Steve Madden beat revenue and earnings expectations in Q2, bucking a trend for retailers struggling with inflation and supply chain challenges this quarter.
Revenue for the footwear brand increased 34.5% to $535 million, compared to $397.9 million in 2021. Net income was $48.5 million, or $0.62 per diluted share. Wholesale revenue was $397.1 million and direct-to-consumer revenue was $135.5 million.
Despite the strong results, the company said it is seeing a pullback in consumer spending, as prices soar at record highs.
“We have seen virtually all the customers get more cautious,” said Steve Madden chairman and CEO Edward Rosenfeld, explaining how the slowdown in sales was felt across wholesale and DTC channels, with the most impact in the channels that target low-income consumers.
Steve Madden shares were down 3% at market close on Wednesday.
Rosenfeld noted that the deterioration in “macro conditions” led to a drop in consumer demand and sales trends between June and July.
However, despite some price increases, Rosenfeld said the company has yet to get significant pushback from wholesale customers and consumers. Some analysts have noted that as prices continue to rise, some consumers will likely “trade down” to shop more affordable options.
Rosenfeld also noted that more consumers have opted for the company’s “Buy Now, Pay Later” options, which he said “could be reflective of inflation and how the consumer is feeling overall.”
Steve Madden also beat earnings and revenue estimates in Q1, despite persisting supply chain headwinds, including extended lead and transit times. To mitigate some supply chain issues in China, Steve Madden has begun moving some production from China to countries such as Brazil and Mexico.
In Q2, Rosenfeld said Steve Madden has seen improvements in transit times from China, which have gone from 7 days down to 45. He said air freight rates are dropping as well, though they continue to be higher than pre-Covid levels.
“We’re still not back to our normal speed-to-market,” Rosenfeld said. “And so I think it will really be into 2023 before we can chase [products] the way that we’re accustomed to.”
These macro-pressures have clouded the company’s near-term outlook, though Steve Madden still reinstated its fiscal outlook for 2022. Steve Madden expects revenue to increase between 13% and 16% over fiscal 2021. Diluted EPS is expected to be in the range of $2.87 to $2.97, with adjusted diluted EPS between $2.90 and $3.00.