Good Times Continue to Roll for Madden

Business at Steven Madden Ltd. is going from strength to strength as the firm hits the right trends in every channel of distribution, said analysts, who are upbeat on the firm’s back half.

“What Madden has been able to do is interpret whatever fashion is relevant, and their consumers accept it,” said Scott Krasik, an analyst at BB&T Capital Markets.

Sterne Agee analyst Sam Poser noted that the firm continues to be “tremendously innovative in the speed at which they deliver product.”

So far, shoppers agree. The company said last Thursday it has increased prices on select items with fresh materials or styling to counter rising costs and has not yet seen price resistance from consumers.

Madden’s management is counting on distribution in better department stores, momentum in the Betsey Johnson business and growth in newly acquired licenses to drive the back half.

Edward Rosenfeld, the firm’s chairman and CEO, said in a call with analysts that sell-throughs of Betsey Johnson footwear were extremely strong in department stores, while the Big Buddha brand is still seeing nice momentum. Meanwhile, the biggest increases in the first quarter came from private-label accessories.

The firm also is planning big moves for Superga, the Italian heritage sneaker it will distribute in North America starting in June.

“In terms of distribution, it’s going to be focused on the high-end department stores and specialty stores,” Rosenfeld said. “We’re working on developing some kind of collaboration or co-branding concept with a designer brand, which we think could be very exciting.”

The company also affirmed it is very actively pursuing acquisitions.

“We’re looking into a couple of things right now [and] hope to be able to get at least one of them done … hopefully [by] the next call,” said Rosenfeld. “We also continue to look at some things on the very high-end — the Elizabeth & James kind of customer base. So it’s certainly a possibility that we would do another license this year.”

For the period ended March 31, the Long Island City, N.Y.-based firm’s net income rose 16 percent to $17.9 million, or 63 cents a share, compared with $15.4 million, or 55 cents, in the year-ago period.

Although revenue surged 26 percent to $165.8 million on the back of a 12 percent increase in comparable store sales, consolidated gross margin fell 380 basis points, dragged down by wholesale.

Madden expects fiscal 2011 revenue to rise between 20 percent and 22 percent, with earnings per share expected to be in the range of $2.03 to $2.10.

The firm ended the quarter with $188.8 million in cash, cash equivalents and marketable securities.

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