Steve Madden and Guess Downgrade to Hold with Limited Upside in 2024 From Investing.com
© Reuters. Steve Madden (SHOO) and Guess (GES) downgraded to Hold with limited upside in 2024
Jefferies cut stakes in Steve Madden (SHOO) and Guess? (GES) Hold Buy in Thursday note. Analysts maintained their price target for SHOO at $40 per share, but lowered their GES price target from $25 to $24 per share.
Analysts said specialty apparel and footwear retailers generally performed well in 2023, but upside for companies including SHOO and GES is limited in 2024.
According to analysts, the SHOO backdrop remains unstable despite gains over the past six months.
“We believe the backdrop for wholesale footwear retailers remains challenging, especially given the potential for a slowdown in wholesale demand trends,” the analysts wrote. “As wholesale revenue declines, promotions may increase, which could put pressure on margins. Therefore, due to strong inventory performance over the past six months and the shaky outlook, we downgrade the stock to Hold.”
Jefferies believes the GES brand remains strong, but sees the current risk/reward balance.
“While GES’ results over the past two years have been encouraging (healthy margin expansion and strong top-line growth), we believe the uncertainties associated with the company’s U.S. retail segment (~28% of F’23 sales), namely a turnaround in margin performance, .(OM% down ~220bps in F’23), changes in wholesale ordering patterns (HSD% of F’23 sales) could put pressure on performance over the next 6-12 months,” the analysts said.
