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Monday, Williams Trading reduced its rating on Steven Madden (NASDAQ:SHOO) stock from Hold to Sell and slashed its price target to $16.00 from the previous $35.00. The stock, currently trading near its 52-week low of $19.05, has declined over 57% in the past six months. The move comes as the firm anticipates challenges for the footwear industry due to the impact of tariffs on margins, pricing, and consumer demand. According to InvestingPro analysis, Steven Madden maintains strong financial health with a current ratio of 2.16 and more cash than debt on its balance sheet.
Williams Trading analysts highlighted the uncertainty surrounding tariffs, which has prompted a revision of estimates and price targets across their coverage, with an average reduction of the P/E multiple by 20.4%. The firm also downgraded stocks such as DKS and SCVL from Buy to Hold, and upgraded GOOS from Sell to Hold. With Steven Madden’s earnings report due in 2 days, InvestingPro subscribers can access 10+ additional exclusive insights and detailed financial analysis to make informed investment decisions.
The analysts noted that the additional 145% tariff on goods from China has led to a halt in product shipments to the U.S., affecting sales and margins, especially for brands like CROX and SHOO that depend on Chinese manufacturing and have a significant sales presence in the U.S. With the 90-day reprieve on tariffs for products from countries other than China coming to an end, there is an expectation of very high inventory levels in mid-2025 as companies rush to import goods.
The report also mentioned that the overall footwear industry is facing difficulties in planning for the future due to these tariffs. Retailers are waiting for brand decisions before making further purchasing choices, and demand planning is becoming increasingly risky, with the potential for higher inflation.
Despite the challenges, certain brands such as Birkenstock (NYSE:BIRK), Hoka, On, and UGG are considered well-positioned within Williams Trading’s coverage due to their desirable products and scarcity models. Skechers is also seen as favorably positioned because of its value offerings and efficient supply chain. Steven Madden maintains a healthy gross profit margin of 41% and has consistently paid dividends for 8 consecutive years, demonstrating operational resilience despite market pressures.
In other recent news, Steve Madden Ltd reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.55, slightly above the forecasted $0.54. The company’s revenue also exceeded projections, reaching $582.3 million against the anticipated $550.64 million. Despite these positive results, Jefferies and Telsey Advisory Group both adjusted their price targets for the company, with Jefferies reducing it to $36 from $46 and Telsey lowering it to $38 from $44, while maintaining a Market Perform rating. The analysts cited concerns over gross margins and the potential impact of tariffs on U.S. imports, even as the company anticipates a 17-19% revenue increase for 2025.
Additionally, the strategic acquisition of Kurt Geiger is expected to bolster Steve Madden’s "accessible luxury" offerings and contribute to future sales growth. The acquisition is projected to be accretive to earnings per share, although the company faces challenges such as potential tariff impacts. Meanwhile, the Piper Sandler survey highlighted a shift in teen fashion preferences, with smaller brands gaining popularity, posing potential challenges for established players like Nike (NYSE:NKE). These developments indicate a dynamic environment for Steve Madden as it navigates market conditions and strategic growth initiatives.
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