Shoe and fashion accessories retailer Steven Madden Ltd.’s (SHOO) shares slipped 6.7% in the trading session on Jul 31, as lower year-over-year second-quarter fiscal 2014 earnings dampened investors’ confidence. Long Island City, NY-based Steven Madden reported earnings of 44 cents per share missing the Zacks Consensus Estimate by a penny.
Earnings were higher than year-ago results by 2.3% due to lower outstanding shares. Results have been adjusted for the three-for-two stock split effective Oct 2, 2013.
Revenues and Profit
Net sales in the reported quarter came in at $295.7 million and missed the Zacks Consensus Estimate of $315.0 million by 6.5%. Sales also missed year-ago results by 0.6% as soft sales in retail segment due to challenging retail environment offset mid-single-digit sales growth in the branded footwear business.
Absence of fashion trends and weak traffic were responsible for the poor performance in the retail sector. Brands like Steve Madden Men’s, Steve Madden Women’s, and Steven lines, however, performed well during the quarter.
Higher cost of sales (0.8% year over year) led to gross profit decline of 3.2% to $107.1 million. Operating income during the quarter dipped 11.6% year over year to $40.3 million due to higher operating expenses.
Segment Details
Net sales in the wholesale segment declined 1.0% to $249.8 million as decrease in private label footwear sales offset strong sales gain in the branded footwear business and wholesale accessories.
Net sales in the retail segment declined 1% to $45.9 million due to 8.5% decline in comps.
Guidance for 2014
Management anticipates market conditions to remain challenging through the balance of this year. Soft sales in the handbag business have prompted management to lower the guidance for fiscal 2014.
For fiscal year 2014, Steve Madden now expects net sales to increase 2% to 4% from 2013 compared with 5% to 7% expected previously. Earnings per share for fiscal 2014 are expected in the range of $2.00 to $2.10 compared with $2.05 to $2.15, expected previously.
Steven Madden currently has a Zacks Rank #2 (Buy).
OtherStocks to Consider
Other stocks in the same sector include Skechers USA Inc. (SKX), Anta Sports Products Ltd. (ANPDF) and Carters Inc. (CRI). While Skechers sports a Zacks Rank #1 (Strong Buy), Anta Sports and Carters have a Zacks Rank #2.
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