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Steven Madden Trading Above 200 & 100-Day SMA: A Signal to Buy or Hold
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Steven Madden, Ltd. (SHOO - Free Report) has demonstrated strong upward momentum, trading above its 200 and 100-day simple moving averages (SMA). SMA is a key indicator of price stability and long-term bullish trends.
SHOO ended yesterday’s trading session at $45.89, above its 200 and 100-day SMA of $43 and $44.72, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, reflects positive market sentiment and investor’s confidence in SHOO's financial health and growth prospects.
Image Source: Zacks Investment Research
Shares of this distinguished global fashion entity are 8.2% below its 52-week high of $50.01 reached on Oct. 1, 2024, making investors contemplate their next moves. In the past year, SHOO stock has gained 41.8%, outperforming the Zacks Shoes and Retail Apparel industry’s 7.3% decline.
The company’s enhanced operational efficiency and direct-to-consumer (DTC) business has enabled it to outperform the broader Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 20.5% and 39.4%, respectively, at the same time. As the market shifts and the holiday season nears, it's time to consider if buying, holding or selling SHOO stock is the right move.
Image Source: Zacks Investment Research
Steven Madden's Key Initiatives Drive Growth
Steven Madden has strategically concentrated on several key initiatives to drive growth, resulting in a robust performance in the second quarter of 2024. The company's strategy encompasses strengthening SHOO’s DTC business, expanding into accessories and apparel beyond footwear and enhancing international presence, all while sustaining its core U.S. wholesale operations.
By leveraging digital capabilities, Steven Madden enhanced its DTC segment, which experienced a 6.4% year-over-year revenue increase in the second quarter. Disciplined inventory management and a focus on trend-right product assortments minimized the need for promotions, contributing to gross margin expansion within this segment. Comparable DTC sales rose 4.1%.
The wholesale business also saw significant growth, with revenues increasing 22.5% year over year to $385.3 million. Accessories and apparel were standout categories, showing an impressive 86% revenue increase compared with the same period last year, partly fueled by the acquisition of Almost Famous. Even excluding this acquisition, wholesale revenues rose 8.2% year over year. The core wholesale footwear business is also showing signs of recovery, indicating inventory normalization and growth opportunities in key markets.
Steven Madden is intensifying its focus beyond footwear, particularly in handbags and apparel. The company reported a 74% revenue increase in accessories and apparel, with handbag sales rising 30% thanks to popular styles like structured mini satchels. Apparel revenue grew nearly 80% and the launch of Madden Girl apparel at major retailers such as Macy's and Kohl’s underscores its expanding presence in this category.
Furthermore, Steven Madden's international markets continue to thrive, with a 13% revenue increase in the second quarter, primarily driven by the EMEA region. The company anticipates EMEA revenues to increase more than 20% in 2024, showcasing effective market strategies. Joint ventures in Southeastern Europe, the Middle East and South Africa have played a crucial role in this growth. The company’s expanded retail footprint in these areas, particularly through new store openings, positions it well for sustained success.
SHOO’s Financial Stability & Strong Outlook
Steve Madden’s strong financial performance in the second quarter underscores its solid financial health and disciplined capital management. As of June 30, 2024, the company reported $180.5 million in cash and equivalents, along with $11.8 million in short-term investments, and boasts no outstanding debt.
Looking ahead, Steve Madden is well-positioned for continued growth in domestic and international markets. The recovery in U.S. wholesale footwear indicates improved inventory management and stronger retail partnerships. The company projects a year-over-year revenue increase of 11-13% in 2024, with adjusted earnings per share expected to range from $2.55 to $2.65, up from $2.30 in 2023.
Attractive Valuation of Steve Madden Stock
From a valuation perspective, SHOO’s shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-earnings ratio of 16.05, which is below the industry’s average of 25.79, the stock offers compelling value for investors seeking exposure to the sector. SHOO currently has a Value Score of A, further validating its appeal.
The integration of the Almost Famous brand introduces complexities and potential risks for Steven Madden’s operations, negatively impacting gross margins. In the second quarter, the adjusted gross margin contracted 110 basis points to 41.5%. Within the wholesale segment, gross margin declined 50 basis points to 33.1%, primarily due to Almost Famous.
Moreover, the operating environment remains challenging, with consumers reducing discretionary spending and wholesale customers cutting back on orders for inventory control. Management expresses caution due to these tough conditions and difficult year-over-year comparisons. Adjusted operating expenses rose 12% year over year to $162.8 million in the second quarter. These headwinds might hurt the company’s profitability going forward.
Final Thoughts on Steven Madden
Investors might consider SHOO stock due to its strong upward momentum and technical indicators that signal price stability and bullish trends. The company has shown impressive operational efficiency, with significant revenue growth in its DTC business and wholesale segments, alongside successful expansions into accessories and apparel.
With a solid financial foundation characterized by low debt and substantial cash reserves combined with a promising outlook for future revenue increases, SHOO is well-positioned to capitalize on market opportunities, particularly as the holiday season approaches. Despite these tailwinds, challenges related to a tough operating environment cannot be overlooked. Current investors may choose to remain invested but potential investors should be cautious about being drawn to this Zacks Rank #3 (Hold) stock's low valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 (Buy) at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Gildan Activewear Inc. is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 at present.
The consensus estimate for Gildan Activewear’s 2024 earnings and sales indicates growth of 14% and 1.4%, respectively, from 2023’s reported levels. GIL has a trailing four-quarter average earnings surprise of 5.5%.
Crocs offers a wide variety of footwear products, including sandals, wedges, flips and slides that cater to people of all ages. The company currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Crocs’ 2024 earnings and sales indicates growth of 7.3% and 4.4%, respectively, from 2023’s actuals. CROX has a trailing four-quarter average earnings surprise of 14.9%.
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Steven Madden Trading Above 200 & 100-Day SMA: A Signal to Buy or Hold
Steven Madden, Ltd. (SHOO - Free Report) has demonstrated strong upward momentum, trading above its 200 and 100-day simple moving averages (SMA). SMA is a key indicator of price stability and long-term bullish trends.
SHOO ended yesterday’s trading session at $45.89, above its 200 and 100-day SMA of $43 and $44.72, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, reflects positive market sentiment and investor’s confidence in SHOO's financial health and growth prospects.
Image Source: Zacks Investment Research
Shares of this distinguished global fashion entity are 8.2% below its 52-week high of $50.01 reached on Oct. 1, 2024, making investors contemplate their next moves. In the past year, SHOO stock has gained 41.8%, outperforming the Zacks Shoes and Retail Apparel industry’s 7.3% decline.
The company’s enhanced operational efficiency and direct-to-consumer (DTC) business has enabled it to outperform the broader Zacks Consumer Discretionary sector and the S&P 500 index’s growth of 20.5% and 39.4%, respectively, at the same time. As the market shifts and the holiday season nears, it's time to consider if buying, holding or selling SHOO stock is the right move.
Image Source: Zacks Investment Research
Steven Madden's Key Initiatives Drive Growth
Steven Madden has strategically concentrated on several key initiatives to drive growth, resulting in a robust performance in the second quarter of 2024. The company's strategy encompasses strengthening SHOO’s DTC business, expanding into accessories and apparel beyond footwear and enhancing international presence, all while sustaining its core U.S. wholesale operations.
By leveraging digital capabilities, Steven Madden enhanced its DTC segment, which experienced a 6.4% year-over-year revenue increase in the second quarter. Disciplined inventory management and a focus on trend-right product assortments minimized the need for promotions, contributing to gross margin expansion within this segment. Comparable DTC sales rose 4.1%.
The wholesale business also saw significant growth, with revenues increasing 22.5% year over year to $385.3 million. Accessories and apparel were standout categories, showing an impressive 86% revenue increase compared with the same period last year, partly fueled by the acquisition of Almost Famous. Even excluding this acquisition, wholesale revenues rose 8.2% year over year. The core wholesale footwear business is also showing signs of recovery, indicating inventory normalization and growth opportunities in key markets.
Steven Madden is intensifying its focus beyond footwear, particularly in handbags and apparel. The company reported a 74% revenue increase in accessories and apparel, with handbag sales rising 30% thanks to popular styles like structured mini satchels. Apparel revenue grew nearly 80% and the launch of Madden Girl apparel at major retailers such as Macy's and Kohl’s underscores its expanding presence in this category.
Furthermore, Steven Madden's international markets continue to thrive, with a 13% revenue increase in the second quarter, primarily driven by the EMEA region. The company anticipates EMEA revenues to increase more than 20% in 2024, showcasing effective market strategies. Joint ventures in Southeastern Europe, the Middle East and South Africa have played a crucial role in this growth. The company’s expanded retail footprint in these areas, particularly through new store openings, positions it well for sustained success.
SHOO’s Financial Stability & Strong Outlook
Steve Madden’s strong financial performance in the second quarter underscores its solid financial health and disciplined capital management. As of June 30, 2024, the company reported $180.5 million in cash and equivalents, along with $11.8 million in short-term investments, and boasts no outstanding debt.
Looking ahead, Steve Madden is well-positioned for continued growth in domestic and international markets. The recovery in U.S. wholesale footwear indicates improved inventory management and stronger retail partnerships. The company projects a year-over-year revenue increase of 11-13% in 2024, with adjusted earnings per share expected to range from $2.55 to $2.65, up from $2.30 in 2023.
Attractive Valuation of Steve Madden Stock
From a valuation perspective, SHOO’s shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-earnings ratio of 16.05, which is below the industry’s average of 25.79, the stock offers compelling value for investors seeking exposure to the sector. SHOO currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
SHOO’s Margin Pressure & Challenging Operating Environment
The integration of the Almost Famous brand introduces complexities and potential risks for Steven Madden’s operations, negatively impacting gross margins. In the second quarter, the adjusted gross margin contracted 110 basis points to 41.5%. Within the wholesale segment, gross margin declined 50 basis points to 33.1%, primarily due to Almost Famous.
Moreover, the operating environment remains challenging, with consumers reducing discretionary spending and wholesale customers cutting back on orders for inventory control. Management expresses caution due to these tough conditions and difficult year-over-year comparisons. Adjusted operating expenses rose 12% year over year to $162.8 million in the second quarter. These headwinds might hurt the company’s profitability going forward.
Final Thoughts on Steven Madden
Investors might consider SHOO stock due to its strong upward momentum and technical indicators that signal price stability and bullish trends. The company has shown impressive operational efficiency, with significant revenue growth in its DTC business and wholesale segments, alongside successful expansions into accessories and apparel.
With a solid financial foundation characterized by low debt and substantial cash reserves combined with a promising outlook for future revenue increases, SHOO is well-positioned to capitalize on market opportunities, particularly as the holiday season approaches. Despite these tailwinds, challenges related to a tough operating environment cannot be overlooked. Current investors may choose to remain invested but potential investors should be cautious about being drawn to this Zacks Rank #3 (Hold) stock's low valuation. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
Some better-ranked stocks are Abercrombie & Fitch Co. (ANF - Free Report) , Gildan Activewear Inc. (GIL - Free Report) and Crocs, Inc. (CROX - Free Report) .
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 (Buy) at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Gildan Activewear Inc. is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 at present.
The consensus estimate for Gildan Activewear’s 2024 earnings and sales indicates growth of 14% and 1.4%, respectively, from 2023’s reported levels. GIL has a trailing four-quarter average earnings surprise of 5.5%.
Crocs offers a wide variety of footwear products, including sandals, wedges, flips and slides that cater to people of all ages. The company currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Crocs’ 2024 earnings and sales indicates growth of 7.3% and 4.4%, respectively, from 2023’s actuals. CROX has a trailing four-quarter average earnings surprise of 14.9%.