Fashion footwear and accessory designer Steve Madden (SHOO)
is living testament that demand for some products is recession proof, or at least recession resistant. The shoe company’s stock is a potential play on a resurgent U.S. consumer.
Sales and profits are up. Net sales increased 70.5 percent to $313.9 million during the third quarter of 2011, while retail comparable store sales increased 13.2 percent.Net income increased 39.3 percent to $31.9 million compared to $22.9 million in the prior year's third quarter.
Past acquisitions are paying off and, despite troubled economic times, people still make room in their budgets for handbags and shoes.
Net sales from the wholesale business grew 81.8 percent to $278.3 million thanks to acquisitions and also due to a transition of other company labels to wholesale business units.
"Our third quarter results reflect broad-based strength across our business. In addition to the significant sales contributions in the quarter from Topline and Cejon, which we acquired in May 2011, we delivered double-digit organic sales growth in each of our wholesale footwear, wholesale accessories and retail segments," company CEO Edward Rosenfeld says in an earnings statement.
"The ongoing momentum in our core business, combined with the opportunities for growth in our new brands, categories and geographies, gives us confidence that we are well-positioned to continue to deliver strong sales and earnings growth as we move ahead."
For fiscal 2011, the company expects net sales to increase 50 percent compared to fiscal 2010. Diluted EPS is expected to be in the range of $2.20 to $2.25, up from a previous guidance in the range of $2.15 to $2.20.
The U.S. economy is beginning to show that the consumer is coming out of hiding, which is crucial for recovery considering consumer spending accounts for 70 percent of U.S. economic output.
The U.S. Commerce Department, meanwhile, has announced that retail and food services sales for October hit $397.7 billion, an increase of 0.5 percent from the previous month and 7.2 percent above October 2010.
A National Retail Federation (NRF) survey conducted by BIGresearch shows that holiday shoppers say they plan to shell out an average of $704.18 on holiday gifts and seasonal merchandise, down slightly from last year’s $718.98, although overall holiday retail sales should grow 2.8 percent during the months of November and December to $465.6 billion.
Furthermore, 60 percent of the survey respondents say they plan to take advantage of retail sales and discounts to make additional non-gift purchases for themselves and their families this holiday season.
"When it comes to retail growth this holiday season, slow and steady wins the race – and the same is true for shoppers, who are meticulously calculating the best ways to stretch their dollar," says NRF President and CEO Matthew Shay.
The company will release fourth quarter earnings on Jan. 31.
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