Back to top

Image: Bigstock

Steven Madden's (SHOO) E-commerce Wing Continues to Shine

Read MoreHide Full Article

Against the volatile backdrop, investors are looking for stocks that continue to deliver sustainable returns. Fashion footwear dealer Steven Madden, Ltd. (SHOO - Free Report) makes for a suitable portfolio pick. The company is focused on accelerating digital efforts via investing in talent, digital marketing, and e-commerce and omni-channel strategies. Amid the pandemic, the company’s e-commerce business is a bright spot, helping it survive the challenging landscape.

Robust gains from increased investment in digital marketing and solid consumer reception to capabilities such as ‘try before you buy’ have been contributing to the company’s performance. Encouragingly, the company delivered the second straight quarter of more than 80% year-over-year increase in e-commerce during the third quarter of 2020. In the same quarter, revenues on surged 82%, up from a 72% increase seen a year ago. In the preceding quarter, Steven Madden had registered e-commerce growth of about 88%. Further, digital sales grew 63.3% in the third quarter.

We believe Steven Madden’s robust e-commerce business will continue to deliver growth. Apparently, robust growth in the e-commerce channel helped the company post better-than-expected results in third-quarter 2020.

What’s More?

Although a sluggish wholesale business has been concerning, the division is likely to witness sequential improvement in fourth-quarter 2020 on continued recovery in its flagship brands of footwear and handbags. Markedly, the company is witnessing strength in the handbag category, including branded and private label handbags. These factors are likely to drive wholesale unit growth.

In addition, the company’s buyout of a California-based women's apparel company BB Dakota is quite encouraging. With this, the company looks to expand its apparel category. In August, the co-branded BB Dakota Steve Madden assortment hit stores and websites.

Impressively, the Long Island City, NY-based company’s shares have appreciated 65.4% over the past six months, outperforming the industry’s 47.8% growth. Additionally, analysts look optimistic about the company. The Zacks Consensus Estimate for its 2021 sales and earnings is pegged at $1.60 billion and $1.64, respectively. These suggest corresponding growth of 34.8% and 183% year over year.

That said, sturdy momentum in Steven Madden’s e-commerce channel coupled with strength in brands, a pristine balance sheet and a robust business model will most likely continue supporting this Zacks Rank #1 (Strong Buy) company. You can see the complete list of today’s Zacks #1 Rank stocks here.

Check Out These Other Hot Stocks

Crocs (CROX - Free Report) has a long-term earnings growth rate of 15% and currently sports a Zacks Rank #1.

Deckers (DECK - Free Report) has an expected long-term earnings growth rate of 18.6% and a Zacks Rank #2 (Buy).

Caleres (CAL - Free Report) has an expected long-term earnings growth rate of 5.6% and a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>