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Steven Madden's (SHOO) Digital Efforts to Boost Growth in 2021

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Not all stocks are losing investors’ favors in the wake of coronavirus perils. Some remain decent picks, owing to their constant endeavors to survive amid such challenging times. And nowadays when online shopping continues to grab a larger share in light of the COVID-19 safety measures, big consumer brands are making all means to boost guests’ shopping experiences via solid digital offering, curbside pickup, expedite delivery services and what not. To tackle coronavirus-induced challenges, Steven Madden, Ltd. (SHOO - Free Report) has been also accelerating its digital efforts.

Given the sturdy momentum in Steven Madden’s e-commerce channel coupled with strength in brands, pristine balance sheet and a robust business model, it is most likely to place this Zacks Rank #3 (Hold) company well for sustainable growth in 2021.

Let’s Dive Deeper

The e-commerce business has been a bright spot for Steven Madden. During the third quarter of 2020, revenues on stevemadden.com surged 82%, up from a 72% increase registered in the same quarter a year ago. Notably, this marked the company’s second straight quarter of more than 80% year-over-year increase in e-commerce. In the preceding quarter, Steven Madden had registered growth of about 88%. Gains from increased investment in digital marketing and robust consumer reception to capabilities such as ‘try before you buy’ have been contributing to the performance. Further, digital sales grew 63.3% in the reported quarter.

Management has been accelerating investments in talent, digital marketing, and e-commerce and omni-channel strategies. We believe Steven Madden’s robust e-commerce business will continue to advance growth ahead. Robust growth in the e-commerce channel helped the company to post better-than-expected results in third-quarter 2020. Although the coronavirus pandemic continues to hurt the company’s business, the results significantly surpassed management’s expectations.

However, sluggishness in wholesale business for a while due to a decline in the wholesale footwear and accessories/apparel revenues cannot be ignored. Nonetheless, the division is expected to witness a sequential improvement in fourth-quarter 2020 on continued recovery in its flagship brand in both footwear and handbags. Wholesale revenues are likely to decline year over year in high-teens in the fourth quarter. Notably, the same fell 32.7% in the third quarter.

Wrapping Up

Markedly, the company is witnessing strength in the handbag category, including branded and private label handbags. Solid gains in the mass channel are driving the private label handbags. Also, the company’s BB Dakota buyout is encouraging.

 


 

The Long Island City, NY-based company’s shares have skyrocketed 72.7% over the past three months, outperforming the industry’s 19.4% growth. Meanwhile, the Zacks Consumer Discretionary sector and S&P 500 index have rallied 16% and 11.3%, respectively.

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