A month has gone by since the last earnings report for Steven Madden (
SHOO Quick Quote SHOO - Free Report) . Shares have lost about 5.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Steven Madden Q3 Earnings Top, Digital Business Solid
Steven Madden posted sturdy third-quarter 2021 results. This uptrend also led management to hike view for 2021. Both the top and the bottom line improved year over year, thanks to solid gains from the company’s e-commerce business and strategic initiatives.
Steven Madden delivered earnings of 82 cents a share, which beat the Zacks Consensus Estimate of 78 cents. Also, the bottom line grew from adjusted earnings of 39 cents recorded in the year-earlier quarter. Higher sales and margins drove the bottom-line performance.
Total revenues jumped 52.4% year over year to $528.7 million. This takes into account net sales of $525.1 million, which increased 17.2% year over year as well as commission and licensing fee income of $3.7 million that dropped 7.5% from the last-year levels. The Zacks Consensus Estimate for total revenues stood at $528 million. Gross profit increased 57.3% year over year to $220 million while consolidated gross margin expanded 130 basis points (bps) to 41.6%. Wholesale gross margin decreased 100 bps to 33.6% from the year-ago period’s level while retail gross margin expanded 210 bps to 65.9%. Higher freight cost was a deterrent to the metric. The company reported an adjusted operating income of $88.4 million, which surged 91.3% from $46.2 million registered in the same quarter a year ago. Also, adjusted operating margin expanded 340 bps to 16.7%. Segment Performance
Revenues for the
Wholesale business increased 41.6% year over year to $402 million. We note that wholesale footwear revenues climbed 42.6% to $304.2 million while wholesale accessories and apparel revenues were up 38.7% to $97.8 million. In the United States, the company’s women's business remained strong, growing 25% from the 2019 reading. Betsey Johnson and Dolce Vita also witnessed solid gains. Growth was offset by the absence of the Kate Spade footwear license the company had in 2019 along with decreases in Blondo, Anne Klein and private label brands. Also, robust performance in Europe was offset by sluggishness in Canada owing to a slower recovery from the pandemic woes and the impact of the supply-chain bottlenecks. Retail revenues surged 108.6% to $123.1 million, buoyed by a robust performance at the e-commerce business. Strength in the company’s e-commerce business continued with revenues soaring 83.7% year over year. E-commerce constituted about 49% of the company’s total retail segment sales in the third quarter. When compared with the same quarter of 2019, e-commerce revenues skyrocketed 200%. Also, its brick-and-mortar business remained strong. Global comp store sales rose 16% while domestic stores grew 23% from the respective 2019 levels. Other Financial Aspects
Steven Madden ended the reported quarter with cash, cash equivalents and short-term investments of $259.9 million, and shareholders’ equity of $798.8 million excluding non-controlling interest of $8.4 million. As of Sep 30, 2021, the company had no debt and inventory was $201.2 million, up 83.4% year over year.
CapEx came in at $1.8 million during the reported quarter. The company generated net cash from operating activities of $96.2 million at the end of the third quarter. In the reported quarter, management repurchased about 773,063 shares for $31.9 million including shares acquired via the net settlement of employees’ stock awards. On Nov 2, the company’s board approved a raise in the share repurchase authorization of roughly $200 million, bringing the total to $250 million. The same cleared a quarterly cash dividend of 15 cents per share, payable Dec 27, 2021 to its stockholders of record as of Dec 17. Outlook
Given the sturdy third-quarter results, management raised guidance for 2021 despite the global supply-chain disruption being a major headwind. For 2021, it projects revenue growth of 50-52% from the fiscal 2020 reading, up from the prior anticipation of a 43-47% increase. We note that the company delivered total revenues of $1,201.8 million in 2020.
Reported earnings per share are expected in the range of $2.21-$2.26 while adjusted earnings per share are likely to fall in the bracket of $2.30-$2.35. Previously, management had projected earnings of $1.90-$2.00 a share while adjusted earnings were anticipated at $2-$2.10. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 36.91% due to these changes.
Currently, Steven Madden has a subpar Growth Score of D, a grade with the same score on the momentum front. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
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 #2 (Buy). We expect an above average return from the stock in the next few months.