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Steven Madden, Ltd. Message Board

  • floppy_6 floppy_6 Jul 1, 2012 7:15 PM Flag

    Excessive sandal inventory

    We started this year with a warm spring. That caused a strong sandal sales in Spring, mistakenly lead investors to perceive a strong summer sandal sales. But in reality, DSW's guide-down lead to a realization that shoe retailers over-built the sandal inventory for anticipating a strong summer sales which never came and it results DSW to have cleared up the sandal inventory to pave the road Q3 sales. DSW has 30% sales in sandal in Q2, Shoo also has 30% of Q2 sales derived from sandals. SCVL and GCO respectively has less impact from sandals with 10% each in Q2.

    Many analysts expect SHOO to offset the sandal weakeness by other strong products roll-out as well as shares re-purchase. Also, Shoo only represents 5% of DSW Q2 sales. So, it is really a question whether investors had overeacted on anticipated sandals slowdown. Similiar to FINL, investors tend to over-emphasize on a sore spot of operational weakness, continue dumping the stock till they finally realize that their concern had been massively over-exaggerated. FINL had rebounded 15% after ER, hopefully sooner or later SHOO will do the same.

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