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Steven Madden (SHOO) Strong on E-commerce & Strategic Efforts

Steven Madden's (SHOO) e-commerce business exhibits momentum. The company ramps up its digital marketing spend and rolls out buy online, pick-up in st...

This story originally appeared on Zacks

Steven Madden, Ltd. SHOO has been experiencing a solid momentum in the e-commerce business since the outbreak of the coronavirus pandemic. Solid gains from increased investment in digital marketing and robust online capabilities, such as try before you buy are steadily contributing to its performance.

The renowned fashion-footwear dealer is also benefiting from other strategic efforts like product assortment enhancement and judicious buyouts. It is witnessing higher consumer demand and increased spending on fashion products. Its cost-containment efforts are also fruitful, thereby driving margins. All these factors aided this Long Island City, NY-based company to surge 92.1% in a year, outperforming its industry’s 48.6% rally.

Analysts look pretty optimistic about this presently Zacks Rank #1 (Strong Buy) stock, which is evident from higher earnings estimate revisions. The Zacks Consensus Estimate for earnings is pegged at $2.08 for 2021 and $2.42 for 2022, having moved 7.8% and 6.1% north, respectively, over the past 30 days. In fact, the company’s earnings status looks favorable. A glimpse of its performance in the trailing four quarters shows that it delivered an earnings surprise of 56.2%, on average. An expected long-term earnings growth rate of 15% further exhibits strength.

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Let’s Delve Deeper

E-commerce momentum continued during the second quarter of 2021 with revenues surging 105%. The same includes a 119% increase in Steven Madden’s e-commerce business. The company continues to gain from its prudent investments in digital marketing as well as efforts to optimize the features and functionality of its website.

It added a high-level talent to the organization, ramped up digital marketing spend, improved data-science capabilities, launched try-before-you-buy payment facility, rolled out buy online, pick-up in store across its entire U.S. full-price retail outlets plus introduced advanced delivery and return options. Strength in the e-commerce channel is also likely to stay and keep boosting the company’s overall results.

Speaking of the company’s strategic agreements, management concluded the acquisition of its remaining 49.9% stake in the European joint venture (JV). This transaction distributes the company’s branded footwear and accessories across majority countries in Europe. Steven Madden formed the JV roughly five years ago.

This joint venture registered solid double-digit percentage revenue growth each year with a 21% revenue increase in 2020. Management also remains optimistic about the buyout of BB Dakota, a California-based women's apparel company through which Steven Madden is steadily expanding its apparel category.

Overall, management is focused on creating trendy products, deepening relations with customers via marketing, enhancing digital-commerce solutions and expanding in the international markets. Growth in the company’s brands and a robust business model position it well to cash in on the market-expansion opportunities and boost its stakeholder value.

All the aforesaid tailwinds helped Steven Madden issue a bullish outlook for 2021. Management projects revenue growth of 43-47% from total revenues of $1,201.8 million reported in 2020. Adjusted earnings per share are likely to fall in the bracket of $2-$2.10. In 2020, the company reported adjusted earnings of 64 cents.

Eye These Solid Picks Too

Ralph Lauren RL has a long-term earnings growth rate of 12% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

NIKE NKE has a long-term earnings growth rate of 15.2% and a Zacks Rank of 2 at present.

Crocs CROX has a long-term earnings growth rate of 15% and a Zacks Rank #2 (Buy), presently.

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