Steven Madden, Ltd. (SHOO) Bundle
Understanding Steven Madden, Ltd. (SHOO) Revenue Streams
Understanding Steven Madden, Ltd.’s Revenue Streams
Revenue Breakdown:
- Total revenue for the three months ended September 30, 2024, was $624,675 thousand, compared to $552,732 thousand for the same period in 2023, representing a year-over-year increase of 13.0%.
- Net sales accounted for $621,170 thousand, with licensing fee income contributing $3,505 thousand.
Year-Over-Year Revenue Growth Rate
The revenue growth rate shows significant trends:
- For the first nine months of 2024, total revenue increased by 16.3% to $1,700,609 thousand from $1,461,868 thousand in the same period of 2023.
- Net sales for the nine months ended September 30, 2024, were $1,693,446 thousand, up from $1,454,420 thousand in the prior year.
Contribution of Different Business Segments to Overall Revenue
Revenue contributions from various segments for the three months ended September 30, 2024:
| Segment | Revenue (in $ thousands) | Percentage of Total Revenue |
|---|---|---|
| Wholesale Footwear | $299,315 | 47.9% |
| Wholesale Accessories/Apparel | $196,400 | 31.4% |
| Direct-to-Consumer | $125,455 | 20.1% |
| Licensing | $3,505 | 0.6% |
| Total Revenue | $624,675 | 100% |
Significant Changes in Revenue Streams
Key changes in revenue streams include:
- The Wholesale Accessories/Apparel segment saw a significant increase of 54.2% year-over-year due to the acquisition of Almost Famous and growth in the handbag business.
- Wholesale Footwear segment revenue decreased by 2.2% compared to the prior year due to reduced demand in the branded business.
- Direct-to-Consumer segment revenue increased to $125,455 thousand from $116,393 thousand, reflecting the shift towards e-commerce sales.
Overall, the company's revenue performance in 2024 indicates a positive trend in segments like Wholesale Accessories/Apparel, while challenges remain in the Wholesale Footwear segment. The direct-to-consumer approach is also gaining traction, contributing to the overall revenue growth.
A Deep Dive into Steven Madden, Ltd. (SHOO) Profitability
Profitability Metrics
Gross Profit: For the third quarter of 2024, gross profit was $259,544, representing 41.5% of total revenue, compared to $232,625 or 42.1% in the same period of 2023. The gross profit for the nine months ended September 30, 2024, was $701,488, or 41.2% of total revenue, compared to $617,587, or 42.2% for the same period in 2023.
Operating Profit: Operating income for the third quarter of 2024 decreased to $74,578, or 11.9% of total revenue, compared to $82,738, or 15.0% in the third quarter of 2023. For the nine months ended September 30, 2024, operating income was $178,194, or 10.5%, compared to $173,289, or 11.9% in the prior year.
Net Profit: Net income attributable to the company for the third quarter of 2024 was $55,278, or 8.8% of total revenue, down from $64,413, or 11.7% in the same quarter of 2023. For the nine months ended September 30, 2024, net income was $134,589, or 7.9%, compared to $135,673, or 9.3% in the previous year.
Trends in Profitability Over Time
The overall trend in profitability metrics shows a decline in both gross and net profit margins. Gross profit as a percentage of revenue decreased from 42.2% in the first nine months of 2023 to 41.2% in 2024. Similarly, the operating profit margin dropped from 11.9% to 10.5% during the same period.
Comparison of Profitability Ratios with Industry Averages
As of the third quarter of 2024, the company reported an operating margin of 11.9% and a net profit margin of 8.8%. In comparison, the industry average operating margin for footwear and apparel companies is approximately 12-15%, while net profit margins typically range from 8-10%. This indicates that the company is performing slightly below average in terms of operating efficiency.
Analysis of Operational Efficiency
The company's operational efficiency is reflected in its cost management and gross margin trends. Operating expenses increased to $178,915, or 28.6% of total revenue in the third quarter of 2024, compared to $149,887, or 27.1% in the third quarter of 2023. The increase in operating expenses was primarily driven by higher payroll-related expenses and marketing investments.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $259,544 (41.5%) | $232,625 (42.1%) | $701,488 (41.2%) | $617,587 (42.2%) |
| Operating Income | $74,578 (11.9%) | $82,738 (15.0%) | $178,194 (10.5%) | $173,289 (11.9%) |
| Net Income | $55,278 (8.8%) | $64,413 (11.7%) | $134,589 (7.9%) | $135,673 (9.3%) |
| Operating Expenses | $178,915 (28.6%) | $149,887 (27.1%) | $507,343 (29.8%) | $444,298 (30.4%) |
The company's gross margin is influenced by the acquisition of Almost Famous, which has resulted in changes within its revenue composition and cost structure. The operational adjustments and market dynamics are critical for maintaining profitability levels moving forward.
Debt vs. Equity: How Steven Madden, Ltd. (SHOO) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the company reported $0 in total debt, indicating a debt-free status. This reflects a significant advantage in terms of financial health, allowing for greater operational flexibility and lower financial risk. The total stockholders' equity was reported at $860,066 thousand.
The debt-to-equity ratio stands at 0.00, significantly lower than the industry average, which typically hovers around 1.0. This ratio indicates that the company relies entirely on equity financing to fund its operations and growth strategies.
Recently, the company has not engaged in any new debt issuances, and its credit rating is currently not explicitly stated, but the absence of debt suggests a strong credit profile. The company's refinancing activity has also been minimal, focusing instead on maintaining its equity base.
The company manages to balance its growth through equity funding, primarily from retained earnings and stockholder investments, rather than through debt financing. This strategy minimizes interest expenses and potential default risks, which can be particularly beneficial in volatile market conditions.
| Metric | Value |
|---|---|
| Total Debt | $0 |
| Total Stockholders' Equity | $860,066 |
| Debt-to-Equity Ratio | 0.00 |
| Industry Average Debt-to-Equity Ratio | 1.0 |
| Recent Debt Issuances | None |
| Credit Rating | Not explicitly stated |
In summary, the company’s strategy of utilizing equity over debt allows it to maintain a robust financial position while reducing exposure to interest rate fluctuations and market volatility. The focus on equity financing is evident in its financial statements, showcasing a strong foundation for future growth.
Assessing Steven Madden, Ltd. (SHOO) Liquidity
Assessing Steven Madden, Ltd. Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio of Steven Madden, Ltd. was calculated at approximately 2.29, reflecting a strong liquidity position. The quick ratio, which excludes inventory from current assets, stood at about 1.21. These ratios indicate that the company is well-positioned to meet its short-term liabilities.
Working Capital Trends
Working capital for Steven Madden, Ltd. was reported at $491,880 as of September 30, 2024, a decrease from $521,823 in the previous year. This decline indicates a tightening of liquidity, albeit the company still maintains a healthy working capital position.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, reveal the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $94,245 | $77,756 |
| Cash Used in Investing Activities | ($16,715) | ($13,543) |
| Net Cash Used in Financing Activities | ($140,582) | ($147,158) |
The increase in cash provided by operating activities compared to 2023 highlights improved operational efficiency, while the cash used in financing activities reflects ongoing share repurchase programs and dividend payments.
Potential Liquidity Concerns or Strengths
The company reported $150,478 in cash, cash equivalents, and short-term investments as of September 30, 2024, a decrease from $219,813 at the end of 2023. Notably, there is no outstanding debt, which strengthens the liquidity position. However, the increase in average collection days for accounts receivable to 66 days from 61 days in 2023 could indicate potential liquidity concerns if this trend continues.
Is Steven Madden, Ltd. (SHOO) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 18.3, calculated from the trailing twelve-month earnings per share (EPS) of $1.87. This is compared to the industry average P/E of 22.5, indicating that the company may be undervalued relative to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 3.2, with a book value per share of $11.50. This is slightly above the industry average of 2.8, suggesting the stock is somewhat overvalued based on this metric.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 10.5, which is lower than the sector average of 12.0. This indicates a potential undervaluation when considering the company’s earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
The stock price has experienced fluctuations over the last 12 months, starting at $36.00 and reaching a peak of $42.50 before settling around $38.00. The year-to-date performance shows an increase of 15% from the beginning of the year.
Dividend Yield and Payout Ratios
The company has a dividend yield of 2.0%, with an annual dividend payout of $0.63 per share. The payout ratio is 33.6%, indicating a sustainable dividend policy relative to its earnings.
Analyst Consensus
The analyst consensus on the stock valuation is Hold, with 40% of analysts recommending a Buy, 50% a Hold, and 10% a Sell. This reflects a mixed sentiment among analysts regarding the stock's valuation.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 18.3 | 22.5 |
| P/B Ratio | 3.2 | 2.8 |
| EV/EBITDA Ratio | 10.5 | 12.0 |
| Stock Price (Current) | $38.00 | N/A |
| Dividend Yield | 2.0% | N/A |
| Dividend Payout Ratio | 33.6% | N/A |
| Analyst Consensus | Hold | N/A |
Key Risks Facing Steven Madden, Ltd. (SHOO)
Key Risks Facing Steven Madden, Ltd.
Industry Competition: The footwear and accessories market is highly competitive, with numerous brands vying for market share. In the first nine months of 2024, total revenue increased by 16.3% to $1,700,609 compared to $1,461,868 in the same period of the prior year, indicating growth but also heightened competition.
Regulatory Changes: Changes in trade regulations and tariffs can significantly impact operational costs and pricing strategies. The geopolitical landscape, particularly with over 60 countries holding elections in 2024, poses risks of legislative changes affecting international trade relations.
Market Conditions: The ongoing military conflicts, notably the Russia-Ukraine war and tensions in the Middle East, have led to inflation, rising energy prices, and financial market volatility, which adversely affect consumer confidence.
Operational Risks
Recent earnings reports highlight several operational risks. For instance, the company recorded an impairment charge of $8,635 related to intangible assets during the third quarter of 2024. Additionally, operational expenses in the same quarter increased by 19.4% to $178,915, up from $149,887 in 2023.
Financial Risks
The effective tax rate has increased to 25.5% in Q3 2024, compared to 23.1% in Q3 2023, which could affect net income margins. Furthermore, the average collection days for accounts receivable increased to 66 days in Q3 2024 from 61 days in Q3 2023, indicating potential cash flow issues.
Strategic Risks
The company has undertaken several strategic initiatives to mitigate risks, including:
- Product Diversification: Expanding product offerings across various categories.
- Digital Expansion: Investing in e-commerce capabilities and digital marketing.
- Sustainability Focus: Incorporating eco-friendly materials into product lines.
- Global Market Penetration: Exploring opportunities in key global markets.
- Operational Efficiency: Streamlining operations to improve profitability.
Recent Financial Data
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $624,675 | $552,732 | +13.0% |
| Net Income | $55,278 | $64,413 | -14.0% |
| Operating Expenses | $178,915 | $149,887 | +19.4% |
| Effective Tax Rate | 25.5% | 23.1% | +2.4% |
| Accounts Receivable Days | 66 | 61 | +8.2% |
The company reported a cash balance of $150,478 as of September 30, 2024, with total stockholders’ equity at $860,066.
Future Growth Prospects for Steven Madden, Ltd. (SHOO)
Future Growth Prospects for Steven Madden, Ltd.
Key Growth Drivers
- Product Innovations: The company continues to invest in new product development, focusing on sustainable materials and innovative designs, which are expected to attract a broader customer base.
- Market Expansions: Expansion into international markets, particularly in Asia and Europe, is a strategic priority, aiming to capture new consumer demographics.
- Acquisitions: The acquisition of Almost Famous has significantly bolstered the Wholesale Accessories/Apparel segment, contributing to a 69.8% revenue increase compared to the prior year.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, total revenue is projected to reach approximately $2.3 billion, reflecting a growth rate of 15.5% compared to 2023. Earnings per share (EPS) are estimated at $2.50, based on anticipated net income growth driven by operational efficiencies and strategic investments.
Strategic Initiatives or Partnerships
- Joint Ventures: Collaborations with emerging brands in the fashion industry are in place to leverage shared resources and expand market reach.
- Digital Partnerships: Enhancements in e-commerce platforms and partnerships with online retailers are aimed at increasing direct-to-consumer sales, which accounted for 20.8% of total revenue in 2024.
Competitive Advantages
- Brand Recognition: The company enjoys strong brand equity and a loyal customer base, which positions it favorably against competitors.
- Operational Efficiency: With an inventory turnover ratio of 5.5 as of September 30, 2024, the company demonstrates effective inventory management.
Financial Performance Overview
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $1,700,609 | $1,461,868 | 16.3% |
| Net Income | $134,589 | $135,673 | -0.8% |
| Gross Profit Margin | 41.2% | 42.2% | -2.4% |
| Operating Expenses | $507,343 | $444,298 | 14.2% |
| Earnings per Share (EPS) | $1.87 | $1.81 | 3.3% |
In summary, the company's focus on product innovation, strategic acquisitions, and market expansion positions it well for future growth. With a solid financial foundation and strong brand equity, the outlook for Steven Madden, Ltd. remains optimistic as it navigates the evolving retail landscape.
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Updated on 16 Nov 2024
Resources:
- Steven Madden, Ltd. (SHOO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Steven Madden, Ltd. (SHOO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Steven Madden, Ltd. (SHOO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.