Major Shoe Firms Sound Cautious Notes

It’s been a difficult start to the year for some footwear firms.

Steven Madden Ltd., Shoe Carnival Inc., Wolverine World Wide Inc. and Genesco Inc. are among the major shoe companies to cut their guidance for the fourth quarter, citing the challenging holiday season, recent cold snap and lackluster fashion trends.    

Shares of Wolverine World Wide were down almost 10 percent on Tuesday after the company lowered its fiscal 2014 revenue guidance to approximately $2.69 billion, from its prior guidance of $2.71 billion to $2.73 billion. The revised outlook came as the company reported preliminary fourth-quarter revenue guidance of roughly $739.8 million, lower than its previous guidance of between $760 million and $780 million.

”We’re a bit surprised by the sales shortfall as we suspected that weather would have been a net positive for Wolverine in the fourth quarter, meaning that any shortfall in Sperry [Top-Sider] would have been more than offset by upside in Merrell and CAT and Wolverine,” said Mitch Kummetz, an analyst at Robert W. Baird & Co., wrote in a note.

Genesco, meanwhile, said it expects to post-fourth-quarter earnings per share to be on the lower end of its earlier guidance of $2.17 to $2.27.
“Genesco’s first half of 2014 results will likely be challenged due to lack of fashion trends — including the apparent weakness in Toms and Sperry — and lackluster economic improvement,” Sam Poser, an analyst with Sterne Agee, wrote in an analyst note. 

He added that while sales have been strong for Dr. Martens and Timberland product, their impact on earnings won’t become meaningful until the fall.

Last week, Steven Madden lowered its EPS guidance for fiscal 2013, to $1.97 a share, down from its earlier guidance of $2.05 to $2.15. The firm said soft foot traffic and margin compression caused by the heavy promotional holiday season weighed on business in the fourth quarter. Same-store sales fell 6.7 percent over the period, weighing on sales, which grew 8.6 percent to $342.6 million.

“With this negative news out of the way and expectations reset, we believe the stock will [hover] at current levels as we feel this is a strong management team with the best model in the industry,” Canaccord Genuity analyst Camilo Lyon wrote in a note. 

Elsewhere, Shoe Carnival last week lowered its fourth-quarter EPS guidance to between 3 cents and 6 cents a share, down from its previous guidance of between 18 cents and 22 cents.  Management also lowered revenue guidance for the quarter.

“We are concerned that it may take some time to fully identify what caused store traffic to erode in December,” Poser said.

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