In a tough retail climate, Steve Madden may have found the sweet spot.
The fashion footwear maker today reported another round of solid earnings in an otherwise challenged environment and bested market watchers’ estimates across the board.
The company said its net sales increased 15 percent, to $374.1 million, topping consensus bets for revenues of $355.3 million.
Net income advanced 17 percent, to $29 million, or 50 cents per diluted share. On an adjusted basis, diluted earnings per share were 51 cents, against market watchers’ forecasts for diluted EPS of 45 cents.
The firm also delivered a 2.2 percent comparable store sales increase on top of last year’s gain of 5.4 percent.
As has been the case almost consistently, Steve Madden women’s division was the firm’s primary growth driver in Q2, according to chairman and CEO Ed Rosenfeld.
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“Steve and his design team created hit items across a range of categories, most notably pool slides and sneakers, which enabled the brand to take significant market share in a tough retail environment,” Rosenfeld told investors on a conference call today. “In addition to the tremendous growth in women’s, we also recorded double-digit percentage sales growth in Steve Madden men’s and Steve Madden kids demonstrating overall strength and momentum of our flagship brand.”
The company’s latest acquisition, Schwartz & Benjamin, also contributed just under $21 million in net sales in Q2.
Signaling that the momentum will stay strong throughout the second half, Madden’s management lifted the company’s full-year outlook but noted that its approach remains cautious in the current environment.
“While we are very pleased with the momentum that we’ve seen in our business so far this year, we are taking a prudent approach to planning our business for the back half,” Rosenfeld said. “Industry sentiment around the boot and bootie category continues to be very cautious, with many key wholesale customers bringing in boots and booties later and planning the category down for the season overall.”
Rosenfeld also noted that the firm will begin to cycle tougher comparisons in its Steve Madden women’s wholesale footwear business in the second half.
“And of course, the overall retail environment continues to be challenging, with many of our wholesale customers experiencing sales declines and planning their businesses conservatively,” he explained. “That said, we continue to feel very good about the strength of our brands and our product assortments and remain confident that we are well positioned to continue outperforming the competition.”
The company now expects that net sales in fiscal year 2017 will increase nine to 11 percent over the prior year. Diluted EPS is now forecast to be in the range of $2.03 to $2.09. Adjusted diluted EPS is now expected to be in the range of $2.18 to $2.24. (Steve Madden previously expected net sales to increase eight to 10 percent over the prior year and adjusted diluted EPS in the range of $2.12 to $2.18.)
Analysts remained bullish about Madden’s performance following the earnings release.
“With a steady eye on merchandising execution, diversification across new channels and international markets, and disciplined inventory management, Steve Madden continues to outperform both brown shoe peers and the broader U.S. retail market,” Citi Research analyst Corinna Van der Ghinst said of Madden’s Q2 performance.
As of 12:45 p.m. EST, the firm’s shares were up 3.5 percent, to $42.45.
