Steve Madden beat earnings and revenue estimates in Q1, despite persisting supply chain headwinds.
The fashion brand reported Q1 revenues of $559.7 million beating estimates of 466.56 million from analysts surveyed by Yahoo Finance. Net income was $74.5 million, or 94 cents a diluted share, which also beat analyst estimates of 51 cents.
Steve Madden shares were up over 1.5% as of early afternoon on Wednesday.
CEO Edward Rosenfeld said in call with investors on Wednesday that the company is still dealing with supply chain headwinds, including extended lead and transit times. Steve Madden is currently experiencing 70-day transit times up from the typical 30 days prior to the pandemic. Freight pressure has also been amplified.
“I think the freight pressure has gotten incrementally a little worse since the last time we were on the call, at least in terms of the impact to our forecast for the year,” Rosenfeld explained.
Factory delays, though prevalent, have been less problematic thus far. However, the company said it is monitoring the situation, especially in China, where a strict “zero-Covid” policy means continuous lockdowns across the country.
As mentioned in previous quarters, Steve Madden is in the process of moving some production from China to countries such as Brazil and Mexico, which Rosenfeld described as a long-term goal to mitigate the unpredictable environment in China. However, despite extensive lockdowns in China in recent months, Rosenfeld said Steve Madden has not seen any material impact to its Chinese manufacturing facilities.
Steve Madden also emphasized the need to place productions orders earlier than usual to account for longer transit times. However, as Rosenfeld noted, this type of planning does not help the company meet demand for trends in the middle of the season based on consumer preferences.
“We don’t have the same ability to chase goods in season that we normally do,” Rosenfeld said. “I still think that we have an advantage against our closest competitors in our speed-to-market and in our ability to work in season. But certainly, it’s not the same capability that we had when we had shorter lead times prior to the pandemic. So that does create a challenge.”
When it comes to current trends, Rosenfeld called out the success of ’90s and Y2K styles, such as platform shoes with block heels, big bottom sneakers and loafers.
Steve Madden is also seeing strength with its apparel business, which grew triple digits compared to 2021. The company expects apparel to grow 50% in fiscal year 2022 compared to 2021.
“We’re excited about the opportunity we have in apparel,” Rosenfeld said.