Steve Madden Ltd. on Tuesday reported second-quarter income that fell by 17.2 percent year-over-year due to margin declines in the shoe retailer's wholesale division, and said it expects full-year sales to decline.
Investors reacted by selling the stock, sending shares of Steve Madden down by 1.4 percent to close at $26.74 in over-the-counter trading. More than 1.6 million shares traded, compared with a three-month average volume of 259,713.
"We experienced a challenging sales environment during the second quarter, which, combined with a lack of big fashion trends, negatively impacted the performance of certain segments of our wholesale division as well as our retail division," said Jamieson Karson, chief executive officer, in a statement.
For its second quarter ended June 30, Steve Madden reported net income of $10.5 million, or 49 cents a diluted share, down 17.2 percent from $12.7 million, or 58 cents a diluted share in the year-ago period. Net sales fell by 16.4 percent to $108.3 million, from $129.5 million in the same year-ago period.
For the first six months, the company said income fell by 14.9 percent to $20.1 million, or 92 cents a diluted share, from $23.6 million, or $1.07, a year ago. Sales were down by 9.6 percent to $214.9 million from $237.8 million.
Nollenberger Capital Partners analyst Angelique Dab rates Steve Madden shares at "buy."
"Right now, people want to see top-line growth and gross margin expansion, and when you don't have both, the stock can be a little volatile," said Dab, who noted the footwear sector's slow fiscal first half is due to lagging mall traffic, a slowdown at department stores and fewer fresh fashions to drive revenues.
The company reiterated its previous fiscal 2007 guidance of earnings per share between $2 and $2.10 a diluted share, and said it expects sales to decline between 2 and 4 percent from last year's $475.6 million.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"