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Steven Madden (SHOO) Down 8.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Steven Madden (SHOO - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Steven Madden due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Steven Madden Q2 Earnings Top, Revenues Up Y/Y

Steven Madden delivered adjusted earnings of 48 cents a share, which beat the Zacks Consensus Estimate of 30 cents. Also, the bottom line came against an adjusted loss of 19 cents a share reported in the year-ago quarter as well as 47 cents earned in the same quarter of 2019. Higher sales and margins drove the bottom-line performance.

Total revenues jumped 178.6% year over year to $397.9 million. This takes into account net sales of $394.8 million, which increased 179.2% year over year, as well as commission and licensing fee income of $3.1 million, which came in at $1.4 million last year. The Zacks Consensus Estimate for total revenues was $369 million. However, the metric fell 27.9% from the reading recorded in the same quarter of 2019.

Gross profit increased to $170.1 million from $55.9 million witnessed in the year-ago quarter while consolidated gross margin expanded to 42.7% from 39.1% in the prior-year quarter. Wholesale gross margin improved to 30.6% from 26.6% seen in the year-ago period while retail gross margin was 65.4% compared with 67.4% reported in the same quarter of 2020. Higher freight cost was a deterrent to the metric.

The company reported an adjusted operating income of $51 million versus an adjusted operating loss of $21 million witnessed in the same quarter a year ago.

Segment Performance

Revenues for the Wholesale business surged 162.2% year over year to $262.1 million. We note that wholesale footwear revenues climbed 154.1% to $198.1 million while wholesale accessories and apparel revenues were up 190.7% to $64 million.

The segment’s revenues were down from the level recorded in the comparable period of 2019. However, the sell-through performance was solid across shoes, accessories and apparel. Its core Steve Madden Women's footwear business saw sturdy sell-throughs with success in categories like sandals, dress shoes and sneakers.

Retail revenues jumped 220.6% to $132.7 million, buoyed by a robust performance at the e-commerce business. The segment’s overall revenues soared 63% from the second-quarter 2019 reading. Strength in the company’s e-commerce business continued with revenues surging 105% including a 119%-increase in Steve Madden global digital business. E-commerce constituted about 54% of the company’s total retail segment sales in the second quarter. When compared with the same quarter of 2019, e-commerce revenues increased 282.2%.

The company’s digital commerce was sturdy in the quarter. Also, its brick-and-mortar business remained strong. On an open-only basis, the company’s global brick-and-mortar comparable store sales rose 8% from the 2019 tally. The company witnessed significantly lower levels of promotional activity across both the digital and the brick-and-mortar channels, which boosted the segment’s gross margin up above 500 basis points from the level achieved in the same quarter of 2019.

We note that the company ended the second quarter with 216 company-operated retail outlets including six internet stores and 15 company-operated concessions across the international markets. As of Jun 30, 100% of the company’s stores remained open worldwide.

Other Financial Aspects

Steven Madden ended the reported quarter with cash, cash equivalents and short-term investments of $302.7 million, and shareholders’ equity of $774.3 million excluding non-controlling interest of $8.2 million. As of Jun 30, 2021, the company had no debt and inventory was $125.5 million, up 21.5% year over year.

CapEx came in at $1.2 million during the reported quarter. The company generated net cash from operating activities of $91.9 million at the end of the second quarter.

During the second quarter, management repurchased 876,241 shares for $37.2 million including shares acquired via the net settlement of employees’ stock awards. It had roughly $81 million outstanding under its share repurchase authorization. The company's board approved a quarterly cash dividend of 15 cents per share, payable Sep 27, 2021 to its stockholders of record as of Sep 17.

Outlook

For 2021, management projects revenue growth between 43% and 47% year over year. We note that the company delivered total revenues of $1,201.8 million in 2020.

Reported earnings per share are guided in the range of $1.90-$2.00 while adjusted earnings per share are likely to fall in the bracket of $2-$2.10. In 2020, the company reported a GAAP loss of 23 cents a share and adjusted earnings of 64 cents. The Zacks Consensus Estimate for earnings stands lower at $1.68 cents for 2021, which is likely to witness upward revisions in the coming days.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 10.71% due to these changes.

VGM Scores

Currently, Steven Madden has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Steven Madden has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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