Long Island City, NY—Noting a lack of footwear trends in the market, Steve Madden Ltd. reported a fourth quarter earnings and sales virtually unchanged since fourth quarter a year ago.
Still, the company saw its share increase as the lowered earnings still beat market expectations.
For the quarter ended Dec. 31, the footwear and accessories company posted net income of $21 million, or 34 cents a share, compared with $35.7 million, or 54 cents a share, in year-ago quarter.
Saying that fourth quarter capped off a difficult year for the brand, Chairman/CEO Edward Rosenfeld said, “Throughout 2014, we were impacted by a lack of significant fashion footwear trends on which to capitalize. In the fourth quarter, we faced additional challenges including production delays on goods from Mexico and slowdowns at the West Coast ports.
“While 2014 was a difficult year, we are excited about the steps we took during 2014 and early in 2015 to position the company for future growth. In 2014, we implemented a new e-commerce platform, acquired two powerful footwear brands in Dolce Vita and Brian Atwood, and moved to an ownership model in two important international markets with the acquisition of our Mexican licensee and the formation of a joint venture in South Africa. In January 2015, we announced our acquisition of Blondo, which adds an authentic waterproof boot brand to our portfolio. We believe that these initiatives will significantly enhance the company’s long-term growth prospects.”
Port Slowdown Impacts
Gross margin in the quarter narrowed to 34.3% from 37.8% a year ago. Operating expenses as a percentage of sales were 25.6% compared to 23.2% of sales in the same period of 2013.
Net sales for the wholesale business were $270.9 million in the fourth quarter compared to $273.4 million in the fourth quarter 2013. Excluding the results of Dolce Vita, wholesale net sales decreased 6.3% compared to the prior year period. Gross margin in the wholesale business decreased to 27% compared to 31.8% in last year’s fourth quarter, due “primarily to increased markdown allowances, the impact from Dolce Vita and higher air freight costs incurred due to the West Coast port slowdown.”
Retail net sales were $71.7 million compared to $69.5 million in the fourth quarter of the prior year. The increase in net sales was driven by the net opening of 14 new stores since the end of the fourth quarter last year, partially offset by a same store sales decrease of 2.3%. Retail gross margin increased to 61.7% in the fourth quarter of 2014 compared to 61.4% in the fourth quarter of 2013, as a result of decreased promotional activity.
For its fiscal 2015 year, Steve Madden predicted a net sales increase of 7% to 9% with earnings in the range of $1.85 to $1.95 a share.