The Company designs, sources, markets and retails fashion-forward footwear for women, men and children; name brand and private label fashion handbags and accessories through its Daniel M. Friedman Division.
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Steven Madden (SHOO) together with its subsidiaries engages in design, marketing, and sale of footwear for women, men, and children. The company sells its products through its retail stores, e-commerce web site and department and specialty stores spread across the United States and Canada, as well as through distribution arrangements in Europe, Central and South America, Australia, and Indonesia.
Competition in the footwear industry is intense and companies are dealing in multiple product lines to cater to the changing style and trends of the consumer. Taking cue of the situation, Steve Madden has kept a rich portfolio of brands in its kitty like Steve Madden Men/Women, Natural Comfort, SM New York and Daniel Friedman to name a few. Though, the company primarily targets style-conscious young women aged between 16 and 25 years, multitude brands enable the company to serve a vast demography.
The third quarter results of the company have been impressive with 23% growth in the top-line that was being powered by good brand performance across wholesale and retail divisions. Wholesale division, which contributes around 74% to the revenues, has delivered splendid operating performance and the management plans to improvise its retail operating margins through planned store openings. Its acquisition of Daniel M. Friedman has turned out to be fruitful and its license agreement with a leading New York designer named Tracy Reese is expected to drive the growth ahead.
To enhance the customer base, the company has diversified its business by offering dress collections. Steve Madden has recently signed a license agreement in the same line, which could bring additional revenues in 2007. Among the few clouds on the horizon, is the slowing Sports Fusion brand in the Men’s Division, which contributes about 12% to the sales. However, company is gradually shifting the focus towards dress shoes, which is offsetting the revenue loss from Sports Fusion. Its unlevered balance sheet supported by a positive outlook, makes Steve Madden an attractive pick.