Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Steve Madden Ltd. (NASDAQ:SHOO) rose as much as 12.9% early Tuesday, then settled to trade up around 6.5% as of noon after the fashionable footwear specialist announced better-than-expected fourth-quarter results and solid forward guidance.
So what: Quarterly sales fell slightly over the year-ago period to $342.6 million, which translated to adjusted net income of $35.1 million, or $0.53 per diluted share. Analysts, on average, were looking for net income of just $0.35 per share on sales of $340.8 million.
Steve Madden CEO Edward Rosenfeld pointed out these results were achieved despite 2014 being punctuated by both a "lack of significant fashion footwear trends on which to capitalize," as well as production delays in Mexico and slowdowns at its West Coast ports. What's more, Rosenfeld elaborated, "While 2014 was a difficult year, we are excited about the steps we took during 2014 and early in 2015 to position the company for future growth."
Those steps included the launch of a new e-commerce platform, the acquisitions of the Dolce Vita, Brian Atwood, and Blondo brands, and moves toward an ownership model internationally with the acquisition of its Mexican licensee and a joint venture in South Africa.
Now what: As a result, Steve Madden expects fiscal year 2015 revenue to increase 7%-9% over 2014, resulting in a range of roughly $1.42 billion-$1.45 billion, and earnings per share of $1.85-$1.95. Wall Street, for its part, was modeling 2015 revenue and earnings of $1.43 billion and $1.99 per share, respectively.
Even so, given Steve Madden's sluggish growth, it's hard for me to get excited with shares trading at a relatively reasonable 18.6 times this year's expected earnings. In the end, while I can't blame the market for bidding up the stock Tuesday, I'm content watching Steve Madden from the sidelines.