Analysts Upbeat on Madden’s Second Quarter

Analysts last week said Steven Madden Ltd.’s strategy has been a winner even in a challenging retail climate.

“The second-quarter performance proved their operational excellence,” said Danielle McCoy, an analyst at Brean Capital LLC. “[Their] speed-to-market capability is a key competitive advantage in this ever-changing retail environment. In addition, its test-and-react strategy has aided in reducing risk and has allowed the company to retain its fashion authority in the footwear space.” 

For the period ended June 30, net earnings rose 7.6 percent to $29 million, or 65 cents a diluted share, compared with $26.9 million, or 61 cents, in the second quarter of 2012. Net sales increased more than 3 percent to $297.6 million, from $288.7 million in the year-ago period.

Analysts polled by Yahoo Finance had expected earnings per share of 64 cents on sales of $307.2 million.
“Given the tough weather trends that significantly stunted growth in the category, this was an impressive result that demonstrates the strength of the brand and the company’s inventory control discipline,” Canaccord Genuity analyst Camilo Lyon wrote in an earnings note.

The company reported progress on all fronts, though it did miss analysts’ revenue expectations. In its wholesale business, sales inched up 1.3 percent to $251.4 million, compared with $248.1 million a year ago. In the company’s retail division, comparable-store sales increased 2.5 percent, while net sales in the division jumped 13.9 percent to $46.2 million.

“We believe our second-quarter results reflect the strength of our business model,” Chairman and CEO Ed Rosenfeld said during a call with investors and analysts.

“In a choppy environment, our quick-turn model enabled us to be nimble and react quickly to changing trends. And our execution in controlling inventory and expenses drove solid profitability. We remain on track to meet our top- and bottom-line goals for 2013 and are well positioned to continue growing the business for years to come.”

While the company did not break out numbers, Rosenfeld said strong gains were made by the Betsey Johnson brand, while Superga sales doubled during the quarter and the Mad Love label continues to exceed expectations at Target.

Looking to the full year, the firm reaffirmed its guidance and expects EPS of $2.95 to $3.05, with a 6 percent to 8 percent increase in net sales.

“Based on our current wholesale order book and a number of orders that historically would have been shipped in September that we currently expect to go out in the first week of October, we expect sales and earnings to be more heavily weighted to the fourth quarter,” Rosenfeld said.

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