Williams Trading analyst Sam Poser cited conservative open-to-buys as playing a role in Steve Madden's first quarter performance.
Steve Madden’s wholesale woes are expected to be a continued factor in its upcoming first quarter results next week, according to Williams Trading analyst Sam Poser.
In a new note on Friday, Poser wrote that while trends were improving for the footwear company, its large wholesale accounts were still cautious with their buys in the first quarter, which may affect sales in the period.
“While there are strong sellers, which include the Hadyn flat sandal, the Graya, double buckle sling-back flat, the Slinky30 platform slide, the Possession sneaker, a number of 90’s influenced boots and a number of kitten heel styles, incremental demand from Steve Madden’s large wholesale customers has not inflected post the last week of March through the first two-weeks of April, as spring sales usually open up around Easter,” Poser wrote.
The analyst added that part of the issue is that cold weather led to slower than planned sandal sales in the period, and that the primary driver of fiscal 2024 wholesale footwear growth is expected to come from the mass channel.
“Management said on the fourth quarter 2023 earnings call, that mass retailers were the first to recognize a downturn and are the first to recover,” Poser wrote. “While recovery in the mass channel is likely, it’s not enough to get Steve Madden’s boots briskly walking.”
This note comes after Steve Madden reported in February that its wholesale footwear revenue was down 0.4 percent in the fourth quarter of 2023. This dip was offset by wholesale accessories and apparel revenues, which was up 56.5 percent in the period.
Despite its lagging wholesale footwear sales in the fourth quarter, Steve Madden chairman and chief executive officer Edward Rosenfeld said at the time that the company expects branded and private label footwear to see growth in 2024, with the latter experiencing faster growth as customers recover from inventory slumps and look for more new products.
“We expect to see some pretty nice growth even starting in Q1 in wholesale footwear in the private label segment,” Rosenfeld said in February.
In the department store channel, specifically, Rosenfeld added that Steve Madden is in a strong position to take share, should retailers’ comp sales improve throughout the year. “We’re confident that we’re very important vendors, and that we’re going to get more than our fair share,” he said. “We’re positioned to take share, frankly, in that channel.”
According to Poser, this hasn’t happened yet.
“Steve Madden Inc. continues to do an admiral job of managing its businesses and continues to develop compelling new product within the Steve Madden women’s and men’s lines, and within Dolce Vita,” Poser added. “Unfortunately for Steve Madden, department stores continue to take a very conservative stance with their open-to-buys. The possible upside to the fiscal 2024 guidance would still come from an increase in at-once orders.”
Steve Madden is slated to report its first quarter results on May 1.
