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How Steven Madden (SHOO) Looks Just Ahead of Q2 Earnings


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Steven Madden, Ltd. SHOO is slated to report second-quarter 2018 results on Jul 31. In the trailing four quarters, this designer, marketer and seller of fashion-forward name brand and private label footwear has outperformed the Zacks Consensus Estimate by an average of 5.9%. In the last reported quarter, the company reported positive earnings surprise of 8%. Investors are counting on another beat by Steven Madden in the to-be-reported quarter.

How Are Estimates Faring?

After registering a bottom-line increase of about 14.9% in the first quarter of 2018, Steven Madden is likely to record year-over-year growth of roughly 15.7% in the second quarter. This is quite evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 59 cents compared with 51 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has remained stable in the last 30 days.

Analysts polled by Zacks now project revenues of $390.4 million, up approximately 4.4% from the year-ago quarter. We note that total revenue of this NY-based company had increased 6.2% in the last reported quarter.

Out of the trailing seven quarters, the company's earnings surpassed the consensus mark in the five quarters while sales surpassed the same in all seven. Let's delve deeper and find out the factors impacting the results.

Factors Holding Key to Steven Madden's Performance

Steven Madden has been witnessing soft comps over the last few quarters. We note that in the first quarter, same-store sales dropped 1.2% due to a decline in the boot category. In the fourth and third quarters of 2017, the metric declined 5.1% and 3.8%, respectively.

Further, a contraction in adjusted operating margin as a result of increasing operating expenses is a concern. Notably, adjusted operating margin shrunk 60 basis points (bps) to 10.2% in first-quarter 2018 following a contraction of 180 bps and 70 bps in the last two quarters. Steve Madden is also witnessing rising cost of goods sold that may weigh on its gross margin. On top of it, stiff competition in the fashion industry remains a headwind.

Nevertheless, the company is leaving no stone unturned to boost the top and bottom line. Notably, the company is focusing on expanding worldwide and enhancing product portfolio. The company is taking several initiatives to grow globally. Notably, in the first quarter, the company witnessed 36% revenue growth internationally. The company's directly-owned subsidiaries in Canada and Mexico, SM Europe JV as well as the distributor business posted strong results.

Further, Steven Madden expects its international business to sustain momentum in 2018 on strategic investments. The company is optimistic about growth in the Middle East, Italy and India. The company expects Asia to be a major contributor to net sales despite the region's marginally low figures in the first quarter. The company also continues to witness robust growth in the Wholesale Footwear and Accessories segments.

Steven Madden, Ltd. Price, Consensus and EPS Surprise

Steven Madden, Ltd. Price, Consensus and EPS Surprise | Steven Madden, Ltd. Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Steven Madden is likely to beat estimates this quarter. A stock needs to have both - a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP - for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Steven Madden has a Zacks Rank #4 and an Earnings ESP of +1.30%, which makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here .

3 Stocks With Favorable Combination

Here are three companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Urban Outfitters URBN has an Earnings ESP of +1.46% and a Zacks Rank #2.

Foot Locker, Inc. FL has an Earnings ESP of +6.51% and a Zacks Rank #2.

DSW Inc. DSW has an Earnings ESP of +2.86% and a Zacks Rank #3.

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Steven Madden, Ltd. (SHOO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: FL , URBN , DSW , SHOO



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