For the first time in recent memory, Steve Madden had a big booth at theMicam show in Milan last month, evidently with the intention of playing a stronger role in Europe and other markets. Company officials said they could not make any comments at this stage. Three of its stores in Europe have been operated by the Macintosh Group, with which it also had a wholesale distribution deal and which is in the midst of bankruptcy proceedings, as previously reported.
The company has set a goal to raise its sales outside the U.S. from $114 million to $200 million by 2017. They grew last year by 33 percent to $150 million, but they still represented only 11 percent of its turnover of $1.4 billion. Sales to distributors increased by 25 percent, with robust gains in China, Dubai and Italy.
Its products are sold in about 80 different countries and the company has 43 own stores in Canada and Mexico, plus four joint venture stores in South Africa. Distribution partners operate an additional 188 Steve Madden stores and 203 concessions.
Steve Madden has tried to get into the European market in the past, notably through a joint venture with the French Groupe Royer. Its absence from the market is in stark contrast with the fact that it claims the leadership in the women's fashion footwear market in the U.S. through its various brands, with a share of 8 percent. With sales of $801 million last year, the Steve Madden brand alone and its derivatives (Madden Girl, etc.) had a share of 2.8 percent, coming after Skechers with 4.7 percent and Ugg with 2.9 percent. Clarks came next with a 2.7 percent share.
Meanwhile, Steve Madden has reported earnings for the last quarter of 2015 that were slightly above analysts' expectations. Net sales increased by 0.5 percent over the corresponding period in 2014 to $344.3 million, while Thomson Reuters' analysts had predicted $344.2 million. The gross margin expanded by 1.8 percentage points to 36.1 percent.
The group's net income improved by 4.7 million to $25.7 million, while the operating margin increased by 1.9 percentage points to 11.2 percent.
The company said that these results were achieved despite a “challenging retail environment” and unfavorable weather that negatively impacted sales of seasonal products like boots and cold weather accessories.
Wholesale revenues reached $265 million, slightly down from $269.9 million in the fourth quarter of 2014. The gross margin in this segment increased to 28.2 percent from 26.9 percent, improving for both footwear and accessories.
Retail sales stood at $79.3 million in the quarter, up from $72.8 million in the fourth quarter of the prior year, and they generated a gross margin of 62.3 percent, up from 61.6 percent a year ago, as a result of reduced promotional activity.
Between October and December, the company opened one full-price store in Mexico and three outlet locations in the U.S. It ended the quarter with 169 company-operated retail locations, including 121 full-price stores, 40 outlets, four Internet stores and four joint venture stores in South Africa.
For the full financial year, Steve Madden reported a 5.3 percent increase in total revenues to $1,405 million. The group's 169 directly operated stores in the U.S., which include 40 outlet stores and four e-commerce sites, last year represented 17 percent of the turnover. Their sales grew by 11.2 percent on a comparable store basis and their operating margin improved by three percentage points. E-commerce grew by 17 percent. A new loyalty program will be introduced in 2016.
Still, the group's operating margin declined from 12.5 per cent in 2014 to 12.2 percent last year. Net income reached $112.9 million and included an after-tax net benefit of $2 million related to the early lease termination for the company's 5th Avenue store in New York as well as an after-tax loss of $2 million related to the partial impairment of the company's “Wild Pair” trademark. Nevertheless, the net profit for the year was higher than in 2014, when it stood at $111.9 million.
The company issued a conservative outlook for 2016, predicting a sales increase of between 2 and 4 percent. It said it remains cautious about the overall environment although it is pleased with the underlying fundamentals of its business.