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On Wednesday, Telsey Advisory Group adjusted its outlook on Steven Madden stock (NASDAQ:SHOO), reducing the price target significantly from $38.00 to $24.00 while retaining a Market Perform rating. The stock, currently trading at $20.97, has declined over 50% year-to-date, according to InvestingPro data. The firm’s analysts pointed out that while Steven Madden has effectively introduced trend-right products, expanded its apparel and accessories segment, and pursued international growth, upcoming tariffs are likely to adversely affect the company’s financial performance. The company maintains strong fundamentals with a healthy gross profit margin of 41% and return on equity of 20%.
Steven Madden has been working on diversifying its supply chain away from China over the last few years to mitigate risks. The company has established production capabilities in Mexico, which has allowed for faster trend response times compared to its competitors. Despite these efforts, Steven Madden still has a substantial 58% of its production tied to China, and a meaningful portion connected to Mexico, which poses a risk of increased costs as the company evaluates adjustments to its supply chain. InvestingPro analysis shows the company maintains strong financial health with more cash than debt and liquid assets exceeding short-term obligations, potentially providing flexibility during supply chain transitions.
The analysts at Telsey believe that Steven Madden may face challenges in passing on the higher product costs to consumers, especially considering economic pressures on mid to lower income consumer segments. This concern forms the basis for their decision to maintain the Market Perform rating.
The new price target of $24.00 is based on a 10.0x multiple applied to the firm’s two-year forward EPS estimate. This valuation aligns with the near-term multiple of 9.7x that the company’s shares have been trading at recently. Telsey’s revised estimates reflect a cautious stance on Steven Madden’s ability to navigate the complexities of international tariffs and supply chain management in the current economic environment.
In other recent news, Steven Madden has faced significant developments impacting its financial outlook. Telsey Advisory Group recently lowered its price target for Steven Madden shares to $38, citing mixed performance in FY24 and challenges in FY25, despite the anticipated boost from the Kurt Geiger acquisition. The company’s FY25 revenue guidance, excluding the acquisition, is projected to grow in the low single digits, slightly below previous expectations. Additionally, Telsey noted a potential 14%-18% decline in earnings per share due to possible trade tariff re-implementation, maintaining a Market Perform rating on the stock.
Williams Trading also downgraded Steven Madden from Hold to Sell, reducing its price target to $16.00, amid concerns about tariffs affecting margins and demand. Similarly, UBS adjusted its price target for Steven Madden to $22 while maintaining a Neutral rating, highlighting concerns over consumer spending and potential tariff impacts on FY25 earnings guidance. Meanwhile, Shoe Carnival (NASDAQ:SCVL) experienced a downgrade from Williams Trading, with its stock rating cut from Buy to Hold and a price target drop to $17.00, reflecting broader industry challenges.
Piper Sandler’s survey revealed changing consumer preferences, with brands like UGG and On Running gaining popularity among teens, impacting the competitive landscape for companies like Steven Madden. These developments underscore the complexities facing the footwear industry, as companies navigate tariff uncertainties and shifting consumer trends.
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