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On Tuesday, Citi analyst Paul Lejuez maintained a Neutral rating on Steven Madden stock (NASDAQ:SHOO), with a steady price target of $38.00. Currently trading at $38.32, the stock has declined nearly 8% in the past week and is hovering near its 52-week low of $37.99. The analyst anticipates the company’s fourth-quarter earnings per share (EPS) to be $0.55, slightly above the consensus of $0.53, with results expected on February 20. However, the spotlight is expected to be on the fiscal year 2025 guidance, which could be notably weaker compared to consensus expectations. InvestingPro analysis reveals several key metrics that warrant attention, including a P/E ratio of 16.24 and strong liquidity with a current ratio of 2.09. Additional insights are available through InvestingPro’s comprehensive analysis tools.
Lejuez predicts significant gross margin (GM) weakness for Steven Madden in fiscal year 2025, estimating a decrease of 210 basis points, in contrast to the consensus estimate of a 30 basis point reduction. This anticipated decline is attributed to the company’s significant exposure to China tariffs, affecting around 70% of its production. The analyst suggests that Steven Madden has limited options to mitigate the near-term pressures.
The forecast also points to continued challenges within the wholesale segment for the upcoming fiscal year. Factors contributing to this outlook include conservative department store orders, reduced demand for made-for orders in off-price channels, and weakness in Steven Madden handbags, likely due to signs of handbag inventory accumulation in the market.
While Steven Madden is expected to manage selling, general, and administrative expenses (SG&A) tightly, Lejuez notes that the company already operates on a lean basis, making it more difficult for SG&A reductions to compensate for sales and GM weakness.
The current market conditions are not favorable for Steven Madden’s fast-turning business model, which relies heavily on sourcing from China. As a result, fiscal year 2025 is set up to be a challenging year, with the potential to drive the stock’s downside in the near term. Despite these challenges, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, and the company maintains a healthy gross profit margin of 41.27%. For detailed insights into Steven Madden’s valuation and future prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Steven Madden Limited has experienced significant financial developments. The company reported a third-quarter revenue increase of 13%, reaching $624.7 million, driven by strong sales in accessories and apparel, particularly handbags, and contributions from the newly acquired Almost Famous brand. Despite a minor decline in wholesale footwear, overall wholesale revenue rose, and the company reported a net income of $64.8 million. In light of these results, Steven Madden raised its 2024 revenue guidance to a 13%-14% increase, expecting diluted earnings per share (EPS) between $2.62 and $2.67.
However, tariff concerns have prompted several analysts to adjust their outlooks. Piper Sandler reduced its price target for Steven Madden to $40 due to the company’s significant exposure to sourcing from China and Mexico. The firm also adjusted its 2025 earnings estimate for Steven Madden to $2.38. Meanwhile, Citi reiterated its Neutral rating and Needham initiated coverage with a Hold rating, both citing tariff concerns.
On a positive note, BTIG reiterated a Buy rating and a $53 price target, expressing confidence in the company’s strategic positioning and potential for growth. Steven Madden is actively working to mitigate potential tariff risks by diversifying its supply chain and reducing reliance on Chinese sourcing. These are recent developments that investors will be closely monitoring.
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