Following its $52 million acquisition of Almost Famous in October, Steve Madden is keeping the door open to more deals in the future.
“In terms of acquisitions, we’re always going to keep our eyes and ears open, and we’ll be opportunistic,” Steve Madden chairman and chief executive officer Edward Rosenfeld said in a call with investors on Wednesday in response to an analyst question about what other deals might be attractive to the brand.
In the first quarter, Steve Madden said its recently acquired Almost Famous apparel business contributed $41 million in revenue. Prior to the acquisition, Almost Famous had been the exclusive licensee of the Madden NYC apparel line since its launch in 2022 and also made private label goods for mass merchants, department stores and off-pricers. Steve Madden said it is planning to utilize Almost Famous’ platform to launch and grow its own Madden Girl and Madden NYC apparel businesses.
“A big part of the rationale for doing the deal was to use Almost Famous as the platform to do Madden Girl Apparel and Madden NYC Apparel,” Rosenfeld said in the call. “And as we build those businesses, which are obviously associated with a $1 billion-plus brand with pricing power, we think there’s some opportunity to get some margin, and we’re starting to see that.”
Steve Madden has previously grown through acquisition. The company bought up the debt of Betsey Johnson and then took control of the company in 2010. And in 2019, the company bought the digital native Greats sneaker brand.
“If we find another brand that adds to the portfolio, that’s complementary to what we do and where we can add value and make a difference, that’s certainly something we would look at,” Rosenfeld said.
Thus far in 2024, the footwear deal market has gotten off to a slower start than expected, but the signs for a second-half turnaround are there — if the IPO market, the economy and interest rates cooperate.
In addition to Steve Madden, other shoe companies have also been open about their potential to enter the right deal. For example, VF Corp.’s chief executive officer Bracken Darrell has been adamant that the company’s strategic review of its portfolio, which includes Vans, Timberland, Supreme and The North Face, will spare “no sacred cow.”
And recent events suggest the foundation for deal activity is currently being laid, even if interest rate cuts are slower to come. FN reported last month that Canadian waterproof sneaker brand Vessi had met with potential investors and is contemplating what to do next. Milan-based private equity fund Style Capital inked an agreement with Autry International to buy a 50.2 percent stake in premium sneaker brand Autry in March and kid’s retailer Kidpik and heritage shoe company Nina Footwear Corp. merged into one entity: Nina Holdings Corp, in early April.
Overall, Steve Madden reported sales and earnings for the first quarter of 2024 that beat expectations. Revenues in the first quarter were $552.4 million, up 19.1 percent compared to the same quarter in 2023. Adjusted net income was $47 million, or 65 cents per diluted share, compared to $37.6 million and 50 cents per diluted share the prior year. Sales and profits were ahead of what analysts surveyed by Yahoo were looking for: $526.16 million in revenues and 56 cents in EPS.
