Steven Madden, Ltd. SHOO is well poised to tap the positive trends in the fashion world, thanks to its sturdy digital efforts and other robust strategies, including international business expansion. SHOO is witnessing immense strength in the e-commerce business amid such a challenging backdrop. Solid gains from brand strength, product assortments and direct-to-consumer channels have been yielding results so far.
This renowned fashion-footwear player’s shares have increased 11.1% in the past year against the industry’s 5.4% dip. In addition, the Zacks Consensus Estimate for Steven Madden’s 2022 sales and earnings per share (EPS) suggests growth of 12.2% and 12.4%, respectively, from the year-ago period’s corresponding figures.
Steven Madden’s e-commerce wing continues to gain from prudent investments in digital marketing as well as efforts to optimize features and functionality of its website. Gains from increased investment in digital marketing and robust consumer capabilities have been contributing to its performance for a while.
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Management also ramped up digital marketing spend, improved data science capabilities, launched try-before-you-buy payment facility, rolled out buy online, pick-up in store across its entire U.S. full price retail outlets plus introduced advanced delivery and return options. E-commerce momentum continued in the fourth quarter of 2021 with revenues surging 80.2% year over year and 144.9% from the same-period level in 2019.
One of SHOO’s major growth opportunities is expanding its international business. Last April, Steven Madden achieved a significant milestone in international development by acquiring the remaining interest in the European joint venture. In fact, Europe has been SHOO’s fastest-growing market over the past years.
For the year, the acquired Europe business increased 57% from the 2020 level and 91% from the 2019 level. This paves the way for Steven Madden’s EMEA region to hit the $100-million mark of annual revenues. Europe again performed outstandingly with revenues more than tripling from the same-period level in 2019. Management is also optimistic about the buyout of BB Dakota, a California-based women's apparel company, through which SHOO is steadily expanding its apparel category.
We note that Steven Madden posted sturdy results for fourth-quarter 2021, wherein both the top and the bottom line improved year over year and surpassed the Zacks Consensus Estimate. Quarterly results reflect gains from brand strength and solid consumer demand for SHOO’s merchandise assortments. The direct-to-consumer business continued to exhibit momentum. Also, the brick-and-mortar business remained strong.
The trend-right product assortments boosting consumer demand have been expanding Steven Madden’s market share and contributing to the overall performance for a while. SHOO’s Steve Madden and Dolce Vita brands are performing well. Steven Madden witnessed broad-based strength with Steve Madden, Anne Klein, Betsey Johnson, private label handbags and BB Dakota Steve Madden apparel, all posting revenue growth of more than 40% from the 2019 level.
Steven Madden is well poised for double-digit gains in its key markets during 2022 and believes that international business is a major driver. Strong direct-to-consumer channels, product category expansion, international growth and strength of its core U.S. wholesale footwear business are likely to fuel growth.
For 2022, management projects revenues to grow 10-13% from the 2021 level. Steven Madden envisions adjusted earnings per share in the range of $2.73-$2.83. In 2021, SHOO delivered revenues of $1.87 billion and adjusted earnings per share of $2.50.
Wrapping up, Steven Madden is focused on creating trend-right merchandise assortment, deepening relations with customers via marketing, enhancing digital commerce agenda, expanding international markets and efficiently controlling expenses. A robust business model positions this currently Zacks Rank #3 (Hold) player well to cash in on market-growth opportunities and boost its stakeholders’ value in the long run.
Eye These Solid Picks
Some better-ranked stocks are Gildan Activewear GIL, Columbia Sportswear COLM and Delta Apparel DLA.
Gildan Activewear, which manufactures and sells various apparel products, sports a Zacks Rank #1 (Strong Buy) at present. Shares of GIL have increased 25.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.
Columbia Sportswear currently has a Zacks Rank #2 (Buy). COLM has a trailing four-quarter earnings surprise of 203.3%, on average. Shares of COLM have increased 2.5% in the past year.
The Zacks Consensus Estimate for Columbia Sportswear's current financial-year sales suggests growth of 17.7% while the same for EPS indicates growth of 8.1% from the year-ago period's reported figure.
Delta Apparel currently carries a Zacks Rank of 2. DLA has a trailing four-quarter earnings surprise of 21.3%, on average. Shares of DLA have increased 11.1% in the past year.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 12.3% and 19.1%, respectively, from the corresponding year-ago period's reported numbers.
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