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Why Is Steven Madden (SHOO) Up 2.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Steven Madden (SHOO - Free Report) . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steven Madden due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Steven Madden Q4 Earnings & Revenue Beat
Steven Madden reported better-than-expected results in fourth-quarter 2020. Although the coronavirus pandemic continued to hurt the company’s business, quarterly results surpassed management’s expectations and witnessed a sequential improvement. Its actions including quickly adjusting merchandise assortments to cater to changed consumer preferences, enhancing digital initiatives and managing expense structure have aided it to maneuver the pandemic-induced challenges. Meanwhile, strength in brands, strong balance sheet and a robust business model appear encouraging.
Steven Madden delivered adjusted earnings of 27 cents a share, which beat the Zacks Consensus Estimate of 21 cents. However, the bottom line tumbled 30.8% from adjusted earnings of 39 cents reported in the year-ago quarter.
Total revenues plunged 15.9% year over year to $353 million. This takes into account a 15.9% decline in net sales of $349.1 million and decrease of 17% in commission and licensing fee income of $3.9 million. The Zacks Consensus Estimate for total revenues was $343 million.
Given the ongoing pandemic uncertainties, management did not issue revenue and earnings guidance for 2021.
Segment Performance
Revenues for the Wholesale business fell 16.2% to $263 million, reflecting decrease in wholesale footwear and accessories/apparel revenues. We note that wholesale footwear revenues tumbled 19.7% to $187.3 million. Wholesale accessories/apparel revenues dropped 5.9% to $65.7 million. We note that the pandemic continued to hurt this business, nevertheless the unit witnessed a sequential improvement.
Retail revenues plunged 14.9% to $86.1 million, owing to a sluggish brick-and-mortar business, somewhat offset by a robust e-commerce business. Notably, e-commerce momentum continued with revenues surging 36% including a 51%-increase in Steve Madden e-commerce business.
Detailed Discussion
We note that cost of sales decreased 16.7% to $217.7 million and adjusted operating expenses dropped 13.2% to $109.2 million owing to the company’s cost-control measures.
Adjusted gross profit tumbled 15.1% year over year to $134.8 million, while adjusted gross margin expanded 40 basis points (bps) to 38.2%. We note that gross margin in the wholesale business contracted 90 bps to 28.3%, mainly owing to the closeout of surplus inventory from store closures and order cancellations related to the pandemic. However, retail gross margin expanded 400 bps to 65.6%, mainly buoyed by higher-margins in e-commerce and stores owing to less discounting.
Further, the company reported operating income of $25.6 million, down 22.4% from the same quarter a year ago.
Steven Madden ended the fourth quarter with 218 company-operated retail outlets, comprising 66 stores and seven e-commerce sites along with 17 company-operated concessions in international markets. The company had reclosed 1/3 of its stores in the reported quarter on local government orders. Currently, nearly 34% of its stores in Canada remain shut, but the rest of the stores worldwide have reopened. However, the company’s operation remained limited by about 25% on average.
Other Financial Aspects
Steven Madden ended the reported quarter with cash, cash equivalents and short-term investments of $287.2 million, and shareholders’ equity of $776.6 million, excluding non-controlling interest of $13.8 million. As of Dec 31, 2020, the company had no debt, and inventory was $101.4 million, down 26% year over year.
CapEx came in at $1.1 million during the reported quarter. The company generated net cash from operating activities of $44.2 million in 2020.
Further, the company's board reinstated a quarterly cash dividend of 15 cents per share, payable Mar 26, 2021, to stockholders of record as on Mar 16.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.82% due to these changes.
VGM Scores
At this time, Steven Madden has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steven Madden has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Steven Madden (SHOO) Up 2.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Steven Madden (SHOO - Free Report) . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steven Madden due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Steven Madden Q4 Earnings & Revenue Beat
Steven Madden reported better-than-expected results in fourth-quarter 2020. Although the coronavirus pandemic continued to hurt the company’s business, quarterly results surpassed management’s expectations and witnessed a sequential improvement. Its actions including quickly adjusting merchandise assortments to cater to changed consumer preferences, enhancing digital initiatives and managing expense structure have aided it to maneuver the pandemic-induced challenges. Meanwhile, strength in brands, strong balance sheet and a robust business model appear encouraging.
Steven Madden delivered adjusted earnings of 27 cents a share, which beat the Zacks Consensus Estimate of 21 cents. However, the bottom line tumbled 30.8% from adjusted earnings of 39 cents reported in the year-ago quarter.
Total revenues plunged 15.9% year over year to $353 million. This takes into account a 15.9% decline in net sales of $349.1 million and decrease of 17% in commission and licensing fee income of $3.9 million. The Zacks Consensus Estimate for total revenues was $343 million.
Given the ongoing pandemic uncertainties, management did not issue revenue and earnings guidance for 2021.
Segment Performance
Revenues for the Wholesale business fell 16.2% to $263 million, reflecting decrease in wholesale footwear and accessories/apparel revenues. We note that wholesale footwear revenues tumbled 19.7% to $187.3 million. Wholesale accessories/apparel revenues dropped 5.9% to $65.7 million. We note that the pandemic continued to hurt this business, nevertheless the unit witnessed a sequential improvement.
Retail revenues plunged 14.9% to $86.1 million, owing to a sluggish brick-and-mortar business, somewhat offset by a robust e-commerce business. Notably, e-commerce momentum continued with revenues surging 36% including a 51%-increase in Steve Madden e-commerce business.
Detailed Discussion
We note that cost of sales decreased 16.7% to $217.7 million and adjusted operating expenses dropped 13.2% to $109.2 million owing to the company’s cost-control measures.
Adjusted gross profit tumbled 15.1% year over year to $134.8 million, while adjusted gross margin expanded 40 basis points (bps) to 38.2%. We note that gross margin in the wholesale business contracted 90 bps to 28.3%, mainly owing to the closeout of surplus inventory from store closures and order cancellations related to the pandemic. However, retail gross margin expanded 400 bps to 65.6%, mainly buoyed by higher-margins in e-commerce and stores owing to less discounting.
Further, the company reported operating income of $25.6 million, down 22.4% from the same quarter a year ago.
Steven Madden ended the fourth quarter with 218 company-operated retail outlets, comprising 66 stores and seven e-commerce sites along with 17 company-operated concessions in international markets. The company had reclosed 1/3 of its stores in the reported quarter on local government orders. Currently, nearly 34% of its stores in Canada remain shut, but the rest of the stores worldwide have reopened. However, the company’s operation remained limited by about 25% on average.
Other Financial Aspects
Steven Madden ended the reported quarter with cash, cash equivalents and short-term investments of $287.2 million, and shareholders’ equity of $776.6 million, excluding non-controlling interest of $13.8 million. As of Dec 31, 2020, the company had no debt, and inventory was $101.4 million, down 26% year over year.
CapEx came in at $1.1 million during the reported quarter. The company generated net cash from operating activities of $44.2 million in 2020.
Further, the company's board reinstated a quarterly cash dividend of 15 cents per share, payable Mar 26, 2021, to stockholders of record as on Mar 16.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.82% due to these changes.
VGM Scores
At this time, Steven Madden has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steven Madden has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.