The company owns 113 stores, three of them e-commerce focused. The other 85% of the business is direct-to-merchants like Target and Neiman Marcus. The company has $290.13 million in cash and no debt.
The company reported Q2 results on Aug. 1 with a 110 basis point gain in gross margin now at 37.2%, net income up 8%, and the opening of two full-price Steve Madden stores and one outlet. Stores are generating $909 in sales per square foot.
On the Q&A, booties and bags and Betsey were the big questions and CEO Rosenfeld assured analysts sales have been brisk in those three categories despite weather and other excuses put forth by competitors such as Decker’s. The company added that handbags at the $100 price point are moving well against the much higher priced Michael Kors and Coach bags.
Steve Madden bought back 456,000 shares at an average price of $47.46 in the quarter, with another $125 million left to buy. The Goldman Sachs analyst did ask about the possibility of a regular dividend, and it wasn’t ruled out. The company has a history of special surprise dividends. This was another reason Goldman upgraded the name. The company trades at a trailing P/E of 19.99 with a PEG of 2.43.
Quirky, edgy, and cool
Urban Outfitters, Inc. (NASDAQ:URBN) is another unique, eclectic retailer that’s outperforming thanks to a huge direct-to-consumer push. Its websites are undeniably edgy and fashion-forward, and online sales rose 31% in 2012. Eventually Urban expects online to make up fully half of its sales. The company was included in Jim Cramer’s Lifestyle Index this spring for its undisputed coolness.
Its clothing and home accessories target trendy young men and women. Brands include Free People, Beholdn (hip wedding clothes), Urban Outfitters, Inc. (NASDAQ:URBN), Terrain (home and garden), and Anthropologie, for a combined total of 475 stores.
The stock is up 45% this last year and it trades at a 25.58 P/E, with no debt and $379 million in free cash. Analysts like the name, expecting 15.72% five year EPS growth year over year. Sun Trust initiated coverage with a Buy in July.
Method to their madness?
With back to school and the holiday season coming, these are three intriguing stocks. Abercrombie & Fitch Co. (NYSE:ANF) is becoming a turnaround story, but is the least recommended of the three. Steve Madden is at 52-week highs and although I agree with Goldman that it’s a buy, just not a buy right here. I like the niche that Urban Outfitters, Inc. (NASDAQ:URBN) has carved for itself and think it will continue to rock your world (and portfolio).
The article Crazy Like A Fox Retail Stocks originally appeared on Fool.com and is written by AnnaLisa Kraft.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters. AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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