UPDATE 2-Steve Madden Q4 beats Street, sees solid 2010 profit

Thu Feb 25, 2010 1:25pm EST

* Says expects to double EPS in 5 years

* Sees "Madden" men's brand as 2010 growth driver

* Q4 EPS up 83 pct, revenue up 17 pct, tops Street view

* Sees FY10 EPS $3.10-$3.30 vs est $3.06

* Shares rise as much as 5 pct (Adds conference call details, background, analyst comments, share movement)

By Shradhha Sharma

BANGALORE, Feb 25 (Reuters) - Steven Madden Ltd's (SHOO.O) quarterly profit breezed past market expectations on improved margins and the shoe maker forecast strong 2010 earnings, buoyed by the popularity of its boots, sending its shares up as much as 5 percent.

On a conference call with analysts, Chief Executive Edward Rosenfeld said Steve Madden, which is popular among girls aged 12 to 25, expects its recently launched "Madden" brand to be a significant growth driver in 2010. [ID:nWNAB1971] "I think Madden -- the new men's line -- is certainly something that we are pretty excited about. I would like to see us do $10 million, maybe even a little bit more right out of the gates here in year one," Rosenfeld said on the call.

However, Sterne, Agee & Leach analyst Sam Poser said on Thursday the company was underplaying the strength of its men's business and that it could generate a much larger chunk of sales during 2010. "We estimate the Madden line will add an incremental $20 million to $40 million (4 percent to 8 percent) in revenue in 2010," Poser said in a note to clients earlier this month.

Steve Madden's "Madden" line, which was launched in November, has average price points of $50 to $60. It is being distributed by shoe and hat retailer Genesco Inc's (GCO.N) Underground Station and Journeys units, and retailers like DSW Inc (DSW.N) and Brown Shoe Co Inc's (BWS.N) Famous Footwear unit.

STRONG BOOT TRENDS TO CONTINUE

Steve Madden, which expects to double its earnings in the next five years, said strong boot trends that boosted sales in 2009 are expected to continue this year.

"The boot category was the main product driver for the wholesale division, particularly western, casual flat and over the knee styles," CEO Rosenfeld said.

But Poser said that despite all the positive commentary the company's outlook could be conservative for a reason.

"There are a few people like Deckers Outdoor (DECK.O) and Steve Madden who know they have got a winning model at the moment but it's not in their best interest to go out and put out a huge number and not beat it."

Steve Madden, whose other lines include flagship brand Steve Madden, Stevies, and Candies forecast 2010 profit of between $3.10 and $3.30 a share, outpacing analysts' view of $3.06 a share, according to Thomson Reuters I/B/E/S. The company also sees an 11 percent to 13 percent uptick in sales for the full year.

It reported fourth-quarter earnings 73 cents a share, up from 40 cents a share, a year earlier, as gross margins improved to 44.1 percent from 40.4 percent, driven by strong performance of both its wholesale and retail units.

Revenue at the Long Island City, New York-based company jumped 17 percent to $139.5 million.

Analysts were looking for earnings of 66 cents a share, on revenue of $128.9 million.

Shares of the company touched a high of $43.71 in morning trade, but lost most of their gains and were trading up 50 cents at $42.06 Thursday afternoon on Nasdaq. (Reporting by Shradhha Sharma, additional reporting by Nivedita Bhattacharjee; Editing by Anne Pallivathuckal)

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