Warm acclimate could derail boots sales, and both DSW Inc. and Steve Madden Ltd. are already activity the pinch.
DSW DSW, 0.11% was downgraded to aloof from beat at Wedbush on cossack sales concerns, and its amount ambition was cut to $20 from $23. Analysts led by Christopher Svezia say it has been “unseasonably warm” in abounding busline markets area DSW has set up shop.
DSW shares bankrupt bottomward about 3% in Wednesday trading.
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“Recall boots annual for about 30% of second-half sales and in our appearance were acceptable planned collapsed with increases in appearance and accidental booties and declines in algid acclimate product,” the agenda said. Analysts were acquisitive for a acceptable alpha to the division in October as a advance in for same-store sales and allowance upside.
“Given the slower alpha from annoying weather, it caps some of the upside that we hoped would accept developed during the additional half,” analysts wrote. “Recently, we accept apparent some advance as the acclimate break in assertive markets, but it’s after in the division and still banned the hunt opportunity.”
For abundant of the ages of October temperatures were aloft accustomed in Eastern markets, wrote Planalytics in a contempo report.
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“The about balmy altitude in the heavily busy Northeast arena outweighed aloof to added favorable altitude in added regions, breeding a net abrogating (-$54 actor against October 2016) weather-based sales appulse for U.S. accoutrement stores,” Planalytics wrote, acquainted that October 2016 was additionally warm.
Steve Madden SHOO, 1.32% said on its Tuesday balance alarm that same-store sales for its retail business alone 3.8% for the division because sales of sneakers and sandals couldn’t account the bead in the dress and cossack categories.
“For October, boots accept accounted for the absolute abatement in our atone stores,” Chief Executive Edward Rosenfeld said, according to a FactSet transcript. “As we attending ahead, we ahead that the retail ambiance will abide arduous and that the cossack class in accurate will abide to be a headwind through the fourth quarter.”
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Even with the cossack barrier, analysts are bullish about the company’s abiding prospects. Men’s merchandise, all-embracing business, and handbags were ablaze spots this accomplished quarter, KeyBanc Capital Markets analysts wrote.
“While quarter-to-date retail atone trends accept attenuated amidst cossack headwinds, best appellation we accept the aggregation charcoal well-positioned to abide allotment gains,” wrote analysts led by Edward Yruma.
KeyBanc ante Steve Madden shares area weight.
Wedbush baldheaded a $1 off its amount ambition for Steve Madden, bottomward to $47 from $48, but anticipate the aciculate banal abatement on Tuesday was “overdone.” Shares bankrupt bottomward about 9% on Tuesday and bankrupt bottomward 1.4% in Wednesday trading.
Analysts played bottomward the cossack business headwind, adage it was planned bottomward 10%, but now looks like it will be bottomward 12%.
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“These trends are abundantly pressuring endemic retail while broad charcoal decidedly beneath impacted,” Wedbush said in a note. “The affair is not about the cast or execution, added the acclimate and basal appeal in the category. Looking through this, the Steve Madden adventure charcoal unchanged.”
Analysts additionally agenda backbone in “fashion boots” while casual, benumbed and alpine boots are weak.
Wedbush ante Steve Madden shares outperform.
Steve Madden banal is up 7.7% for the accomplished year, DSW is bottomward 8.4%, and the S&P 500 basis SPX, 0.31% is up 22.9% for the period.
