Why is Steven Madden (SHOO) up 9.9% since its last earnings report?

It’s been a month since Steven Madden’s (SHOO) last earnings report. Shares have risen about 9.9% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Steven Madden headed for a decline? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Steven Madden’s Q1 results soared, revenues increased y/y

Steven Madden’s better-than-expected first-quarter 2024 earnings, with the top and bottom lines beating the Zacks Consensus Estimate. Revenues and profits also increased year by year.

The company made significant progress in key strategic areas, achieving double-digit revenue growth in international markets, non-footwear categories and direct-to-consumer channels, as well as revenue recovery in U.S. footwear wholesale. Ongoing strategic efforts are expected to help sustain revenue and profit growth, thereby generating significant stakeholder value in the long run.

The most important information in the first quarter

Steven Madden posted adjusted quarterly earnings of 65 cents per share, beating the Zacks Consensus Estimate of 56 cents. The same increased by 30% from 50 cents in the previous year period.

Total revenue increased 19.1% year-over-year to $552.4 million. Net revenues of $550.6 million increased 19.2% and commission and royalty income of $1.8 million decreased 13.5% compared to the year-ago period. The top line topped the consensus estimate of $522 million.

Adjusted gross profit increased 15.3% year over year to $225 million. We note that adjusted gross margin decreased 130 basis points (bps) to 40.7%.

Gross profit as a percentage of wholesale revenue decreased 190 basis points to 35.1%, impacted by the Almost Famous program and a shift in the wholesale footwear mix toward the private label business. However, gross profit as a percentage of direct revenue increased 270 basis points to 61.9% due to reduced promotional activity.

The company’s adjusted operating expenses increased 11.3% year-over-year to $164.1 million. However, as a percentage of revenue, adjusted operating expenses declined 210 basis points year-over-year to 29.7%.

Steven Madden reported adjusted operating income of $61 million, an increase of 27.8% compared to the same quarter a year ago. Adjusted operating margin increased 80 bps to 11%.

Segment efficiency

Wholesale division revenues increased 21% year-over-year to $438.2 million. We note that footwear wholesale revenues increased year-on-year by 4.7%, while accessories/apparel wholesale revenues increased by 78.6%. Excluding the recent acquisition of Almost Famous, wholesale revenue increased 9.7% year-over-year and accessories and apparel wholesale revenue increased 27.4%.

DTC revenues increased 12.8% to $112.3 million, driven by growth in its brick-and-mortar and e-commerce businesses.

SHOO ended the first quarter with 253 stationary retail outlets, five e-commerce sites and 25 franchises operated by companies in international markets.

The story continues

Other financial aspects

Steven Madden ended the first quarter with cash and cash equivalents of $131.5 million, short-term investments of $11.6 million and equity of $825.2 million, excluding non-controlling interests of $18.4 million. Management incurred capital expenditures of $4 million in the first quarter.

During the reported quarter, SHOO repurchased $37.3 million of its common stock, including shares acquired through net settlement of employee stock awards. At the end of the first quarter, there was approximately $143 million remaining in share repurchase authorization. Additionally, the board has approved a quarterly cash dividend of 21 cents per share, payable on June 21, 2024, to shareholders of record as of June 10.

Perspectives

In 2024, the company expects revenue growth of 11-13% compared to 2023, with adjusted earnings of $2.55-2.65 per share. Notably, the company saw earnings of $2.30 per share in 2023.

How have estimates changed since then?

It turns out that the estimates have not changed in the last month.

VGM results

Steven Madden currently has an average Growth Score of C, although well behind the Momentum Score of F. However, the stock is rated C on the value side, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of D. If you’re not focused on one strategy, this score should interest you.

Perspectives

Steven Madden carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Steven Madden belongs to the Zacks Footwear & Apparel Retail industry. Another stock in the same industry, Skechers (SKX), has gained 6.6% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In the most recent quarter, Skechers reported revenue of $2.25 billion, representing a year-over-year change of +12.5%. EPS of $1.33 in the same period compared to $1.02 a year ago.

For the current quarter, Skechers is expected to report earnings per share of $0.91, representing a change of -7.1% from the prior-year quarter. The Zacks Consensus Estimate has changed -0.6% over the past 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Skechers. The stock also has a VGM Rating of C.

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