Steve Madden Concludes Buyout Of Greats, Ups Sneaker Game
Zacks Investment Research | Aug 12, 2019 10:07PM ET
Steve Madden, Ltd. (NASDAQ:SHOO) recently concluded the acquisition of Italian sneakers company — Greats Brand, Inc. The booming athleisure business makes this a lucrative move. The acquisition is also in sync with the company’s plans to expand its sneakers business. Financial details of the deal were undisclosed.
Notably, Greats was a digital start-up founded in 2014, known for its classic and inspirational styles as well as versatility. Soon after its inception, Greats emerged as one of the most sought-after new labels in the sneakers space. Most of its products were sold direct-to-consumer on greats.com as well as in the company's flagship retail store located in New York. Since then, the brand has garnered attention for its high-quality footwear available at compelling prices. As of Jun 30, 2019, Greats generated sales of nearly $13 million.
According to industry experts, the buyout follows the new market trend, in which direct-to-consumer brands are partnering with large brands to fortify their presence among a wide customer base. Also, this deal will help Steve Madden attract young customers, who are more digitally focused.
Further, the company has been on an acquisition spree. It acquired the license for Anne Klein footwear and handbags in January 2018. The company's wholesale accessories and footwear segments gained from the acquisition.
Some of Steve Madden’s other notable buyouts include Schwartz & Benjamin in 2017 and footwear brands such as Dolce Vita and Blondo to name a few. We believe these acquisitions have benefited the company’s top line to some extent. Notably, the top line increased 12.4% year over year to $445 million during second-quarter 2019. Steven Madden envisions net sales growth of 5-7% for 2019.
That said, we hope that the inclusion of Greats will boost growth for the company in the near term and help this Zacks Rank #3 (Hold) stock get back on track.
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