Steven Madden (SHOO) Q2 Earnings call transcript Jul 31, 2024

Steven Madden Limited, a leading footwear and accessories brand, recently held its Q2 2024 earnings call, showcasing a robust performance across multiple business segments. With a revenue increase of 18% and adjusted diluted EPS rising 23% compared to the same period in 2023, the company's strategic focus on expanding its business in international markets and growing its business outside of footwear has paid off.

Key Themes and Trends

Edward Rosenfeld, Chairman and CEO, highlighted the company's success in expanding its business in international markets, particularly in Europe, the Middle East, and South Africa. The EMEA region, which is the biggest driver of growth, is expected to see revenue growth of more than 20% in 2024, underscoring the company's commitment to global expansion.

Steven Madden's strategy to diversify its business beyond footwear has also been successful, with accessories and apparel revenue growing by 74%. The Steve Madden handbag business, in particular, has seen remarkable growth, with revenue increasing more than 30% in the quarter. This growth is a testament to the company's ability to adapt to changing market trends and consumer preferences.

Investor Interactions

Key shareholders and investors raised questions about the company's strategy and performance in the call. Aubrey Tianello of BNP Paribas inquired about the composition of revenue growth guidance for the year, particularly with regard to Almost Famous. The company confirmed that the guidance remains in the same place, with low to mid-singles in wholesale, high singles in DTC, and mid-singles overall, excluding Almost Famous.

Sam Poser of Williams Trading asked about the company's DTC performance, specifically regarding the composition of revenue growth and the breakdown between e-commerce, full-line stores, and outlets. Edward Rosenfeld clarified that the company ended the quarter with 273 company-operated brick-and-mortar retail stores, 5 e-commerce websites, and 27 company-operated concessions in international markets. The comp was 4% in the quarter, with brick-and-mortar comp at 7%, digital at 1%, and outlets performing better than full price.

Sector Trends

The earnings call provided valuable insights into trends within the footwear and accessories sector. The company's strategic expansion into international markets and the growth of its accessories and apparel business are indicative of broader industry trends towards globalization and diversification. The success of the Steve Madden handbag business and the growth of the company's apparel business underscore the importance of innovation and product diversification in the competitive footwear market.

Tone, Language, and Sentiment

The tone and language used by company executives during the call were positive and confident, reflecting the company's strong performance and optimistic outlook for the future. The company's focus on long-term growth opportunities, such as expanding its business in international markets and growing its business outside of footwear, signals a proactive and strategic approach to business growth.

Red Flags and Warning Signs

The call highlighted some challenges facing the company, including the cautious approach of some of its largest wholesale customers and the impact of freight costs on gross margins. However, the company's strategic initiatives and focus on diversification are well-positioned to mitigate these challenges and drive sustainable, profitable growth.

Conclusion

Steven Madden Limited's Q2 2024 earnings call demonstrated a strong performance across multiple business segments, driven by strategic initiatives to expand into international markets and grow its business outside of footwear. The company's focus on innovation, product diversification, and strategic expansion is well-positioned to capitalize on changing market trends and consumer preferences. Despite some challenges, the company remains confident in its long-term growth prospects and is poised for continued success in the footwear and accessories market.