Long Island City, NY—Despite facing “a challenging” retail environment, Steve Madden Ltd. today reported its second quarter profit rose 7.6% as gross margin improved.
For the quarter ended June 30, the footwear and accessories company posted earnings of $29 million, or 65 cents a share, compared with $26.9 million, or 61 cents a share, in the same quarter a year ago.
Net revenue rose 3% to $297.6 million. Retail comparable store sales increased 2.5%.
Gross margin widened to 37.2% compared to 36.1% last year as a result of gross margin expansion across both the wholesale and retail businesses.
While Steve Madden’s second quarter profit was in line with analysts’ average estimate, its net sales missed their estimate by 3%.
“We achieved solid sales and earnings results in the second quarter despite a challenging retail environment,” said Edward Rosenfeld, chairman/ceo. “Through careful inventory management, we recorded gross margin increases in both the wholesale and retail businesses. The gross margin improvement, combined with well-controlled expenses, enabled us to deliver a robust year-over-year gain in operating profit margin.”
Net sales from the wholesale business grew 1.3% to $251.4 with growth in the wholesale accessories business partially offset by flat sales in the wholesale footwear business due to the loss of two private label customers.
Gross margin in the wholesale business was 32.1% compared to 31.6% in last year’s second quarter, driven by improvement in the Steve Madden Women’s wholesale footwear division.
Retail net sales rose 13.9% to $46.2 million driven by the opening of 17 new stores since the end of the second quarter last year. Retail gross margin increased to 64.7% compared to 63.7% in the second quarter of 2012 driven by fewer markdowns.
During the quarter, the company opened two Steve Madden full-price stores and one outlet store, ending the quarter with 113 company-operated retail locations, including 12 outlets and three Internet stores.
The company said it expects profit of $2.95 to $3.05 a share this year. Analysts’ consensus expects $3 a share.