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Steven Madden (SHOO) Up 2.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Steven Madden (SHOO - Free Report) . Shares have added about 2.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steven Madden due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Steven Madden Q1 Earnings Top, Digital Business Solid
Steven Madden posted sturdy first-quarter 2021 results. Both 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. 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. However, Canada remained challenging during the quarter on extensive pandemic lockdowns and restrictions.
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.
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.
Other Financial Aspects
Steven Madden 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.
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.
Outlook
Given the pandemic uncertainties, management did not issue any revenue and earnings guidance for 2021. Buoyed by a sturdy quarter, management issued an upbeat view for the second quarter. Management now 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. It 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -19.43% due to these changes.
VGM Scores
At this time, Steven Madden has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steven Madden has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Steven Madden (SHOO) Up 2.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Steven Madden (SHOO - Free Report) . Shares have added about 2.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steven Madden due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Steven Madden Q1 Earnings Top, Digital Business Solid
Steven Madden posted sturdy first-quarter 2021 results. Both 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. 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. However, Canada remained challenging during the quarter on extensive pandemic lockdowns and restrictions.
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.
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.
Other Financial Aspects
Steven Madden 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.
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.
Outlook
Given the pandemic uncertainties, management did not issue any revenue and earnings guidance for 2021. Buoyed by a sturdy quarter, management issued an upbeat view for the second quarter. Management now 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. It 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -19.43% due to these changes.
VGM Scores
At this time, Steven Madden has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steven Madden has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.