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Here's Why Steven Madden (SHOO) Stock Increases 20% YTD
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Steven Madden, Ltd. (SHOO - Free Report) appears impressive, thanks to immense strength in its e-commerce business and strategic initiatives. The e-commerce business has been a bright spot amid the pandemic to date. Management also remains encouraged about the company’s prudent buyouts. In addition, this fashion-footwear dealer’s cost-containment efforts are fruitful as the same drives its margins.
Impressively, shares of the company have increased 20.3% year to date against the industry’s 5.4% dip. Additionally, analysts look quite optimistic about the stock, which is apparent from the company’s upward earnings estimate revisions. The Zacks Consensus Estimate for 2021 earnings stands at $1.68 while the same for 2022 is pegged at $2.11, both having moved 1.2% and 1.4% north, respectively, over the past 30 days.
Let’s Analyze Further
Speaking of Steven Madden’s e-commerce initiatives, we note that the company is significantly accelerating its digital commerce efforts including the expansion of the distribution channels. It added high-level talent to the organization, 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. In fact, solid gains from increased investments in digital marketing and a robust consumer reception of capabilities, such as try before you buy are consistently contributing to its performance.
Markedly, e-commerce revenues surged 89% during the first quarter of 2021. This included a 112%-increase in Steven Madden e-commerce business. Notably, this represented about 54% of the company’s total Retail segment sales in the first quarter. Also, the digital commerce business has been pretty strong for a while. Moving on, strength in the e-commerce business is likely to continue aiding the company’s performance.
In addition, the company is constantly making strategic buyouts. Recently, management concluded the company’s acquisition of the remaining 49.9% share of its European joint venture. This transaction distributes its branded footwear and accessories across majority countries in Europe. The company formed the European joint venture roughly five years ago. Notably, it registered solid double-digit percentage revenue growth each year with a 21% increase in the metric during 2020.
For 2021, management anticipates revenues from the European joint venture of about $55 million, more than 3/4th of which will be generated from digital channels. Also, the business is expected to generate a mid-teen operating profit margin before allocation of corporate overhead. Additionally, Steven Madden remains encouraged about the buyout of BB Dakota, a California-based women's apparel company. With this acquisition, the company looks to expand its apparel category.
Bottomline
Despite such strengths, Steven Madden has been witnessing sluggishness in its wholesale business for a while. The adverse impacts of supply-chain disruption with respect to the pandemic and lower footwear category revenues marred the segment’s prospects in the first quarter. Therefore, management remains cautious about the wholesale channel in the near term as well. Nonetheless, the segment’s accessories/apparel revenues increased in the said quarter on robust gains from Steve Madden handbags across the domestic and international markets along with growth in private label.
Overall, Steven Madden is focused on creating trendy products, enriching relations with customers via marketing, enhancing digital commerce agenda, expanding international markets including Europe and efficiently controlling expenses. Also, the company’s flagship brand performance has been outstanding over time. Strength in the company’s brands and e-commerce business coupled with a robust business model position it well for growth.
Currently, Steven Madden has a Zacks Rank #3 (Hold). Also, a Momentum Score of B highlights the company’s potential.
Gildan Activewear (GIL - Free Report) , presently a Zacks #1 Ranked stock, has a long-term earnings growth rate of 28.6%.
Under Armour (UAA - Free Report) has a long-term earnings growth rate of 32.2% and a Zacks Rank #2 (Buy) at present.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Here's Why Steven Madden (SHOO) Stock Increases 20% YTD
Steven Madden, Ltd. (SHOO - Free Report) appears impressive, thanks to immense strength in its e-commerce business and strategic initiatives. The e-commerce business has been a bright spot amid the pandemic to date. Management also remains encouraged about the company’s prudent buyouts. In addition, this fashion-footwear dealer’s cost-containment efforts are fruitful as the same drives its margins.
Impressively, shares of the company have increased 20.3% year to date against the industry’s 5.4% dip. Additionally, analysts look quite optimistic about the stock, which is apparent from the company’s upward earnings estimate revisions. The Zacks Consensus Estimate for 2021 earnings stands at $1.68 while the same for 2022 is pegged at $2.11, both having moved 1.2% and 1.4% north, respectively, over the past 30 days.
Let’s Analyze Further
Speaking of Steven Madden’s e-commerce initiatives, we note that the company is significantly accelerating its digital commerce efforts including the expansion of the distribution channels. It added high-level talent to the organization, 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. In fact, solid gains from increased investments in digital marketing and a robust consumer reception of capabilities, such as try before you buy are consistently contributing to its performance.
Markedly, e-commerce revenues surged 89% during the first quarter of 2021. This included a 112%-increase in Steven Madden e-commerce business. Notably, this represented about 54% of the company’s total Retail segment sales in the first quarter. Also, the digital commerce business has been pretty strong for a while. Moving on, strength in the e-commerce business is likely to continue aiding the company’s performance.
In addition, the company is constantly making strategic buyouts. Recently, management concluded the company’s acquisition of the remaining 49.9% share of its European joint venture. This transaction distributes its branded footwear and accessories across majority countries in Europe. The company formed the European joint venture roughly five years ago. Notably, it registered solid double-digit percentage revenue growth each year with a 21% increase in the metric during 2020.
For 2021, management anticipates revenues from the European joint venture of about $55 million, more than 3/4th of which will be generated from digital channels. Also, the business is expected to generate a mid-teen operating profit margin before allocation of corporate overhead. Additionally, Steven Madden remains encouraged about the buyout of BB Dakota, a California-based women's apparel company. With this acquisition, the company looks to expand its apparel category.
Bottomline
Despite such strengths, Steven Madden has been witnessing sluggishness in its wholesale business for a while. The adverse impacts of supply-chain disruption with respect to the pandemic and lower footwear category revenues marred the segment’s prospects in the first quarter. Therefore, management remains cautious about the wholesale channel in the near term as well. Nonetheless, the segment’s accessories/apparel revenues increased in the said quarter on robust gains from Steve Madden handbags across the domestic and international markets along with growth in private label.
Overall, Steven Madden is focused on creating trendy products, enriching relations with customers via marketing, enhancing digital commerce agenda, expanding international markets including Europe and efficiently controlling expenses. Also, the company’s flagship brand performance has been outstanding over time. Strength in the company’s brands and e-commerce business coupled with a robust business model position it well for growth.
Currently, Steven Madden has a Zacks Rank #3 (Hold). Also, a Momentum Score of B highlights the company’s potential.
Eye These Solid Picks
Crocs (CROX - Free Report) has a long-term earnings growth rate of 15% and a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Gildan Activewear (GIL - Free Report) , presently a Zacks #1 Ranked stock, has a long-term earnings growth rate of 28.6%.
Under Armour (UAA - Free Report) has a long-term earnings growth rate of 32.2% and a Zacks Rank #2 (Buy) at present.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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