Steven Madden Ltd (SHOO) Reports Mixed Q3 Results Amidst Challenging Market Conditions
Steven Madden Ltd (NASDAQ:SHOO) announced a slight year-over-year decrease in wholesale revenue and a modest dip in direct-to-consumer sales for Q3 2023.
Despite softer industry trends, the company achieved earnings growth and improved operating margins.
Updated fiscal 2023 guidance reflects a revenue decrease of approximately 7% and an adjusted diluted EPS of approximately $2.40.
On November 8, 2023, Steven Madden Ltd (NASDAQ:SHOO), a prominent designer and marketer of fashion-forward footwear, accessories, and apparel, released its financial results for the third quarter ended September 30, 2023. The company reported a slight decrease in wholesale revenue by 0.3% to $433.5 million compared to the same period last year. The wholesale footwear segment saw a 7.5% decline, while the wholesale accessories/apparel segment grew by 22.7%. Despite the mixed revenue performance, the company managed to improve its gross profit margin in the wholesale segment to 35.9% from 35.3% in Q3 2022, attributed to margin enhancement in the wholesale accessories/apparel segment.
Direct-to-Consumer and Operational Highlights
Direct-to-consumer revenue experienced a 1.8% decrease to $116.4 million, primarily due to a downturn in e-commerce business. However, gross profit as a percentage of direct-to-consumer revenue rose to 63.7%, up from 61.2% in the previous year, driven by lower freight expenses and reduced promotional activity. Steven Madden Ltd (NASDAQ:SHOO) concluded the quarter with 251 brick-and-mortar retail stores, five e-commerce websites, and 22 company-operated international concessions.
Financial Position and Shareholder Returns
As of September 30, 2023, Steven Madden Ltd (NASDAQ:SHOO) held $206.4 million in cash, cash equivalents, and short-term investments, while inventory levels were down by 15.8% to $205.7 million compared to Q3 2022. The company also returned value to shareholders, spending $40.0 million on stock repurchases, including net settlements of employees stock awards. Additionally, the Board of Directors approved a quarterly cash dividend of $0.21 per share, payable on December 29, 2023, to stockholders of record as of December 15, 2023.
Updated Fiscal 2023 Outlook
Amidst a challenging operating environment, Steven Madden Ltd (NASDAQ:SHOO) has updated its fiscal 2023 guidance. The company now anticipates a revenue decrease of approximately 7% compared to 2022, with diluted EPS expected to be around $2.35 and adjusted diluted EPS forecasted at approximately $2.40.
Management Commentary
We were pleased to return to year-over-year earnings growth in the third quarter, demonstrating the strength and durability of our business model in challenging operating environments. Our team prudently managed inventory and expenses which enabled us to drive operating margin improvement in both wholesale and direct-to-consumer channels while continuing to invest in our long-term growth initiatives. While softer trends across the industry since September have left us incrementally more cautious on the near-term outlook, we remain confident that our core strengths our people, brands and business model will enable us to deliver sustainable revenue and earnings growth over the long term.
Interested stockholders can access the conference call discussing the Q3 2023 earnings results and updated 2023 outlook on the company's website or via the provided webcast link.
Conclusion
Steven Madden Ltd (NASDAQ:SHOO) has navigated a complex retail landscape to deliver a resilient performance in the third quarter of 2023. With a strategic focus on inventory and expense management, the company has shown its ability to adapt and maintain profitability. Investors and stakeholders will be watching closely to see how the company's updated strategies and core strengths will drive its performance in the upcoming fiscal periods.
Explore the complete 8-K earnings release (here) from Steven Madden Ltd for further details.
This article first appeared on GuruFocus.
