With a mild start to winter blunting sales in cold weather apparel and an increasingly difficult retail market, Steve Madden announced its fourth quarter results and updated its guidance.
Net sales came in at $336.4 million, down 2.3% from the same quarter in 2015. Net wholesale sales took a hit, coming in at $251.5 million, 5.1% lower than the year ago period.
The good news, Steve Madden’s net retail sales increased by 7.1% to $84.9 million compared to last year’s fourth quarter.
For the fiscal year wholesale decreased by 2.4% to $1.1 billion, while retail net sales increased by 9.3% to $262.8 million.
After a strong first quarter, Steve Madden cautiously projected an increase in net sales by 2 to 4 percent in 2016. Ultimately, they came in 0.4% lower this year, with overall net sales at $1.4 billion. Steve Madden is looking at its marginal decrease in sales as a win for the brand, while many other footwear companies struggle after a turbulent 2016 and the even more uncertain 2017 ahead. For the high majority of consumers, footwear is still only purchased in brick and mortar locations, but retailers struggled with low margins as consumers looked for cheaper shoes in 2016. With that in mind, Steve Madden claimed that reducing promotional activity in-store helped stabilize the retail gross margin in 2016.
“Sales were lower than anticipated, due largely to softness in cold weather accessories as well as our decision to wind down our relationship with our distributor in Asia as we plan to transition to a new business model in the region in 2017,” said Steve Madden CEO Edward Rosenfeld in the release. “However, the sales shortfall was offset by better-than-anticipated gross margin, with both our wholesale footwear and wholesale accessories segments expected to show strong gross margin improvement compared to last year’s fourth quarter. We also expect our tax rate to be lower than forecast due to the income tax benefit from stock option activity during the quarter.”