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On Tuesday, Piper Sandler adjusted its price target for Steven Madden stock (NASDAQ:SHOO), reducing it to $40 from the previous $45, while keeping a Neutral rating on the company’s shares. The stock, currently trading at $38.32, is near its 52-week low of $37.99, though InvestingPro analysis indicates the company maintains a GOOD financial health score. The decision follows a meeting with Steven Madden’s management during the Fashion Footwear Association of New York (FFANY) event in New York City. Analysts had the opportunity to preview the company’s product and marketing plans for the upcoming July and August deliveries.
The firm acknowledged Steven Madden’s strong product execution, noting the addition of more novelty items and the emergence of a skinny bottom silhouette that could boost the boots category—a segment where Steven Madden has already been performing well above the industry standard. This product success has contributed to impressive revenue growth of 14.89% over the last twelve months. Despite the positive product developments, Piper Sandler expressed concern over the company’s significant exposure to sourcing from China, which stands at approximately 50%, the highest in the firm’s coverage area, along with 15% from Mexico. This exposure necessitates a revision of estimates due to the impact of tariffs.
Piper Sandler has adjusted its 2025 earnings estimate for Steven Madden to $2.38, taking into account a 250 basis point decline in gross margins. The revised price target reflects these updated estimates. During the first Trump administration, Steven Madden managed to mitigate 75% of the tariff headwinds by negotiating with partners, raising prices, and shifting production. Based on the brand’s strong value proposition, Piper Sandler believes that Steven Madden will likely use higher pricing as a lever once again to address the tariff challenges.
The report from Piper Sandler emphasizes the need for the company to rein in estimates as a result of the tariffs. However, it also suggests that Steven Madden’s experience in dealing with similar issues in the past may help the company navigate the current situation. The footwear brand’s ability to offset a significant portion of the tariff impact previously demonstrates a level of resilience that could be beneficial as it faces these renewed challenges. With a healthy current ratio of 2.09 and moderate debt levels, InvestingPro data suggests the company has the financial flexibility to manage these challenges. For deeper insights into Steven Madden’s financial health and growth prospects, including additional ProTips and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Steven Madden Limited reported a 13% increase in third-quarter revenue, reaching $624.7 million. This growth was 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. The company also announced a quarterly dividend of $0.21 per share.
Steven Madden is actively working to diversify its supply chain, aiming to reduce reliance on Chinese sourcing due to potential tariffs. Analysts at Jefferies highlighted uncertainties around tariffs in China, potentially affecting the company’s future performance. Citi and Needham maintained a Neutral and Hold rating respectively, acknowledging the company’s efforts to mitigate tariff risks. BTIG, on the other hand, reiterated a Buy rating and a $53 price target, expressing confidence in the company’s strategic positioning and potential for growth. These are recent developments that investors will be closely monitoring.
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