Steven Madden elevates chunky heels to new heights. It operates through five business segments: wholesale footwear, wholesale accessories, retail, first cost, and licensing. Its wholesale business boasts seven divisions, such as Madden Girl, Steven, Steve Madden Men's, and Stevies, as well as its Daisy Fuentes, Betsey Johnson, and Olsenboye accessories business through licenses. Its retail operations include about 120 Steve Madden, Steven, and Report stores, along with several websites. Its First Cost segment designs and sources private-label footwear, such as Candie's, for mass merchants. Steven Madden shoes are sold in the US and Canada through its own shops and such stores as Nordstrom and Dillard's.
New York-based Steven Madden rings up 92% of its sales in the US. The company's shoes and accessories are also sold in Asia, Europe, the Middle East, Mexico, Australia, South Africa, South America, and India through special distribution arrangements. More than 120 Steven Madden-owned stores are located across the US, with noteworthy penetration in New York, California, and Florida.
The company's wholesale operation accounts for 85% of its revenue, with footwear contributing 65% of that. Subsidiary Steven Madden Retail owns and operates about 120 stores, including about 90 Steve Madden full price stores, a dozen Steve Madden outlet stores, a pair of Steven stores, a single Report shop and Superga store and thee e-commerce sites. The retail business accounted for 15% of sales in 2012. The company's First Cost business earns commissions as a buying agent for footwear products under private labels and licensed brands, such as Candies, for many large mass merchants, shoe chains, and other retailers.
Sales and Marketing
Steven Madden looks to department stores, specialty stores, and independent boutiques for the majority of its revenue. The company's sells its footwear and accessories through 15 department store chains throughout North America. Major accounts include Macy's, Nordstrom, Bloomingdale's, Dillard's, and Lord & Taylor. Major specialty store accounts include DSW, Famous Footwear, and Journeys.
To promote itself as a leading designer of fashion footwear for style-conscious young women and men, the company's marketing activities include placements in lifestyle and fashion magazines, personal appearances by founder and design chief Steve Madden, and in-store promotions. The company's website and social media forums, including Facebook and Twitter, are other sales and marketing tools.
Steven Madden's sales jumped 24% in 2012 versus 2011, to $.123 billion, after rising more than 50% in the previous annual comparison. Indeed, 2012 marked the fourth consecutive year of rapidly rising sales and profits for the firm, with growth accelerating in 2011 and 2012. The strong sales performance in 2012 was broadly supported by double-digit growth across all of the company's business segments. Gains by the wholesale business have been the primary sales driver in recent years. Net income increased 23% in 2012 versus 2011, to nearly $120 million driven by rising sales.
Steven Madden's recent success is a result of its focus on its wholesale operation. The company is also gaining a foothold in areas beyond shoes, and it continues to invest in its accessories business. (The footwear maker's accessories business has eclipsed its men's business.) While small compared to the wholesale business, retail is an important avenue for growth at Steve Madden. The company has added more than 30 stores over the past two years and is looking to enter new markets.
Mergers and Acquisitions
In February 2012 the company acquired its licensee Steve Madden Canada (SMC) for about $29 million. Privately-held SMC markets Steven Madden products in Canada on a wholesale basis and well as in Steve Madden-branded retail stores.
Looking to increase its private-label footprint, Steven Madden bought Topline Corp. for $55 million in May 2011. Topline, which rang up sales of about $189 million in 2010, sells private-label and branded footwear (Report, Report Signature, R2 by Report) primarily to specialty retailers and department stores. Also in May, Steven Madden acquired the Cejon group of design and marketing companies for about $30 million. The purchase included Cejon Inc., Cejon Accessories, and New East Designs. The companies design scarves, wraps, winter accessories and other items, and expanded Steven Madden's accessories business beyond handbags and belts.