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Steven Madden (SHOO) Q1 Earnings Top, Digital Business Solid
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Shares of Steven Madden, Ltd. (SHOO - Free Report) fell 5.8% during the trading session on Apr 28 despite sturdy first-quarter 2021 results. Beating the impact of the coronavirus pandemic, earnings and sales surpassed the Zacks Consensus Estimate and improved year over year. Quarterly results also surpassed management’s expectations. The company’s business accelerated in March, with significant improvement in revenue trends across its Retail unit and performance at its wholesale partners. Also, the government stimulus, the vaccine rollout and easing of government restrictions acted as tailwinds. Its flagship brand performance was also outstanding.
Among the company’s international markets, Europe was a strong performer buoyed by robust performance of digital channels. However, Canada remained challenging during the quarter on extensive pandemic lockdowns and restrictions.
Buoyed by a sturdy quarter, management issued an upbeat view for the second quarter. However, the earnings guidance fell shy of analysts’ expectations, which most probably weighed on the stock. Management envisions earnings per share of 26-28 cents for the second quarter, which suggests an improvement from adjusted loss per share of 19 cents reported in the year-earlier quarter. The Zacks Consensus Estimate for quarterly earnings stands at 35 cents, which is likely to witness downward revisions in the coming days.
Q1 Highlights
Steven Madden delivered adjusted earnings of 33 cents a share, which beat the Zacks Consensus Estimate of 19 cents. Moreover, the bottom line more than doubled from adjusted earnings of 16 cents in the year-ago quarter. We note that cost of sales decreased 1.7% to $221.9 million and adjusted operating expenses dropped 13.2% to $103.5 million owing to cost-control measures.
Steven Madden, Ltd. Price, Consensus and EPS Surprise
Total revenues rose 0.5% year over year to $361 million. This takes into account a 0.9% rise in net sales of $358.9 million and a 40% drop in commission and licensing fee income to $2.1 million. The Zacks Consensus Estimate for total revenues was pegged at $333.1 million.
Gross profit edged up 4.2% year over year to $139.1 million, while consolidated gross margin expanded 130 basis points (bps) to 38.5%. However, higher freight cost was a deterrent to the metric.
We note that gross margin in the wholesale business contracted 20 bps to 32.3% owing to a shift in sales mix. However, retail gross margin expanded 370 bps to 63.5%, reflecting solid growth at both the e-commerce and brick-and-mortar businesses.
Further, the company reported adjusted operating income of $35.6 million that rose significantly from $14.2 million generated a year ago. Also, adjusted operating margin increased considerably to 9.9% from 4% seen in the year-earlier quarter.
Segment Performance
Revenues at the Wholesale business dropped 3.7% year over year to $291.4 million, mainly due to adverse impacts from supply-chain disruption and lower revenues in the footwear category. We note that wholesale footwear revenues fell 7.8% to $216.8 million. However, the decline was somewhat offset by an increase of 10.3% to $74.6 million in wholesale accessories/apparel revenues on robust gains in Steve Madden handbags across the domestic and international markets along with growth in private label.
Retail revenues jumped 27.5% to $67.5 million, buoyed by robust performance of the e-commerce business. Notably, e-commerce momentum continued with revenues surging 89%, including a 112% increase in Steve Madden’s e-commerce business. The digital commerce business remained sturdy. Also, the segment’s revenues increased 7% versus the pre-COVID-19 first quarter of 2019, driven by solid consumer demand for brands and products.
We note that the company ended the first quarter with 215 company-operated retail outlets, including seven Internet stores and 17 company-operated concessions in international markets.
Other Financial Aspects
Steven Madden, which carries a Zacks Rank #3 (Hold), ended the reported quarter with cash, cash equivalents and short-term investments of $273 million, and shareholders’ equity of $787.5 million, excluding non-controlling interest of $13.2 million. As of Mar 31, 2021, the company had no debt, and inventory was $106.6 million, up 4.2% year over year.
CapEx came in at $1.6 million during the reported quarter. The company generated net cash from operating activities of $44.2 million in 2020.
During the first quarter, management repurchased 154,040 shares for nearly $5.6 million, including shares acquired via the net settlement of employees’ stock awards. It had roughly $135 million remaining on its share repurchase authorization. Further, the company's board approved a quarterly cash dividend of 15 cents per share, payable on Jun 25, 2021, to stockholders of record as on Jun 15.
Other Details
Management concluded the acquisition of the remaining 49.9% share of its European joint venture early in the second quarter. This transaction distributes the company’s branded footwear and accessories across majority countries in Europe. It formed the European joint venture roughly five years ago. Notably, this joint venture registered solid double-digit percentage revenue growth each year with a 21% revenue increase in 2020.
For 2021, management anticipates revenues from the European joint venture of about $55 million, more than 3/4 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.
Outlook
Given the pandemic uncertainties, management did not issue any revenue and earnings guidance for 2021. However, it anticipates revenues in the range of $360-$365 million for the second quarter, suggesting improvement from $142.8 million registered in the year-ago quarter.
Although management is encouraged by the improving demand trends, it is cautious about the near-term outlook, mainly for the wholesale channel. We note that the company is concerned about the supply-chain disruptions and wholesale customers' conservative approach to orders for spring.
Furthermore, management predicts the year-over-year online growth to moderate somewhat on much tougher comparisons beginning in the second quarter. Nonetheless, momentum in the e-commerce business and strength in product assortments are likely to boost the Retail segment.
Deckers (DECK - Free Report) has an expected long-term earnings growth rate of 21.5% and a Zacks Rank #2 (Buy).
Crocs (CROX - Free Report) has an expected long-term earnings growth rate of 15% and a Zacks Rank #2.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Steven Madden (SHOO) Q1 Earnings Top, Digital Business Solid
Shares of Steven Madden, Ltd. (SHOO - Free Report) fell 5.8% during the trading session on Apr 28 despite sturdy first-quarter 2021 results. Beating the impact of the coronavirus pandemic, earnings and sales surpassed the Zacks Consensus Estimate and improved year over year. Quarterly results also surpassed management’s expectations. The company’s business accelerated in March, with significant improvement in revenue trends across its Retail unit and performance at its wholesale partners. Also, the government stimulus, the vaccine rollout and easing of government restrictions acted as tailwinds. Its flagship brand performance was also outstanding.
Among the company’s international markets, Europe was a strong performer buoyed by robust performance of digital channels. However, Canada remained challenging during the quarter on extensive pandemic lockdowns and restrictions.
Buoyed by a sturdy quarter, management issued an upbeat view for the second quarter. However, the earnings guidance fell shy of analysts’ expectations, which most probably weighed on the stock. Management envisions earnings per share of 26-28 cents for the second quarter, which suggests an improvement from adjusted loss per share of 19 cents reported in the year-earlier quarter. The Zacks Consensus Estimate for quarterly earnings stands at 35 cents, which is likely to witness downward revisions in the coming days.
Q1 Highlights
Steven Madden delivered adjusted earnings of 33 cents a share, which beat the Zacks Consensus Estimate of 19 cents. Moreover, the bottom line more than doubled from adjusted earnings of 16 cents in the year-ago quarter. We note that cost of sales decreased 1.7% to $221.9 million and adjusted operating expenses dropped 13.2% to $103.5 million owing to cost-control measures.
Steven Madden, Ltd. Price, Consensus and EPS Surprise
Steven Madden, Ltd. price-consensus-eps-surprise-chart | Steven Madden, Ltd. Quote
Total revenues rose 0.5% year over year to $361 million. This takes into account a 0.9% rise in net sales of $358.9 million and a 40% drop in commission and licensing fee income to $2.1 million. The Zacks Consensus Estimate for total revenues was pegged at $333.1 million.
Gross profit edged up 4.2% year over year to $139.1 million, while consolidated gross margin expanded 130 basis points (bps) to 38.5%. However, higher freight cost was a deterrent to the metric.
We note that gross margin in the wholesale business contracted 20 bps to 32.3% owing to a shift in sales mix. However, retail gross margin expanded 370 bps to 63.5%, reflecting solid growth at both the e-commerce and brick-and-mortar businesses.
Further, the company reported adjusted operating income of $35.6 million that rose significantly from $14.2 million generated a year ago. Also, adjusted operating margin increased considerably to 9.9% from 4% seen in the year-earlier quarter.
Segment Performance
Revenues at the Wholesale business dropped 3.7% year over year to $291.4 million, mainly due to adverse impacts from supply-chain disruption and lower revenues in the footwear category. We note that wholesale footwear revenues fell 7.8% to $216.8 million. However, the decline was somewhat offset by an increase of 10.3% to $74.6 million in wholesale accessories/apparel revenues on robust gains in Steve Madden handbags across the domestic and international markets along with growth in private label.
Retail revenues jumped 27.5% to $67.5 million, buoyed by robust performance of the e-commerce business. Notably, e-commerce momentum continued with revenues surging 89%, including a 112% increase in Steve Madden’s e-commerce business. The digital commerce business remained sturdy. Also, the segment’s revenues increased 7% versus the pre-COVID-19 first quarter of 2019, driven by solid consumer demand for brands and products.
We note that the company ended the first quarter with 215 company-operated retail outlets, including seven Internet stores and 17 company-operated concessions in international markets.
Other Financial Aspects
Steven Madden, which carries a Zacks Rank #3 (Hold), ended the reported quarter with cash, cash equivalents and short-term investments of $273 million, and shareholders’ equity of $787.5 million, excluding non-controlling interest of $13.2 million. As of Mar 31, 2021, the company had no debt, and inventory was $106.6 million, up 4.2% year over year.
CapEx came in at $1.6 million during the reported quarter. The company generated net cash from operating activities of $44.2 million in 2020.
During the first quarter, management repurchased 154,040 shares for nearly $5.6 million, including shares acquired via the net settlement of employees’ stock awards. It had roughly $135 million remaining on its share repurchase authorization. Further, the company's board approved a quarterly cash dividend of 15 cents per share, payable on Jun 25, 2021, to stockholders of record as on Jun 15.
Other Details
Management concluded the acquisition of the remaining 49.9% share of its European joint venture early in the second quarter. This transaction distributes the company’s branded footwear and accessories across majority countries in Europe. It formed the European joint venture roughly five years ago. Notably, this joint venture registered solid double-digit percentage revenue growth each year with a 21% revenue increase in 2020.
For 2021, management anticipates revenues from the European joint venture of about $55 million, more than 3/4 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.
Outlook
Given the pandemic uncertainties, management did not issue any revenue and earnings guidance for 2021. However, it anticipates revenues in the range of $360-$365 million for the second quarter, suggesting improvement from $142.8 million registered in the year-ago quarter.
Although management is encouraged by the improving demand trends, it is cautious about the near-term outlook, mainly for the wholesale channel. We note that the company is concerned about the supply-chain disruptions and wholesale customers' conservative approach to orders for spring.
Furthermore, management predicts the year-over-year online growth to moderate somewhat on much tougher comparisons beginning in the second quarter. Nonetheless, momentum in the e-commerce business and strength in product assortments are likely to boost the Retail segment.
Don’t Miss These Solid Bets
Ralph Lauren (RL - Free Report) has an expected long-term earnings growth rate of 8.2% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers (DECK - Free Report) has an expected long-term earnings growth rate of 21.5% and a Zacks Rank #2 (Buy).
Crocs (CROX - Free Report) has an expected long-term earnings growth rate of 15% and a Zacks Rank #2.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>