Steve Madden tops sales and earnings expectations in third quarter
American footwear, accessories and apparel company Steve Madden reported higher than expected Q3 net sales and income on Tuesday, thanks to a strong performance from its namesake Steve Madden brand and Blondo.
In the third quarter ended September 30, 2019, the company’s net sales increased 8.5% to $497.3 million, up from $458.5 million in the prior-year period. According to FactSet figures cited by MarketWatch, analysts had expected sales to total $487.0 million.
In the group’s wholesale business, sales were up 8.5% to $421.6 million, reflecting a 6.3% increase in wholesale footwear sales and a 15.8% rise in wholesale accessories and apparel revenues. The channel’s footwear sales were led by Blondo, Steve Madden-brand women’s shoes and the company’s private labels, while the accessories and apparel segment was boosted by the addition of the group’s newly acquired BB Dakota label's apparel sales.
As well as BB Dakota – a contemporary womenswear brand – Steve Madden also acquired digitally native sneaker label Greats during the quarter.
The company’s retail net sales saw an 8.3% rise to $75.7 million, up from $69.9 million in the same period in the previous year, with same store sales increasing 5.1%, driven by e-commerce.
The group’s quarterly net income totaled $52.5 million, or $0.63 per diluted share, compared to $55.6 million (EPS of $0.64) in Q3 2018, with increased operating expenses taking much of the blame for the decline. Nonetheless, Steve Madden’s adjusted EPS of $0.67 beat out the FactSet estimate of $0.59.
Year to date, the company’s net sales totaled $1.35 billion, up from $1.24 billion in the first nine months of 2018, while net income was $123.6 million, or $1.48 per diluted share, up from $116.6 million, or $1.35 per diluted share.
“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,” said the company’s chairman and CEO, Edward Rosenfeld in a release. “Based on the strong performance in third quarter and the continued momentum in our underlying business, we are raising our 2019 EPS guidance despite incremental earnings pressure from the implementation of the 15% tariff on List 4 products from China.”
In line with Rosenfeld’s statement, the company now expects that net sales will increase 7% to 7.5% year over year in fiscal 2019, revised up from a previous guidance of an increase between 5% and 7%. Annual diluted EPS is predicted to be in the range of $1.83 to $1.86, compared to a previous range of $1.74 to $1.82.
Thanks to its expectation-beating results and its raised guidance, the company’s stock jumped up 9.9% in pre-market trading on Tuesday.
Steve Madden Ltd. currently owns 227 retail locations, eight of which are internet stores, while another 32 are company-operated concessions in international markets.
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