone bag division.

Meanwhile, the company is cashing in on new licensing opportunities. Its footwear collection for the Material Girl line launches in 200 Macy’s doors tomorrow.

“The core business is strong, but these new business lines represent areas of more-rapid growth for the company,” said Jeff Van Sinderen, analyst at B. Riley & Co. “These are businesses that can double and triple in size or more, and the company is still on track to double its earnings by 2014.”

Steven Madden last Thursday reported that second-quarter net income swelled 63 percent to $19.8 million, or 70 cents a share, up from $12.1 million, or 44 cents, in the year-ago period.

Net sales for the quarter increased 36 percent to $158.7 million, thanks to strong gains in the firm’s Steve Madden Women’s, Steve Madden and Madden Girl wholesale footwear divisions, as well as significant contributions from new business ventures.

Retail sales were up 4 percent to $29.5 million, driven by a comp-store sales increase of 7 percent.

“They blew it out of the water,” said Van Sinderen. “We were on the high end of the Street estimates, at 62 cents, and they beat our number.” Analysts, on average, were looking for 57 cents.

Like other companies, Madden is carefully monitoring the sourcing situation in southern China, where costs have risen an average of 5 percent.

The company is working to offset rising costs by shifting some production to northern areas of China and to Mexico.

Rosenfeld said the firm will likely pass some of the higher supply chain costs to consumers “as we have done in past periods of inflation.”

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