Steven Madden Q4 Sales Up 9%

Steven Madden Ltd. shrugged off sluggish foot traffic in the fourth quarter, aided, in part, by its private-label business and solid gains in the Steve Madden women’s line and Madden Girl brand.

The Long Island City, N.Y.-based firm posted an 8.2 percent increase in adjusted net income to $35.7 million, or 54 cents a diluted share, compared with $33 million, or 49 cents, in the prior year’s fourth quarter, adjusted for the three-for-two stock split effective Oct. 2, 2013. The results topped analysts’ consensus forecast of 53 cents.

Net sales rose 8.7 percent to $342.9 million, from $315.5 million in the prior corresponding period, slightly below analysts’ consensus forecast of $346.2 million.

In a note to clients, BB&T Capital Markets analyst Scott Krasik said, “While the fourth-quarter earnings release came as no surprise to investors, we are interested to hear management’s commentary around spring fashion trends after enthusiastically hearing from customers last week at FN Platform in Las Vegas.” He added that the market should react positively to a change in retail foot traffic this year.

“We believe potential upside to our estimates should come from either a turn in fashion trends this spring and/or an inflection in traffic, both of which could happen as early as the second quarter as better weather potentially drives pent-up demand into stores,” Krasik said.

On a conference call with analysts and investors, Edward Rosenfeld, chairman and CEO of Steven Madden, said the outlook for spring is positive, following a lack of fashion trends this winter.

“[Despite a tough start to the year], we have seen some signs of life over the last couple weeks. And in particular, in the stores where we’re getting some warm weather, we’re really pleased with what we’re seeing in terms of the new spring merchandise and how it’s selling,” he said in a statement, noting that slip-on sneakers and gladiator shoes have been popular.

Rosenfeld noted that while the retail segment performed below expectations, the wholesale business recorded a strong quarter. The company’s flagship Steve Madden brand continues to be a leader in the fashion footwear space, but he remains concerned about the U.S. retail outlook in the near term.

“While we are cautious on the near-term outlook for our retail segment due to continued softness in traffic and sales trends, we are confident we can maintain solid momentum in our wholesale business, and we expect to deliver another year of strong performance in 2014,” he said.

For the fourth quarter, comparable-store sales dropped 6.7 percent and margins decreased as the company shifted toward more private-label products. The retailer also increased its marketing efforts to lure shoppers into stores.

Quarterly performance also improved thanks to a sales boost from the wholesale segment, which rose 10.6 percent, driven by Steven Madden’s private-label business.

For the full year, net sales rose 7.1 percent to $1.31 million, from $1.22 million a year ago. Adjusted net income was $132 million, or $1.98 million a diluted share, roughly in line with analysts’ consensus forecast for $1.97 and matching the company’s guidance.

Management reiterated its prior fiscal 2014 earnings per share guidance of between $2.05 and $2.15, based on a 5 percent to 7 percent increase in sales, not including the impact of total potential share repurchases, which analysts said could reach more than $100 million this year.

Steven Madden shares rose 18 cents to $35.28 in Tuesday morning trading.

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