Steve Madden Stock Dips After Wholesale Challenges Persist in Q2
Steve Madden shares dipped in pre-market trading after the company reported a decline in sales and earnings in Q2 compared to the prior year.
The footwear company reported revenues of $445.3 million in the second quarter, down 16.8 percent compared to the same quarter in 2022. Adjusted net income was $34.9 million, or $0.47 per diluted share, compared to $49.8 million and $0.63 per diluted share the prior year. Analysts surveyed by Yahoo were looking for $457.32 million in revenues and $0.46 in EPS.
The results came during what CEO Edward Rosenfeld described as a “choppy” retail environment. Steve Madden’s Q1 was similarly challenged due to weak orders from wholesale partners and tough comparisons to the prior year.
In Q2, wholesale revenue declined 20.8 percent to $314.6 million. This included a 19.4 percent decrease in wholesale footwear revenue and a 24.6 percent decrease in wholesale accessories and apparel revenue. DTC revenue dropped 5.4 percent to $128.2 million due to drops in brick-and-mortar and e-commerce sales.
As inventory excesses continue to plague the marketplace, wholesale retailers have adopted a conservative approach to order placement. This has meant bad news for brands like Steve Madden that rely on department stores and other retailers to drive a significant portion of their business. Other wholesale heavy brands like Skechers and Deckers have recently reported declines in the channel this past quarter.
“We were pleased to deliver earnings results in line with expectations for the second quarter despite the challenging operating environment,” Rosenfeld said. “Our performance in the quarter reflects our disciplined control of inventory and expenses, even as we continue to invest in product innovation, consumer engagement and our long-term growth initiatives.”
Despite the challenging quarter, Steve Madden reiterated its 2023 outlook. The Company expects revenues to decrease between 6.5 percent and 8.0 percent in 2023, compared to the prior year. Adjusted diluted EPS is expected to be in the range of $2.40 to $2.50.