Steven Madden (SHOO) Up More Than 21% Year to Date: Here's Why

Steven Madden, Ltd. SHOO is well-poised to tap the positive trends in the fashion world, thanks to its digital endeavors and other robust strategies. Undoubtedly, management is focused on creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda, expanding international markets and efficiently controlling expenses.

Buoyed by such strengths, shares of this footwear dealer have gained 21.6% against the industry’s 3.9% dip in the year-to-date period. A Growth Score of B further adds strength to this current Zacks Rank #3 (Hold) company.

Let’s Delve Deeper

The company has been enhancing its e-commerce wing via prudent investments in digital marketing as well as efforts to optimize the features and functionality of its website. Gains from increased investment in digital marketing and robust consumer reception capabilities, such as try before you buy, have been strengths. The company has also been significantly accelerating its digital commerce initiatives concerning distribution.

Management has added high-level talent to the organization, ramped up digital marketing spending, improved data science capabilities, launched a try-before-you-buy payment facility, rolled out buy online, pick-up in store across its entire U.S. full-price retail outlets and introduced advanced delivery and return options.

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Prudent acquisitions have been aiding Steven Madden’s performance. In the latest developments, management has concluded the buyout of privately-held Almost Famous, a major women's apparel designer and marketer. Almost Famous sells products under its brands, mainly Almost Famous and private label brands for retailers. Its BB Dakota buyout, which is a California-based women's apparel company, appears encouraging. With this acquisition, the company can expand its apparel category. Additionally, management had concluded the acquisition of the European joint venture. This transaction distributes the company’s branded footwear and accessories across the majority of countries in Europe.  

Steven Madden is focused on driving growth across the direct-to-consumer business, led by digital capabilities, expanding categories apart from footwear, such as handbags and apparel, enhancing its presence in the international markets and reinforcing its core U.S. wholesale footwear business.

During the third quarter of 2023, international revenues grew 5% year over year, accounting for about 20% of the consolidated revenues. The EMEA region was a standout and momentum continued in Europe as revenues rose 18% across the region. In the South Africa joint venture, revenues surged 87%, mainly backed by the sturdy performance of sneakers. Impressively, the company’s accessories and apparel revenues grew 27% in the third quarter. The Steve Madden handbag business had an outstanding quarter, as revenues grew 52%, including a 46% rise in wholesale and a 90% increase in direct-to-consumer.

What’s More?

Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $2.1 billion and $2.76, respectively. These estimates show corresponding growth of 7.3% and 14.8% year over year.

To wrap up, Steven Madden seems to be a decent investment pick, given all the aforementioned positives. These tailwinds, coupled with a robust business model, position the company well to cash in on the market growth opportunities and boost stakeholders’ value in the long haul.

Eye These Solid Picks

Some better-ranked companies are Royal Caribbean RCL, lululemon athletica LULU and Ralph Lauren RL.

Royal Caribbean sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

RCL has a trailing four-quarter earnings surprise of 28.3%, on average. The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates increases of 57.7% and 187.9%, respectively, from the year-ago period’s reported levels.

lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 18.1% and 20.5%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.

Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 18%, on average.

The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 1.4% and 13.1%, respectively, from the year-ago corresponding figures.

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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.

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