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Steven Madden's (SHOO) Brands, Digital Gains Aid Customer Wins

As the economy is steadily reverting to normalcy, the fashion and apparel space that suffered a setback last year from coronavirus jitters seems buoyed with optimism. Renowned footwear dealer Steven Madden, Ltd. SHOO is well poised to tap the positive trends in the fashion world, thanks to its digital marketing efforts and other robust strategies including brand strength. Apparently, the company is gaining from increased consumer demand and increased spending on fashion products.

Undoudtedly, management is focused on creating trend-right merchandise assortment, deepening relations with customers via marketing, enhancing digital commerce agenda, expanding international markets and efficiently controlling expenses. These tailwinds coupled with a robust business model position the company well to cash in on the market-growth opportunities and boost its stakeholders’ value in the long haul.

Delving Into Strategies

Even after stores are being reopened, Steven Madden’s e-commerce business continued to remain a bright spot for the company ever since the outbreak of the pandemic. The company’s e-commerce wing is consistently benefiting from prudent investments in digital marketing as well as efforts to optimize features and functionality of its website. Solid gains from capabilities, such as try before you buy have been contributing to its performance so far.

The company is significantly accelerating its digital commerce initiatives with respect to distribution. 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.

E-commerce revenues surged 105% during the second quarter of 2021. This included a 119%increase in Steve Madden e-commerce business. Digital sales represented about 54% of the company’s total Retail segment sales in the second quarter.

The company is also likely to continue gaining from its smart buyouts. Steven Madden is optimistic about the takeover of BB Dakota, a California-based women's apparel company through which the former is steadily expanding its apparel category. Its European joint venture (JV) is noteworthy as well. This transaction distributes the company’s branded footwear and accessories across the majority countries in Europe.

Steven Madden formed the European JV roughly five years ago and the same registered solid double-digit percentage revenue growth each year with a 21% revenue increase in 2020. For 2021, management anticipated revenues worth about $55 million from the European JV, more than 3/4th of which will be generated by digital channels. Also, the business is expected to deliver a mid-teen operating profit margin before allocation of corporate overhead.


Aforesaid strengths have aided Steven Madden’s share price rally of 96.2% in a year’s time, comfortably outpacing the industry’s 19.5% growth. This currently Zacks Rank #2 (Buy) stock is further backed by analysts’ higher earnings estimate revisions. The Zacks Consensus Estimate for earnings is pegged at $2.10 for 2021 and $2.50 for 2022, which has increased 1% and 3.3%, respectively, over the past 30 days.

Image Source: Zacks Investment Research

Wrapping up, Steven Madden seems a solid investment bet now, given the aforementioned positives.

Eye These Solid Picks Too

PVH Corp. PVH has a long-term earnings growth rate of 59.1% and a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

GIII Apparel GIII, presently a Zacks #1 Ranked stock, has an earnings surprise of 180.5% in the last four quarters, on average.

Crocs CROX has an earnings surprise of 180.5% in the trailing four quarters, on average, and a Zacks Rank of 1, currently.

Tech IPOs With Massive Profit Potential

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