Expectations are tempered but mostly positive ahead of Steve Madden Q3 earnings report, due before the market open on Tuesday.
Consensus estimates peg the fashion footwear brand’s Q3 earnings per diluted share at 71 cents, or flat year-over-year, while revenues are expected to decline about 2.1 percent year-over-year, to $404.58 million.
While a slowdown in wholesale orders as well as the ongoing implications of the Hanjin Shipping bankruptcy remain concerns for some, analysts are generally upbeat on the brand’s product offerings and strategy ahead of the report.
“Despite the wholesale environment’s continuing skittishness regarding overall inventory buys and winter-related demand, we believe Steve Madden has been gaining share in its fashion-centric category,” Canaccord Genuity Inc. analyst Camilo Lyon wrote today, reiterating his buy rating on the stock. “Overall, we expect a positive tone regarding business trends now and into 2017.”
Susquehanna Financial Group LLLP analyst Sam Poser said he suspects that Madden’s third quarter will provide more “evidence of sustained customer end demand,” as well as “signs that wholesale revenue will indeed recover and turn positive by 4Q16.”
“We do believe improved inventory levels at Steve Madden’s wholesale accounts resulted in, and will result in improved fill in order flow in 3Q16 and going forward,” Poser wrote in an Oct. 27 note.
On the product side, Citi Research analyst Corinna Van der Ghinst said her third-quarter store checks indicated increasing momentum for the brand’s fashion sneakers at wholesale and retail, which she expects to continue into Q4 and spring.
“At Steve Madden stores, we estimated a slightly higher level of promotions year-over-year but at lower average markdown rates,” Van der Ghinst added. “Key silhouettes included wear-now sandals (continuing through August), fashion sneakers, transitional cut-out and open toe booties, and dress shoes in new fabrications & heels.”
Van der Ghinst said store traffic “appeared solid,” with shoppers primarily focused on wear-now styles.
Lyon said he believes that momentum in the casual bootie category might be slowing, but he sees ongoing strength in Madden’s sweet spot: dress booties.
“While Steve Madden does not have a single iconic item that will drive sales, such as the Troopa combat boot from a few years ago, there are a number of new, innovative booties, over-the-knee boots, block-heel dress shoes and fashion athletic styles, which, combined, should drive volume,” noted Poser.
When Steve Madden reported Q2, on Aug. 2, its Q2 net income increased 0.7 percent year-over-year, to $24.7 million, or 42 cents per diluted share, in line with analysts’ forecasts. Revenues, which gained 0.6 percent year-over-year, to $325.4 million, missed analysts’ expectations for revenues of $329.5 million.