Why Analysts Say Steve Madden Is Earnings Gold

Designer labels like Gucci and Balenciaga aren’t the only ones profiting off our collective yen for fashion sneakers: Steven Madden Ltd. is poised for a strong quarter, analysts say, thanks in part to the white-hot footwear trend.

The company, which owns brands like Schwartz & Benjamin, Betsey Johnson and Brian Atwood along with its flagship label, reports second-quarter earnings on Tuesday, and Wall Street expects it to continue the growth streak that has carried it through the year so far.

In an earnings preview note published July 30, Canaccord Genuity Inc. analyst Camilo Lyon pointed to several factors contributing to Steve Madden’s ongoing success, including an on-trend product assortment, sandal sales driven by warm May weather and a boost from Nordstrom’s anniversary sale. Impressive growth at VF Corp. and other category leaders also boosted Canaccord’s earnings-per-share estimate for Q2 to 60 cents per share, a cent ahead of the consensus estimate. (Overall, analysts expect the firm’s Q2 sales to rise 4.4 percent to $390.6 million.

Susquehanna Financial Group analyst Sam Poser was also bullish on the company’s prospects for the second half of the year in a June 7 note. “We are confident, after meeting with management, getting a product line review and speaking to retailers, that the fashion sneaker trend will remain robust and boot sales in the second half of 2018 will exceed the flat year-over-year expectations built into full-year 2018 guidance,” he wrote, adding that increased tourist traffic in New York will likely boost same-store sales.

Lyon also referenced the company’s expansion in China and a preorder strategy that lets customers see products up to two months before they launch as positive indicators for the future.

“As we look to the second half of 2018, we see the pathway for sales growth to accelerate as Steve Madden presses forward with a strong fashion assortment, international grows in excess of 20 percent, the China strategy ramps and compares ease,” he wrote.

Susquehanna raised its price target from $56 to $64 per share, while Canaccord’s remained unchanged at $59. SHOO was trading at $53.65 as of 2 p.m. EST on Monday.

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