Results for the quarter were strong, with total sales advancing 23% as sales at company-owned retail stores grew 8.4% on an impressive 10.5% increase in same-store sales and improvement in gross margins. Wholesale results include sales made to department stores such as Macy's, Nordstrom
Bottom-line results were not too shabby, either, as operating income grew an outstanding 143% and net income also more than doubled to $0.57 per diluted share. Better yet, management announced the payment of a $1 special one-time dividend to shareholders.
Unfortunately, the company reduced 2007 earnings guidance, which sent investors heading for the exits the day of the release. But the shares have still more than doubled over the past year. Is this a good time to buy in?
It's hard to tell at this point. With the reduced guidance, the shares still trade at 18 times next year's earnings. Steve Madden usually generates robust levels of cash, flow and the company has had a decent run of sales and earnings growth, but the footwear industry is a tough one to compete in. The space is crowded with many competitors, including Wolverine World Wide
I have to commend companies like Steve Madden for staying at the fashion forefront, but it's hard to recommend these stocks to long-term oriented investors, as it's just too hard to tell when the next fashion faux pas will hit, bringing positive stock returns to a screeching halt. Recently reduced guidance at the company could signal the first signs of a change in its fortunes.
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. . Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.