UPDATE 3-Steve Madden sees growth potential outside footwear

Thu Jul 29, 2010 11:14am EDT

* Q2 EPS $0.70 vs est. $0.57

* Q2 net sales up 36 pct

* Bullish on licensing business prospects

* Shares rise as much as 7 pct

(Recasts; adds conference call details; updates share movement)

BANGALORE, July 29 (Reuters) - A fast-growing accessories and men's business helped Steve Madden Ltd (SHOO.O) top market expectations in the second quarter, and the shoemaker said it was seeing a lot of potential for growth outside footwear. The company's wholesale accessories business grew 79 percent to $25 million during the second quarter ended June 30, driven by strong sales of its hand bags and private label belts, Chief Executive Edward Rosenfeld said on a conference call with analysts.

The segment got a major fillip from Steve Madden's acquisitions of Madden Zone last year and Big Buddha hand bags in February this year, he added.

"We are also bullish about the prospects of our licensing business," Rosenfeld said, adding that the company would launch a new category of "special occasion dresses" to be sold for $90 to $200 at 50 of Macy's (M.N) top dress stores in the spring of 2011. [ID:nWNAB1107]

Steve Madden's solid quarterly results prompted it to raise its 2010 outlook for the second time this year, sending shares up as much as 7 percent in early trade.

The Long Island City, New York-based company's shares, which touched a life-high of $40.98 in May, were up $2.55 at $38.77 Thursday morning on Nasdaq.

WHOLESALE BUSINESS LIFTS Q2

Net sales at Steve Madden's wholesale unit grew 46.5 percent to $129.2 million, during the quarter.

The company, which primarily sells to 12- to 25-year-old girls, said it now expects 2010 earnings of between $2.45 and $2.55 a share, up from an earlier view of $2.30 to $2.40 a share.

The company also raised its full-year view on sales growth to 22 percent to 24 percent, from 17 percent to 19 percent forecast earlier. Analysts were expecting the company to report 2010 earnings of $2.41 a share, on revenue of $593.07 million, according to Thomson Reuters I/B/E/S. [ID:nASA00KS5]

Steve Madden had earlier raised its full-year forecast in May, when it reported first-quarter results.[ID:nSGE6430KI]

For the second quarter, the company reported earnings of 70 cents a share, up from 44 cents a share, a year earlier.

The company, whose lines include flagship brand Steve Madden, Stevies and Candies, saw sales jump 36 percent to $158.7 million during the quarter.

Same-store sales, a key metric of retail health, rose 7 percent during the quarter. Analysts were expecting the shoe maker to earn 57 cents a share, on revenue of $144.4 million in the quarter. (Reporting by Shradhha Sharma in Bangalore; Editing by Vyas Mohan, Vinu Pilakkott)