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What's in the Cards for Steven Madden (SHOO) in Q4 Earnings?

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We expect Steven Madden, Ltd. (SHOO - Free Report) to report year-over-year declines in the top and bottom line when it releases fourth-quarter 2020 results on Feb 25, before market open. Although the Zacks Consensus Estimate for the quarter’s earnings has been stable in the past 30 days at 21 cents, it suggests a plunge of 46% from 39 cents earned a year ago. Moreover, the consensus estimate for quarterly revenues of $342.8 million suggests more than a 17% decrease from the prior-year quarter’s tally.

However, the fashion-forward footwear, apparel and accessories dealer has a trailing four-quarter earnings surprise of 18.4%, on average.

Key Factors to Note

Steven Madden has been struggling with a sluggish wholesale business for a while now, which might have hurt the company’s fourth-quarter performance. Lower wholesale footwear and accessories/apparel revenues have been marring the wholesale unit. Management at its third-quarter earnings call on Oct 27 stated that the wholesale business will continue to remain under pressure mainly owing to the adverse impacts of the pandemic. For the quarter under review, it anticipated a decline in high-teens percentage year over year for the division. However, it projected a sequential improvement for the division on continued recovery in its flagship brand, in both footwear and handbags.

The coronavirus pandemic has also hit Steven Madden’s Retail segment hard owing to a major decline in the brick-and-mortar business. Apparently, management projected sales decline in high-teens percentage on a year-over-year basis for the Retail business. Bleak fourth-quarter-revenue forecasts for both the segments might have taken a toll on the company’s top line.

However, the company’s e-commerce business has been a bright spot amid the pandemic. 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. We note that the company’s actions, including enhancing digital initiatives, adjusting merchandise mix, and managing expense structure might have cushioned the quarter’s performance to some extent. Management at its last-earnings call had projected operating expense contraction of nearly 10% year over year for the fourth quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Steven Madden this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 

Steven Madden, Ltd. Price and EPS Surprise

 

Steven Madden, Ltd. Price and EPS Surprise

Steven Madden, Ltd. price-eps-surprise | Steven Madden, Ltd. Quote

Although Steven Madden has a Zacks Rank #2, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Camping World (CWH - Free Report) has an Earnings ESP of +45.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target (TGT - Free Report) has an Earnings ESP of +9.79% and a Zacks Rank #2.

American Outdoor Brands AOUT has an Earnings ESP of +15.15% and a Zacks Rank #3.

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