Overheard On Wall Street: Crocs, Wolverine Worldwide & Steve Madden

Another FFANY shoe show week is in the books. As usual, FN has the buzz from analysts on key brands that showed at the event.

Read on for takeaways from Crocs Inc., Wolverine World Wide Inc. and Steve Madden.

Crocs Inc.

CL King & Associates analyst Steve Marotta said Thursday that he walked away from meetings with Crocs Inc.’s management, at the FFANY shoe show in New York this week, feeling positive.

Marotta met with Crocs CEO Gregg Ribatt and CFO Carrie Teffler and said he now feels assured that the firm’s multi-year transformation is “most decidedly underway with full benefits still [to] come.”

“Recent achievements include streamlining global operations, closing underperforming stores, reducing the SKU count by nearly 50 percent, increasing on-time delivery metrics and improving marketing budget effectiveness all conspired to benefit Q1 (and we believe current) trends,” Marotta said.

Regarding product, Marotta said 70 percent of the brand’s current SKU count has been introduced within the last year, “making the product line highly relevant to consumers.”

“Spring 2017 product will begin shipping even earlier than usual this year, delivering to warm-weather markets in October and November; in time for the holiday selling season,” Marotta said. “While the macro trends at retail are generally unfavorable, we believe Crocs is currently successfully swimming against that tide.”

Wolverine World Wide Inc.

Following FFANY meetings with Wolverine Worldwide’s management, Susquehanna Financial Group LLLP analyst Christopher Svezia said he believes the firm’s fiscal year 2016 guidance is “achievable.” (The firm predicts a 4 to 8 percent sales decline and earnings per share in the range of $1.30 to $1.40.)

“Wolverine hopes to improve its model by focusing on areas such as demand creation, product innovation and apparel,” Svezia wrote Friday. “We agree with management that despite high satisfaction among key brands, investments in demand creation and innovation need to be made in order to drive better brand awareness and excitement.”

Svezia said he also received insight on Wolverine’s plans to achieve a 12 percent operating margin in two to three years, compared with its 9 percent operating margin today.

The analyst said management explained that input costs are becoming a tailwind for the company, the firm is reducing its factory base by 15 to 20 percent, it will continue to rationalize store stir fleet by closing an additional 100 underperforming stores (mostly Stride Rite), and its EMEA and Canada businesses are restructuring (EMEA = Europe, Middle East and Africa).

Steve Madden

Sterne Agee CRT analyst Sam Poser said he got a pretty satisfactory read after a visit to the Steve Madden showroom to view the early fall collection this week.

“Steve Madden’s business is improving and well positioned,” Poser wrote Thursday. “Based on what we saw for early fall, it is clear to us that the fashion athletic trend continues to gain momentum. Steve Madden’s fashion sneakers and slip-ons (in different colors, materials and textures) are doing well.”

Women’s fashion non-athletic trends, including block heeled sandals, booties, strappy casual flat sandals and open toe dress shoes are also selling well, Poser added.

“The mod and chunky heel continue to trend along with the single strap open toe dress sandal,” he said. “Metal accents are being added to a number of early fall styles, and rich velvet colors are something new, and good in our view.”

For now, Madden’s single strap dress sandal in natural color [The Stecy] continues to be the brand’s number one selling shoe, Poser noted.


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