Steve Madden Sales Soar, Management Signals Confidence in Bankrupt Payless

Thanks to its robust wholesale business, Steve Madden has hit the ground running in fiscal 2017.

The fashion footwear maker — and owner of Blondo, Schwartz & Benjamin, Betsey Johnson and other brands — produced first-quarter results that topped expectations across the board.

The company said its sales during the period climbed 11.2 percent, to $366.4 million, surpassing analysts’ bets of $359.5 million.

Reported net income was $20.2 million, or 35 cents per diluted share, a 15 percent decline from the comparable period. However, adjusted net income, at $27.5 million, or 47 cents per diluted share, topped consensus estimates of 43 cents for adjusted diluted earnings per share.

We are pleased to have started off 2017 with a strong first quarter. The highlight was our Steve Madden Women’s wholesale footwear division, where we had another quarter of outstanding growth in a challenging retail environment,” Steve Madden chairman and CEO Ed Rosenfeld said in a release. “Steve and his design team have created an exceptional product assortment that is enabling us to outperform the competition and take market share with our flagship brand.”

Net sales for Madden’s wholesale business increased 13.6 percent, to $313.3 million, while retail net sales remained flat year over year at $53.1 million. Same-store sales decreased 6 percent in the quarter, compared to a 10.7 percent same-store sales increase in the same period last year.

Following family footwear retailer Payless ShoeSource’s bankruptcy filing earlier this month, analysts had posited that Steve Madden — which produces private-label footwear for Payless — could be negatively impacted by Payless’ decision to shutter 400 doors as it restructures.

During the firm’s conference call, Rosenfeld said that, although there is “obviously disruption” to the company’s business with Payless, its previous forecast had already accounted for much of it. (When it provided guidance in Q4, Steve Madden indicated softness in its private-label business, estimating that the division would be down 10 percent in FY17, although it did not single out Payless specifically.)

We included a pretty substantial [impact from Payless] last time [we provided guidance], so I still think that our current forecast looks pretty similar — there’s no meaningful change there,” Rosenfeld said today.

Still, if the number of store closures for Payless creeps up, Rosenfeld cautioned implications could be different.

Depending on how many stores they close, could that impact what our business looks like in 2018 and beyond? That’s possible, but we’re really not there yet,” he said.

Nevertheless, Rosenfeld said the firm had no plans to discontinue its business with the debt-saddled retailer.

We are moving forward with them,” Madden’s chief said. “Obviously, the business is down quite a bit in 2017 compared to where it was before, but we’re going to continue to do business with them. And they plan to reorganize, and they remain an important customer for us.”

As of 11 a.m. ET, Payless shares were up more than 2 percent, to $37.90.

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