Steve Madden is expecting continued markdowns and pressure on gross margins in both its wholesale and retail businesses for the remainder of the year. However, the company has further expanded its presence internationally by beginning to distribute its Steve Madden brand in Australia. The company is still keen to diversify business through licensing opportunities and strategic acquisitions.
Steve Madden’s operating income for the 3rd quarter ended Sept. 30 fell to $5.9 million as compared to $11.7 million in the 3rd quarter of 2003, while net income fell to $3.7 million from $7.1 million.
Sales slipped marginally to $88.6 million from $88.7 million, but retail revenues increased by 3.0 percent to $23.8 million, while same-store sales remained flat. The company opened seven new stores during the quarter, bringing the number of corporate units up to 90, and remains on schedule to open a total of eight to 12 new stores in 2004.
Revenues from the wholesale business, comprised of the company’s seven brands, reached $64.9 million, down from $65.6 million. Margins were significantly affected by an increase in cost of goods sold due to pricing pressure from wholesale customers and suppliers. The l.e.i. division was especially affected by weak sales.
The company attributed the disappointing results to a late breaking back-to-school selling season, lackluster sales of boots and the hurricanes in the Southeastern part of the USA, but stressed that store productivity remained high, with average sales of $635 per square foot.