Steve Madden Maintains 2023 Outlook Despite Wholesale Weakness in Q1

Steve Madden reiterated its 2023 outlook despite headwinds in Q1.

The footwear company reported revenues and earnings that were ahead of expectations. Revenues were $463.8 million in the first quarter, down 17.1 percent compared to the same quarter in 2022. Adjusted net income was $37.6 million, or $0.50 per diluted share.

The better-than-expected results came during what CEO Edward Rosenfeld described as a “choppy retail environment” due to “conservative order patterns” from wholesale partners and difficult comparisons to the prior year.

“There’s a lot of uncertainty in the market right now, there’s a lot of negative headlines about the direction of the economy and the consumer,’ Rosenfeld said in a call with analysts. “And so we are dealing with wholesale customers that are pretty conservative right now.”

In recent quarters, wholesale retailers have adopted a conservative approach to order placement to help control inventory excesses. This has meant bad news for brands like Steve Madden that rely on department stores and other retailers to drive a significant portion of their business.

Wholesale revenue for Steve Madden was $362.1 million in Q1, down 19.3 percent from Q1 of 2022. Wholesale footwear revenue was down 18.6 percent, and wholesale accessories and apparel sales were down 22 percent. DTC revenues also dropped in Q1 to $99.6 million, down 8.1 percent over the prior year due to a drop in brick-and-mortar and e-commerce sales.

Rosenfeld added that the brand reduced its own inventory levels and maintained gross margin performance amid a highly promotional environment.

“As we move forward, we remain focused on executing our strategic initiatives — most importantly, utilizing our proven model to create trend-right products and bring them to market quickly — and are confident that we can drive sustainable growth and value creation over the long term,” Rosenfeld said in a statement.

As some analysts have noted, Steve Madden will likely be able to chase and meet demand from retail partners this spring if they find they need more product than they initially planned for.

“The industry leading speed to market, coupled with seasonal shoes that are selling well, makes Steve Madden the go-to brand when retailers realize they need more in-season product that is selling well, delivered quickly and complete,” wrote Williams Trading analyst Sam Poser wrote in an earnings preview last month. “No other fashion brand has the ability to deliver product as fast as Steve Madden.”

According to Rosenfeld, this phenomenon has yet to materialize.

“Here and there, we’ve seen some retailers react to strong selling items and either move forward orders or jump on some reorders but overall, the dynamics in the wholesale channel, particularly in North America, remain very challenging,” Rosenfeld said in a call with analysts. “And we still continue to see a really high degree of conservatism and caution amongst those retailers.”

Overall, Steve Madden expects revenues to decline between 6.5% and 8% in 2023 compared to 2022. Diluted EPS is expected to be in the range of $2.40 and $2.50.

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