Strong Q2 for Steven Madden

There’s no stopping Steven Madden Ltd., analysts said last week after the firm beat expectations for the 13th consecutive quarter.

Momentum at retail and recent acquisitions will continue to help drive the top line, they added, while the firm hinted it could expand into luggage and lingerie.

“It’s hard to find what’s not working for them. Their comps are still increasing on top of positive comps achieved last year,” said Jeff Van Sinderen, an analyst at B. Riley & Co. “At the end of the day, they’re delivering great product that the customer wants; they’re doing it consistently so they’re not getting pushback on the price increases.”

While the new companies are driving a lot of the revenue gains, Steven Marotta, analyst at CL King & Associates, noted, “Madden’s organic sales growth is 8 percent to 10 percent, which is pretty good for a company this large. [The only thing is] it may get more difficult [to beat expectations] with the same magnitude given how strong their operating margins have been.”

In a call with analysts last week, Madden CEO Ed Rosenfeld said the company has begun leveraging its acquisitions of The Topline Corp. and Cejon Inc., both of which concluded in May, and continues to look for additional licensing agreements.

“There’s nothing imminent, but there [are] a couple things that we have our eye on. For Betsey [Johnson], we’re looking at a luggage deal, and for Steve Madden, we’re looking at an intimate apparel deal. Hopefully we’ll get at least one of those done sometime this year,” he said.

Topline will allow Madden to shift more production to northern China to mitigate cost increases and directly source 10 percent to 15 percent of its core product by summer 2012, for lines such as Material Girl, Olsenboye and Madden Girl, said Rosenfeld. “Eventually we’d like to get to 50 percent or 60 percent,” he said.

Cejon could give Madden access to additional licenses or brands that want to produce cold-weather accessories.

As the company diversifies, footwear remains a growth driver. Wholesale footwear revenue surged 43 percent in the second quarter to $148.5 million, buoyed by strong gains in Steve Madden women’s, the international business and the inclusion of Topline sales.

For the period ended June 30, the Long Island City, N.Y.-based firm earned a net income of $23.8 million, or 55 cents a share, an increase of about 20 percent from $19.8 million, or 47 cents, earned in the same period a year ago. Net sales surged 32 percent to $209.2 million.

Madden expects full-year revenue to increase almost 50 percent from 2010, and earnings per share to be between $2.15 and $2.20.

The firm ended the quarter with $31.3 million in cash.

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