Steve Madden Stock Forecast
Steve Madden is a shoe brand best known for its high-platform women’s shoes. Despite appearing high-end, most of Steve Madden’s shoes are priced moderately. Steven Madden is named after its founder, who started the company in 1990. For the most part, the company has enjoyed a sustained rise in popularity. In the late 1990s, there was a brief Steve Madden stock scandal. This occurred after it got involved with Jordan Belfort’s investment firm Stratton Oakmont. Two decades later, it’s time to take another look at a Steve Madden stock forecast.
In general, the last two years have been rough for retail businesses. In 2020, the COVID-19 pandemic forced almost all retail stores to close for months on end. These challenges persisted into 2021. For most of this past year, retail struggled with supply chain issues as well as labor shortages. Companies that adapt quickly to change have survived or even thrived. Companies that respond slowly to change have not been so lucky
Let’s take a look at a quick Steve Madden stock forecast to see how these issues impacted the company.
NOTE: I’m not a financial advisor and am just offering my own research and commentary. Please do your own due diligence before making any investment decisions.
Steve Madden (Nasdaq: SHOO) Stock Forecast
What does Steven Madden do?
Steve Madden is a men and women’s fashion company. It is most well-known for its line of women’s shoes. The company also received publicity for going public with Stratton Oakmont. If you’ve never seen Martin Scorsese’s “The Wolf Of Wall Street,” Stratton Oakmont was a pump-and-dump investment bank. Stratton Oakmont took Steve Madden public and preceded to artificially inflate the price of the business’s shares. Steve Madden himself spent several years in jail for involvement in this stock fraud. However, this happened back in 2000 and the company has mainly been scandal-free since then.
Today, there are 120 Steve Madden stores in the U.S. and 250 globally. Steve Madden owns seven brands in total. This includes Anne Klein, Dolce Vita and Blondo.
- Completed acquisition of European joint venture – Steve Madden launched this venture in 2016. It distributes Steve Madden’s products to most of the countries in Europe. By completing this acquisition, Steve Madden now owns 100% of the venture. Despite COVID-19, it has experienced double-digit revenue growth every year.
Now, let’s examine how Steve Madden’s stock has been moving recently.
Despite the challenges in 2021, Steve Madden’s business has not faltered. This is mainly due to enhancements in its omnichannel presence. Overall, sales were up in both its eCommerce division as well as brick-and-mortar stores. Through its joint venture in Europe, international sales have also been doing well.
In Q3 2021, revenue increased 52.4% to $528.7 million. This was up from $346.9 million in 2020. It also reported a net income of $66.64 million. Both of these numbers were quarterly records. The business is in such a good position that management approved a cash dividend of $0.15 per share. The fact that the company approved a dividend in such a challenging year is a great sign for the business.
Accordingly, Steve Madden stock has had a good 2021 and is up 33% for the year. Over the past five years, the Steve Madden stock is up approximately 91%.
So, onto the important part. Is this a good time to buy Steve Madden stock?
Should I Buy Steve Madden Stock? Potential Upsides
Steve Madden has certainly proved itself to be a flexible business. It posted record numbers in 2021, despite all of the challenges being thrown its way. Part of the reason for its success is to due its success in creating an omnichannel experience. By this, I mean that customers can buy online and pick up at stores or vice versa. Steve Madden also introduced AfterPay into its platform. This allows customers to finance purchases through monthly payments.
These improvements may sound small individually. However, over time all of these little benefits add up to create a phenomenal customer experience. A quality product in addition to a great customer experience creates repeat customers. Repeat customers eventually lead to brand advocates. Brand advocates are customers that will go out of their way to sell Steve Madden products to their friends. This is an incredibly powerful form of marketing for Steve Madden’s business.
Additionally, Steve Madden has a P/E ratio of just 25. This means that its stock is very fairly valued for how much money the business makes.
Revenge Spending Candidate?
In 2022, Steve Madden could also potentially benefit from a concept known as “revenge spending.” Revenge spending is the urge to spend money to make up for lost time. For example, as soon as borders are fully open, people might rush to visit as many foreign countries as they can. Or, they might rush to enhance their wardrobe after spending a year in sweats.
In 2021, lots of people were still implementing lockdowns and quarantines. Venturing out into the world still required a mask or social distancing in many parts of the country. These safety measures have suppressed many different spending categories. To name a few, eating out, live entertainment and fashion. Since there is nowhere to go, there’s no reason to buy new clothes. However, when the world is truly “back to normal,” there’s a chance people will rush to swap their slippers for platforms shoes.
Even though COVID-19 was a major obstacle for Steven Madden in 2020/2021, it could turn into a major boon for its business in 2022 onward. Only time will tell.
Now, let’s take a look at some of the downsides of buying Steve Madden stocks.
Should I Buy Steve Madden Stock? Potential Downsides
The biggest threat to Steve Madden’s business is the omicron variant. As I write this, COVID-19 cases are at the highest that they’ve been in months. It’s easy to think that we are almost done with the pandemic. However, if cases continue to rise, that could change in a hurry. As we know from the past, full lockdowns are never out of the question. If this were to happen again, it would impact Steve Madden stock particularly hard.
When the COVID-19 pandemic first hit, Steve Madden stock lost 50% in a matter of weeks. It has since regained most of that loss. However, this is definitely something for investors to be aware of. If omicron cases continue to rise then the revenge spending thesis could be delayed even longer.
I hope that you’ve found this Steven Madden stock forecast to be valuable! As usual, please base all investment decisions on your own due diligence and risk tolerance.
About Teddy Stavetski
A University of Miami grad, Teddy studied marketing and finance while also playing four years on the football team. He’s always had a passion for business and used his experience from a few personal projects to become one of the top-rated business writers on Fiverr.com. When he’s not hammering words onto paper, you can find him hammering notes on the piano or traveling to some place random.