Steven Madden, Ltd. ( SHOO Quick Quote SHOO - Free Report) is well-poised to tap the positive trends in the fashion world, thanks to its digital endeavors and other robust strategies. The company remains committed to boosting its e-commerce wing via prudent investments in digital marketing and efforts to optimize its website's features and functionality. In a nutshell, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda, expanding international markets and efficiently controlling expenses. Buoyed by such strengths, shares of this footwear dealer have gained 15.6% against the industry’s 6.6% decline over the past year. Delving Deeper
With respect to the e-commerce efforts, management has added high-level talent to the organization, ramped up digital marketing spending, improved data science capabilities, launched a try-before-you-buy payment facility, rolled out buy online, pick-up in store across its entire U.S. full-price retail outlets, and introduced advanced delivery and return options. The company has also been significantly accelerating its digital commerce initiatives concerning distribution.
Steven Madden is focused on driving growth across the direct-to-consumer business, led by digital capabilities; expanding categories apart from footwear, such as handbags and apparel; enhancing its presence in the international markets and reinforcing its core U.S. wholesale footwear business. Gains from increased investment in digital marketing and robust consumer reception capabilities such as try before you buy have been strengths. Image Source: Zacks Investment Research
Prudent acquisitions have been aiding Steven Madden’s performance. The company’s BB Dakota buyout, which is a California-based women's apparel company, appears encouraging. With this acquisition, the company can expand its apparel category. Additionally, management had concluded the acquisition of the remaining 49.9% share of its European joint venture. This transaction distributes the company’s branded footwear and accessories across the majority of countries in Europe.
However, the company has posted soft second-quarter 2023 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Revenues and earnings also declined year over year. In the reported quarter, the company witnessed a challenging operating environment, conservative order patterns from wholesale customers and tough year-over-year comparisons. Nevertheless, Steven Madden has reduced its inventory levels and saw a solid gross margin performance despite the promotional retail backdrop. During the second quarter, gross margin expanded 190 basis points (bps) to 42.6%. As a percentage of wholesale revenues, gross profit increased 200 bps to 33.6%, driven by higher margins in the Wholesale accessories/apparel business. The company has also been managing expenses. A proven business model, robust brands and various growth opportunities position the company well to drive overall growth and boost stakeholders’ value in the long run. On its earnings call, management said the company is poised to witness significant improvement in its financial performance starting in the third quarter. Considering its strengths, Steven Madden seems to be a decent investment bet. A VGM Score of A further speaks volumes for this current Zacks Rank #3 (Hold) stock. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $2.1 billion and $2.74, respectively. These estimates show corresponding growth of 4.5% and 10.9% year over year. Eye These Solid Picks
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