Steven Madden (SHOO) Q3 Earnings Beat, Revenues Down Y/Y
Steven Madden, Ltd. SHOO reported better-than-expected results in third-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. While revenues declined year over year, earnings improved.
Over the past three months, shares of this presently Zacks Rank #3 (Hold) player have gained 2.8% against the industry’s 15.3% drop.
Q3 Highlights
Steven Madden posted adjusted quarterly earnings of 87 cents a share, which beat the Zacks Consensus Estimate by a penny. The same increased 10.1% from earnings of 79 cents per share reported in the prior-year period.
Total revenues fell 0.7% year over year to $552.7 million. While net sales of $549.8 million dipped 0.6%, commission and licensing fee income of $2.9 million decreased 17.1% from the year-ago period’s level. The top line came above the consensus estimate of $545 million.
Steven Madden, Ltd. Price, Consensus and EPS Surprise
Steven Madden, Ltd. price-consensus-eps-surprise-chart | Steven Madden, Ltd. Quote
Gross profit rose 1.4% year over year to $232.6 million. Also, the gross margin expanded 90 basis points (bps) to 42.1% on increases in both the wholesale and direct-to-consumer (DTC) channels. Gross profit, as a percentage of wholesale revenues, increased 200 bps to 33.6%, driven by higher margin in the Wholesale accessories/apparel business. However, gross profit as a percentage of direct-to-consumer revenues, improved 250 bps to 63.7% owing to lower promotional activity and freight expenses.
Adjusted operating expenses dipped 0.8% year over year to $149.3 million. However, as a percentage of revenues, adjusted operating expenses remained flat at 27%.
Steven Madden reported an adjusted operating income of $83.4 million, up 5.6% from the same quarter a year ago. The adjusted operating margin increased 90 bps to 15.1%.
Segmental Performance
Revenues for the Wholesale business dipped 0.3% year over year to $433.5 million. We note that Wholesale footwear revenues fell 7.5% year over year, while Wholesale accessories/apparel revenues were up 22.7%.
DTC revenues dropped 1.8% to $116.4 million, driven by a decrease in the e-commerce unit.
Steven Madden ended the third quarter with 251 brick-and-mortar retail outlets, five e-commerce websites and 22 company-operated concessions across the international markets.
Other Financial Aspects
Steven Madden ended the reported quarter with cash and cash equivalents of $191.8 million, short-term investments of $14.6 million and stockholders’ equity of $837 million, excluding non-controlling interest of $16.7 million. Management incurred capital expenditures of $13.9 million in the first nine months of 2023.
In the reported quarter, SHOO repurchased $40 million of its common stock, including shares acquired via the net settlement of employees’ stock awards. Moreover, the company’s board has approved a quarterly cash dividend of 21 cents per share, payable Dec 29, 2023, to stockholders of record as of Dec 15.
Outlook
Management is focused on operating discipline to navigate through a tough macro backdrop. Trends across the industry softened starting in September, which along with the impact of the crisis in the Middle East on the company’s Israel and Middle East joint ventures, make it highly cautious in the near term. Nonetheless, the company is confident it will deliver sustainable revenue and earnings growth over the long haul.
Steven Madden revised guidance for 2023. It now projects revenues to decline approximately 7% from 2022 versus the earlier anticipation of a decrease in the range of 6.5-8%. SHOO envisions earnings per share (EPS) of $2.40 compared to the previous projection of $2.38-$2.48 for the year. In 2022, Steven Madden reported revenues of $2.1 billion and adjusted EPS of $2.80.
The revised outlook reflects a contribution from the buyout of Almost Famous of nearly $30-$35 million in revenues and one-two cents in EPS. It also has a negative impact with respect to the effect of the crisis in the Middle East on the company’s Israel and Middle East joint ventures of about $8-$9 million in revenues and three cents in EPS.
Eye These Solid Picks
Some better-ranked companies are G-III Apparel Group GIII, lululemon athletica LULU and Ralph Lauren RL.
G-III Apparel sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GIII has a trailing four-quarter earnings surprise of 526.6%, on average. The Zacks Consensus Estimate for GIII’s 2023 sales and EPS indicates increases of 2.4% and 14.7%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.1% and 20.5%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.
Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 17.3%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.4% and 13.4%, respectively, from the year-ago corresponding figures.
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