Steven Madden, Ltd. SHOO reported mixed first-quarter 2023 results, wherein the top line beat the Zacks Consensus Estimate while the bottom line missed the same. However, both revenues and earnings declined year over year.
In the reported quarter, the company witnessed a challenging retail environment, conservative order patterns from wholesale customers and tough year-over-year comparisons. However, Steve Madden reduced its inventory levels and saw a strong gross margin performance in spite of a promotional retail backdrop.
Over the past three months, shares of this presently Zacks Rank #3 (Hold) player have increased 2.5% compared with the industry’s 9.6% rise.
Steven Madden posted adjusted quarterly earnings of 50 cents per share that missed the Zacks Consensus Estimate and our consensus estimate by a couple of cents. The same decreased from 92 cents per share reported in the prior-year period.
Steven Madden, Ltd. Price, Consensus and EPS Surprise
Steven Madden, Ltd. price-consensus-eps-surprise-chart | Steven Madden, Ltd. Quote
Total revenues fell 17.1% year over year to $463.8 million. While net sales of $461.7 million decreased 17.2%, commission and licensing fee income of $2.1 million declined 12.5% from the year-ago period’s level. The top line came above the Zacks Consensus Estimate of $452 million and our consensus estimate of $449.6 million.
Gross profit tumbled 14.4% year over year to $195.1 million. Nonetheless, the gross margin expanded 140 basis points (bps) to 42.1%. Gross profit as a percentage of wholesale revenues increased 180 bps to 37%, driven by higher margin in the Wholesale accessories/apparel business. However, gross profit as a percentage of direct-to-consumer revenues, decreased 310 bps to 59.2% owing to higher promotional activity.
Adjusted operating expenses jumped 10.4% year over year to $147.4 million. Also, as a percentage of revenues, adjusted operating expenses expanded 800 bps to 31.8%.
Steven Madden reported an adjusted operating income of $47.7 million, down from $94.4 million registered in the same quarter a year ago. The adjusted operating margin contracted 660 bps to 10.3%.
Revenues for the Wholesale business decreased 19.3% year over year to $362.1 million. We note that Wholesale footwear revenues fell 18.6% year over year, while Wholesale accessories/apparel revenues were down 22%.
Direct-to-consumer revenues dipped 8.1% to $99.6 million, driven by a decrease in the brick-and-mortar business and e-commerce unit.
Steven Madden ended the first quarter with 235 brick-and-mortar retail outlets, five e-commerce websites and 21 company-operated concessions across international markets.
Other Financial Aspects
Steven Madden ended the reported quarter with cash and cash equivalents of $210 million, short-term investments of $13.7 million and stockholders’ equity of $821 million, excluding non-controlling interest of $16.7 million. Management incurred capital expenditures of $3.8 million in the first quarter of 2023.
In the reported quarter, SHOO repurchased $38.5 million of its common stock, including shares acquired via the net settlement of employees’ stock awards. Moreover, the company’s board has approved a raise in its share repurchase authorization of $189.9 million, with the total authorization up to $250 million. It has also approved a quarterly cash dividend of 21 cents per share, payable Jun 23, 2023, to stockholders of record as on Jun 12.
Steven Madden continues to project revenues to decline 6.5-8% from the last year’s level. SHOO envisions earnings per share (EPS) of $2.39-$2.49 and adjusted EPS of $2.40-$2.50 for the year.
In 2022, Steven Madden reported revenues of $2.1 billion and adjusted EPS of $2.80.
Eye These Solid Picks
Here we have highlighted three top-ranked stocks, namely, Ralph Lauren RL, Oxford Industries OXM and Deckers DECK.
Ralph Lauren, a footwear and accessories dealer, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RL has a trailing four-quarter earnings surprise of 23.6%, on average. The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 5.5% and 14%, respectively, from the year-ago corresponding figures.
Oxford Industries, which designs, sources, markets and distributes lifestyle products and other brands, carries a Zacks Rank #2 (Buy). Oxford Industries has a trailing four-quarter earnings surprise of 18.9%, on average.
The Zacks Consensus Estimate for OXM’s current financial-year sales and EPS suggests growth of 13.7% and 10.4% from the year-ago reported numbers.
Deckers, a footwear dealer, has a Zacks Rank of 2 at present. DECK has a trailing four-quarter earnings surprise of 31%, on average.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and EPS suggests growth of 11% and 17.1%, respectively, from the year-ago corresponding figures.
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