Its been a busy few months for Steven Madden Ltd., which today logged better-than-anticipated earnings and saw its stock shoot up more than 13% during intraday trading.
The footwear and accessories maker posted third-quarter results for the year, delivering revenues that climbed 8.5% to $497.3 million — well above Wall Street’s forecasts of $487.2 million. Its profits also beat consensus bets of 58 cents, rising from last year’s $55.9 million to $56 million, or 67 cents per diluted share on an adjusted basis.
As of 3:30 p.m. ET, the firm’s shares were in the green 13.8% to nearly $41.
In a conference call with investors, Chairman and CEO Edward Rosenfeld touted the company’s two recent acquisitions as well as a high-profile shoe collaboration and improvements in its digital business.
“We are pleased with our third-quarter results, which included adjusted earnings that significantly exceeded our expectations driven by strong performance in our Steve Madden and Blondo brands,” he said in a statement. “We also completed two acquisitions during the quarter that provide meaningful growth opportunities going forward: Greats, a pioneering digitally native sneaker brand, and BB Dakota, a contemporary women’s apparel company.”
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On August 12, the New York-based firm amped up its sneaker business with the purchase of Greats Brand Inc. According to Steve Madden at the time of acquisition, the digital upstart, which was founded in 2014 by Ryan Babenzein, recorded net sales of roughly $13 million for the 12 months ended June 30.
A day later, the company snapped up women’s apparel label BB Dakota, noting that the California-based brand had logged revenues of about $43 million for the same fiscal year. Founded in 2005, BB Dakota’s owned labels include the flagship name and Jack by BB Dakota, as well as licensed brand Cupcakes & Cashmere, launched by blogger and influencer Emily Schuman.
“I think we certainly have the wherewithal to do additional acquisitions if we find the right opportunities,” Rosenfeld added in the earnings call. “These are obviously relatively smaller deals. We’re spending a lot of time on them to make sure that they’re successful, but if the right opportunity came along, we’d still be interested.”
The third quarter also witnessed the launch of a co-branded capsule of footwear with model Winnie Harlow as well as improvements in Steve Madden’s e-commerce business, which helped drive same-store sales to a 5.1% gain during the period. While wholesale revenues grew 8.5% to $421.6 million, retail sales rose 8.3% to $75.7 million.
Rosenfeld also provided an update on the impact of the prolonged U.S.-China trade war: Steve Madden has continued to move its production base out of China and to work with suppliers to negotiate price concessions on products that remain in the country. The company has also indicated the need to raise prices for consumers to offset supply chain costs.
The firm estimates a negative impact of $0.02 per share due to President Donald Trump’s fourth tranche of tariffs, in addition to the $0.05 per share loss from the third tranche of tariffs that the company had previously announced. The first round took effect in September, hitting $112 billion worth of goods with a 15% levy, while duties on the remaining $188 billion are scheduled for mid-December.
Despite the incremental earnings pressure, Steve Madden is raising its EPS guidance for the year in the range of $1.92 to $1.95, compared with the previous range of $1.78 to $1.86. It also expects sales growth of 7% to 7.5%, up from the previous 5% to 7%.
“Looking out further, the power of our brands and the strength of our business model give us confidence that we can continue to drive earnings growth and create value for shareholders over the long term,” Rosenfeld stated.
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