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Here's Why Steven Madden Stock is Up 8% Since Q3 Earnings

Zacks Equity Research

Shares of Steven Madden, Ltd. SHOO have increased 44.7% in the past three months compared with the industry’s growth of 16.5%. Further, it touched a 52-week high of $44.33, before closing the session slightly lower at $44.28 on Nov 18. The company is benefiting from strong wholesale business, which along with other factors aided third-quarter 2019 results. In fact, this Zacks Rank #2 (Buy) stock has improved more than 8% since its earnings release on Oct 29.

Moreover, the Zacks Consensus Estimate for the fourth quarter and 2019 have moved north by 11.8% and 7.8%, respectively, to 38 cents and $1.94 over the past 30 days. Let’s delve deeper and see if Steven Madden’ growth efforts can continue to drive the stock.



Robust Q3 & Impressive View

Both the top line and the bottom line of the company registered year-over-year increase in the third quarter of 2019. Also, earnings and sales surpassed the Zacks Consensus Estimate for the fourth consecutive quarter. This NY-based company gained from sturdy performance across its Steve Madden and Blondo brands. Also, it witnessed incremental sales at its wholesale and retail businesses. Moreover, the company stated that the acquisitions of GREATS and BB Dakota are likely to be key catalysts.

Notably, impressive performance prompted management to lift full-year net sales and earnings per share forecast. The company raised view in spite of incremental earnings pressure due to the imposition of the 15% tariff on List 4 products imported from China.

For 2019, Steven Madden now envisions net sales growth of 7-7.5% and adjusted earnings per share in the band of $1.92-$1.95. The company had reported earnings of $1.83 in the prior year. Management had earlier projected net sales increase of 5-7% and adjusted earnings of $1.78-$1.86 per share.

Growth Strategies & Wholesale Business Bode Well

Steven Madden is on a buyout spree. The company acquired a direct-to-consumer (DTC) company, BB Dakota. With this acquisition, the company will be able to expand its apparel category. This buyout follows Steven Madden’s purchase of Italian sneakers company, Greats Brand, Inc.

The company also formed a new joint venture in China with Channel Link. It has a 51% stake in the new JV, while the remaining is owned by Channel Link. The company also intends to open first store in Shanghai during the fourth quarter and two to three additional locations in spring 2020.

Apart from these, the company’s wholesale business continued with its sturdy performance during the third quarter as well. After increasing 5.1% and 13.1% in the first and second quarters, net sales for the wholesale business rose 8.5% to $421.6, reflecting robust gain in wholesale footwear and accessories businesses. We note that wholesale footwear net sales advanced 6.3% to $315.9 million driven by sturdy performance in Blondo, Steve Madden Women's and private label. Wholesale accessories/apparel net sales improved 15.8% to $105.7 million on the back of solid gain in Steve Madden handbags and the addition of the BB Dakota apparel business.

All said, we are optimistic that Steven Madden’s growth plans will help keep its stellar show on.

3 More Stocks to Watch

Deckers Outdoor Corporation DECK has a long-term earnings growth rate of 12.1% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings, Inc. BOOT has a long-term earnings growth rate of 15% and a Zacks Rank #1.

NIKE, Inc. NKE has a long-term earnings growth rate of 13.1% and a Zacks Rank #2.

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