Thursday, July 30, 2009

Steven Madden has a big quarter, raises guidance(SHOO)

AlphaNinja - Steven Madden (SHOO) reported earnings of 66cents per share, versus the 49cents expected by Wall Street.

Accounting for 81% of revenue, wholesale sales were up 11%. Retail (company-owned stores) declined slightly, due to the closure of two locations and a drop in same-store-sales of 5.4%.

SHOO guided earnings for the full year to about $2.07 per share, well above the current consensus of 1.89 and still above the street-high 1.93.

Details from the conference call:

-Average unit retail was down 9%
-The company expects to open 1 new store during the remainder of this year while closing 2.
-Licensing income doubled, thanks to Candies' performance at Kohls and l.e.i at Walmart
-The improvement in gross margin was due to a 200basis point (2%) improvement in the wholesale division.
-As for how to deploy the company's $111million in cash and securities, they're "actively" looking at 3 acquisition targets, but nothing is imminent.
-Looking forward they see continued year-over-year improvement in wholesale gross margin, yet continued weakness at retail.
-As for how to improve retail performance, the two main factors are the closure of underporfming locations, and an improving retail environment. -->> The NYC locations, while expected to be terrific performers over the long term, are a huge short-term drag on costs.

I've been familiar with CEO Ed Rosenfeld for 5/6 years -->> before he was CEO he was effectively running the finances, while upper management slept. Maybe his best attribute is picking up acquisitions for fantastic prices, such as paying about $1million for $10million of revenue recently...

Netting out $6 per share in cash, the stock trades at a PE multiple of 13times the new EPS guidance. The possibility of more positive earnings surprises is likely, given this company's history.

Wedbush upped their target to $38 today, and took fiscal 2010 estimates to $2.34, as they see the brand gaining market share.

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