Citi Downgrades Steven Madden Stock Ahead of Q4 Earnings Report

Summary

Steven Madden Ltd. (NASDAQ) saw a re-rating by Citi from Buy to Neutral on Wednesday, following a 25% stock price appreciation in recent months. With an anticipation of Steven Madden’s Q4 2023 earnings slightly outperforming consensus estimates, Citi also highlights challenges the company might face in 2024, due to increased freight costs, heightened retail promotions, and higher private label sales. Nevertheless, InvestingPro analysis provides a promising outlook for the footwear and accessories retailer, showcasing its strong liquidity position and consistent profitability.

Rating Shift for Steven Madden

Last Wednesday, the multinational financial services corporation, Citi, upgraded Steven Madden Ltd. (NASDAQ) status from Buy to Neutral. Citi has also set a new price target of $41.00 for the footwear and accessories retailing giant.

The re-rating comes just before the scheduled release of Steven Madden’s fourth-quarter earnings report on February 28, 2024. Despite the challenges of fiscal year 2023, Citi expects Steven Madden to post slightly better-than-expected results for Q4, with earnings per share (EPS) projected at $0.59, versus the consensus estimate of $0.57.

Concerns for the Fiscal Year 2024

For the fiscal year 2024, Citi expresses caution about Steven Madden’s earnings potential, citing potential concerns such as increased freight costs, potential for more competitive promotions in retail and a rise in wholesale’s private label sales. The impact of the Almost Famous (AF) brand is also a matter of concern for the financial analysts.

Outlook for Future Earnings

Steven Madden’s management guidance for fiscal 2024 EPS ranges from $2.40 to $2.50, a conservative estimate based on the company’s past performance and current fashion trends. Citi expects this turnaround could positively affect Steven Madden’s main wholesale footwear business by the spring of 2024.

InvestingPro’s analysis reflects the stability of Steven Madden, displaying a generous market capitalization of $2.96 billion. With a P/E ratio standing at 17.56, the footwear and accessories retailer seems to offer potentially fair value relative to its earnings.

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