Thanks to robust growth in its core Steve Madden Women's wholesale business, the Steve Madden group once again posted upbeat results in the third quarter. The wholesale accessories business was the standout, with sales increasing by nearly 20 percent on the back of a robust increase in Steve Madden handbags and strong performance for private label accessories, supplemented by the contribution from Anne Klein handbags and new licenses.
In January, the group added the Anne Klein brand to its portfolio, as it signed an agreement to become the licensee for the brand's footwear and handbags. Shipments started in the latest quarter. The company believes it can do $80 million to $90 million in net sales under the Anne Klein brand in the first 12 months of shipping, positively affecting its results for the second half of 2018 and the first half of 2019. While it has assumed that this business would break even in 2018, it should contribute to profitability in 2019. Excluding Anne Klein, wholesale revenues from accessories increased by 14.5 percent in the quarter.
In the latest quarter, the group's growth was also led by strong gains in international markets, a good performance by Blondo and a significant acceleration in the e-commerce business. However, the management said the growth was offset by a planned sales decline in the legacy Schwartz & Benjamin business, excluding the Anne Klein.
The Steve Madden brand's strength was broad-based, with gains across women's, men's and kids'. The international business grew by 24 percent as compared to the year-ago quarter. As in recent quarters, the company saw higher sales across this business with strong increases in its markets where it controls the distribution, like Canada and Mexico, as well as outstanding growth in its European joint venture with SPM Shoe Trade and in its distributor business, most notably in India and the Middle East.
Overall, the company's revenues increased by 3.9 percent to $458.5 million. Wholesale revenues went up by 3.1 percent to $388.5 million, as a strong gain in wholesale accessories was partially offset by a modest decline in wholesale footwear. The gross margin of the wholesale business rose by 0.5 percentage points to 34.3 percent.
In the retail segment, revenues advanced by 8.8 percent to $69.9 million, and same-store sales went up by 5.5 percent, including a solid gain in brick-and-mortar locations and a strong increase in the company's e-commerce business. From a product perspective, sandals and sneakers were the standout categories in Steve Madden's stores.
The group ended the quarter with 210 company-operated retail stores, including 59 outlets and seven e-commerce sites, as well as 46 directly operated concessions in international markets. The gross margin in this segment rose by 0.8 percentage points to 60.1 percent.
Overall, the company's gross margin advanced by 0.6 percentage points to 38.2 percent. Net income jumped by 25.8 percent to $55.6 million.
Based on these results, the company has updated its revenue guidance for the full year. It now predicts that its sales will increase by 6 to 7 percent, instead of the previous forecast ranging between 5 and 7 percent.