It has been about a month since the last earnings report for Steven Madden (
SHOO Quick Quote SHOO - Free Report) . Shares have added about 18.8% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Steven Madden Q3 Earnings In Line, Revenues Rise Y/Y
Steven Madden reported third-quarter 2022 results, wherein the top line beat the Zacks Consensus Estimate while the bottom line met the same. Also, revenues improved year over year while earnings dipped.
Management cited that consumer demand for the brands and products has been healthy for a while. Although a tough macroeconomic backdrop is concerning, SHOO is well poised on sturdy brands and business model. Q3 Highlights
Steven Madden posted adjusted quarterly earnings of 79 cents a share that met the Zacks Consensus Estimate. The same dipped 3.7% from 82 cents reported in the prior-year period.
Total revenues rose 5.3% year over year to $556.6 million. While net sales of $553.1 million increased 5.3%, commission and licensing fee income of $3.5 million declined 5.4% from the year-ago period’s level. The top line surpassed the Zacks Consensus Estimate of $532 million. Gross profit increased 4.3% year over year to $229.5 million. However, the gross margin contracted 40 basis points to 41.2%. Gross profit as a percentage of wholesale revenues expanded 170 basis points to 35.3%, driven by a mix shift to the greater-margin branded business. However, gross profit as a percentage of direct-to-consumer revenues, decreased 470 basis points to 61.2% owing to higher promotional activity. Adjusted operating expenses increased 14.4% year over year to $150.5 million. Also, as a percentage of revenues, adjusted operating expenses expanded 210 basis points to 27%. Steven Madden reported an adjusted operating income of $79 million, down 10.6% from $88.4 million registered in the same quarter a year ago. Adjusted operating margin contracted 250 bps to 14.2%. Segmental Performance
Revenues for the Wholesale business increased 8.1% year over year to $434.6 million. We note that Wholesale footwear revenues climbed 8.7% to $330.8 million, while Wholesale accessories/apparel revenues were up 6.2% to $103.9 million. Both units’ growth was buoyed by a sturdy increase in the branded business, somewhat offset by a drop in private label.
Direct-to-consumer revenues dipped 3.7% to $118.5 million, driven by a decline in the e-commerce business. Brick-and-mortar revenues were almost flat year over year. Other Financial Aspects
Steven Madden ended the reported quarter with cash and cash equivalents of $139.2 million, short-term investments of $9.1 million and stockholders’ equity of $842.3 million, excluding a non-controlling interest of $9.6 million. Management incurred capital expenditures of $10.1 million in the quarter.
In the reported quarter, SHOO repurchased $35.1 million of its common stock, including shares acquired via the net settlement of employees’ stock awards. Moreover, the board approved a quarterly cash dividend of 21 cents per share, payable Dec 30, 2022, to its stockholders of record as of Dec 16, 2022. Outlook
Steven Madden updated its 2022 guidance. Management now projects revenue growth of 12.5-13.5% from the last year’s level. However, the guidance compared unfavorably with the prior expectation of a 13-16% increase.
SHOO envisions earnings per share of $2.77-$2.79 and an adjusted earnings view of $2.77-$2.82 for 2022. Earlier, management had guided earnings per share of $2.87-$2.97 and adjusted earnings per share of $2.90-$3.00. Last year, Steven Madden reported revenues of $1.87 billion and adjusted earnings of $2.50 per share. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -21.93% due to these changes.
Currently, Steven Madden has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Steven Madden has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Steven Madden is part of the Zacks Shoes and Retail Apparel industry. Over the past month, Deckers (
DECK Quick Quote DECK - Free Report) , a stock from the same industry, has gained 9.6%. The company reported its results for the quarter ended September 2022 more than a month ago.
Deckers reported revenues of $875.61 million in the last reported quarter, representing a year-over-year change of +21.3%. EPS of $3.80 for the same period compares with $3.66 a year ago.
Deckers is expected to post earnings of $9.45 per share for the current quarter, representing a year-over-year change of +12.2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Deckers has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.