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DTC Drove Steve Madden’s Growth in 2021, But International Expansion May Be Its Key to Long-Term Success

Steve Madden is moving full steam ahead in 2022, focusing on its direct-to-consumer retail channel, product category expansion, international growth, and strengthening of its core wholesale footwear business in the US.

On the company’s fourth quarter and fiscal 2021 earnings call on Thursday, Steve Madden chairman and CEO Edward Rosenfeld laid out his plans for 2022 as the company posted a revenue increase of 63.9% to $578.5 million in Q4 compared to $353.0 million in the same period of 2020. For fiscal 2021, revenue increased 55.3% to $1.9 billion from $1.2 billion in 2020.

When it comes to the company’s direct-to-consumer (DTC) retail channel, Rosenfeld said on the call that the segment drove the company’s growth in 2021, with DTC revenue increasing 52% from 2019. E-commerce, which now represents over 50% of Steve Madden’s DTC business led the way with revenue increasing 89% versus 2020 and 181% versus 2019. Global brick-and-mortar comp store sales also saw a bump, increasing 9% for the full year compared to 2019.

“As we look to 2022, while we are mindful of the difficult comparisons in this segment, we are confident that the actions we have taken in the last two years have resulted in a DTC business that is fundamentally stronger than it was prior to the pandemic and that we can continue to drive top and bottom line gains in DTC channels,” Rosenfeld said.

Wholesale, which is also another big business for the company, will also get some love in 2022. Rosenfeld mentioned on the call that the company will be focusing on strengthening its core wholesale footwear business in the U.S. this year. “While revenue in this business was still under significant pressure in the first half of 2021, our sell-through performance was strong throughout the year,” he said. “And eventually, our wholesale customers reacted with a significant acceleration in orders in the back half.”

The executive noted that the company’s second half US wholesale footwear revenue was up 12% compared to 2019, or 17% excluding revenue from the discontinued Kate Spade license in 2019. Its two largest brands drove this performance. Steve Madden brand U.S. wholesale footwear revenue was up 30% in the back half of 2021 compared to 2019, including a 42% increase in Steven Madden women’s.

“Based on our continued momentum and sell-through performance as well as the relatively easy comparisons we faced in the first half, we are confident that we can drive double-digit growth in our core U.S. wholesale footwear business in 2022,” Rosenfeld said.

Turning to product category expansion, Rosenfeld noted that the company is working on expanding its business outside of footwear. He referenced the growth of the Steve Madden brand handbag business, which grew in revenue by 18% in 2021 compared to 2019, which Rosenfeld said was driven by exceptional performance in DTC channels, and is poised for another year of double-digit growth in 2022.

In apparel, the company’s BB Dakota Steve Madden business continues to see strong sell-throughs and increased open-to-buy commitments at its key wholesale customers, Rosenfeld said. Given the momentum the apparel is seeing in the market, Rosenfeld revealed that the company will transition from the BB Dakota Steve Madden co-branded label to just the Steve Madden label for fall of 2022. “Initial response from wholesale customers to this change has been positive, and we are targeting revenue growth in the apparel category of nearly 50% in 2022,” said Rosenfeld.

Pressed further by an analyst later in the call about his distribution for Steve Madden apparel, Rosenfeld noted that the company will rely on wholesale and Stevemadden.com for the near term. “I think as far as our own brick-and-mortar stores, I would place apparel in a handful of doors,” Rosenfeld said, adding that the stores aren’t really built for apparel.

Looking abroad, Rosenfeld believes the company’s largest long-term growth opportunity is its international business. “April 2021 marked an important milestone in our international development when we acquired the remaining interest that we did not already own in our European joint venture,” Rosenfeld said. “Europe has been our fastest-growing market in recent years, and our momentum there has only accelerated since we took full ownership in the region.”

For the year, the Europe business Steve Madden acquired grew 57% versus 2020 and 91% versus 2019, leading the way for its EMEA region to reach $100 million in annual revenue for the first time. While some of its other international markets remain down to 2019 for the year due to lingering COVID impacts, Rosenfeld said the company is positioned for double-digit gains across all key markets in 2022 and believe its international business can be a significant driver of revenue and earnings growth for the company for years to come.

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