Steve Madden A Shoe-In For Growth With Amazon Distribution, Fast-Turn Business Model

Piper Jaffray has upgraded Steven Madden, Ltd. SHOO to Overweight from Neutral as it believes the company can continue outperforming peers in 2017, given its durable business model.

The upgrade comes ahead of Steven Madden's quarterly earnings on Feb. 28. Analyst Erinn Murphy expects the company to report EPS in line with Street and issue a solid guide. Street expects EPS of $0.49 on revenue of $338.19 million.

Analyst Commentary

“[W]e believe SHOO is executing well on fashion and feel more comfortable with SHOO's ability to attain Street estimates over the NTM--setting the stock apart from the vast majority of names in our universe,” Murphy wrote in a note.

Murphy favors the company's fast-turn business model in the current "buy now, wear now" environment, and welcomes its proactive distribution approach with Amazon.com, Inc. AMZN, which continues to grow 50 percent plus at favorable margins.

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“We see SHOO having an opportunity in Amazon's private-label with time. As such, we continue to see steady topline trends moving forward despite SHOO generating ~14 percent sales from US dept. stores,” Murphy elaborated.

In addition, the analyst is comfortable With Steven Madden's ability to at least grow sales mid-single digits in 2017, driven by brand share gains and Amazon acceleration.

“Additionally, we believe the recent launch of a new label (Madden NYC) at KSS could provide an incremental $0.03–$0.04 lift to annual EPS and a smaller benefit to sales (~$8 million) given its mostly licensed apparel,” Murphy continued.

Murphy also noted that the company should at least hit his about 5 percent sales growth estimate in FY 2017 as the recent Schwartz & Benjamin acquisition should contribute about $80 million to revenue.

Murphy, who raised her price target to $41 from $38, also increased her FY 2017 EPS estimate to $2.22 from $2.20.

At last check, shares of Steven Madden rose 1.74 percent to $37.90.