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On Thursday, Needham reaffirmed its Hold rating on Steven Madden (NASDAQ: NASDAQ:SHOO), following a visit to the company’s New York City showroom. The stock, currently trading near its 52-week low of $36.88, has experienced a significant 10.2% decline over the past week, according to InvestingPro data. During the visit, which included discussions with CEO Ed Rosenfeld, CFO Zine Mazouzi, and IR Danielle McCoy, tariffs emerged as a significant point of discussion. The management team expressed confidence in their strategies to mitigate tariff impacts; however, they anticipate a substantial gross margin challenge in 2025, potentially exceeding a 200 basis point reduction as these strategies take time to be effective. Currently, the company maintains a healthy gross margin of 41.27%, as reported in InvestingPro’s comprehensive financial analysis.
The meeting also covered other important topics such as the dynamics of different product categories and the state of the wholesale environment. The slowdown in the handbag segment was noted as a particular area of concern. Needham’s analysts highlighted that the financial community’s earnings per share (EPS) expectations for fiscal year 2025 might be overly optimistic, suggesting that the consensus estimate of $2.76 is higher than their more cautious projection of $2.53.
Needham’s stance on Steven Madden remains guarded, especially considering the sizeable anticipated gross margin headwinds for 2025. The firm’s analysts have projected a gross margin decline of approximately 120 basis points for the fiscal year 2025, indicating that even their more conservative EPS forecast carries risks due to the potential impact of tariffs on the company’s profitability.
The reiterated Hold rating reflects Needham’s cautious outlook on Steven Madden’s stock in light of the anticipated tariff-related margin pressures and the broader industry challenges. The management’s confidence in their mitigation plans was acknowledged, but the expected timeframe for these measures to take effect suggests that investors may need to brace for margin pressures in the near term. Despite these challenges, InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels, trading at a P/E ratio of 15.77x. For deeper insights into Steven Madden’s valuation and financial health, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Steven Madden has been the subject of several analyst notes. Citi maintained a neutral rating on Steven Madden’s stock with a target price of $38, anticipating the company’s fourth-quarter earnings per share (EPS) to be $0.55. The firm predicts significant gross margin weakness for Steven Madden in fiscal year 2025 due to the company’s significant exposure to China tariffs.
On the other hand, Piper Sandler reduced its price target for Steven Madden to $40, citing concerns about the company’s significant sourcing from China and potential tariff impacts. The firm adjusted its 2025 earnings estimate for Steven Madden to $2.38, reflecting a predicted decline in gross margins.
BTIG reaffirmed its positive stance on Steven Madden, maintaining a Buy rating and a price target of $53. The firm highlighted the potential for further improvement in the wholesale environment and cited international expansion as a contributing factor to the company’s success.
Jefferies analysts highlighted uncertainties around the trajectory of tariffs in China and other countries, suggesting a significant effect on the company’s performance. The firm noted that Steven Madden’s heavy reliance on imports makes it particularly vulnerable to shifts in trade policy.
Lastly, Citi reiterated its neutral rating on Steven Madden with a consistent price target of $45. The firm reported that Steven Madden is actively shifting production to mitigate potential tariff risks, aiming to reduce the percentage of units exposed to tariffs from 50% to 25% by moving production outside of China. These are the recent developments concerning Steven Madden.
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