Steven Madden Fights Industry Headwinds With Resilient Supply Chain: Analyst

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Steven Madden Ltd SHOO with a price target of $39.00.

The company reported 2Q23 adjusted EPS of $0.47 versus $0.63 last year, coming in a penny ahead of the consensus estimate of $0.46.

The wholesale channel underperformed for the third consecutive quarter as revenues declined 20.8% to $314.6 million, attributable to what the analyst sees as continued conservative ordering patterns.

Similar to the first quarter, despite the topline decline, the channel’s gross margin expanded 200 bps to 33.6% driven by improved margins in the accessories/apparel business.

DTC revenue fell 5.4% to $128.2 million (from down 8.1% last quarter), reflecting declines in both the brick-and-mortar and e-commerce channels.

For the second consecutive quarter to start the year, SHOO maintained its annual outlook on both the top and bottom lines, reflecting the encouraging first-half results tempered by a still uncertain macro environment marked by volatile consumer spending trends, opined the analyst.

Looking ahead, the analyst continues to see a normalization of supply chain lead times as supportive of SHOO’s ability to test and react to trends and chase demand in-season, a competitive advantage in the space.

Despite the tailwinds, the wholesale channel in the U.S. continues to face industry-wide headwinds that could further weigh in the back half, and the revenue miss for the quarter could move expectations towards the lower end of the maintained guidance range, the analyst concluded.

Price Action: SHOO shares are trading higher by 4.21% at $34.42 on the last check Wednesday.