Footwear Stocks Decline After Goldman Says Sell Steven Madden, DSW

This morning, Goldman downgraded footwear designer Steve Madden (SHOO) and footwear retailer DSW Inc. (DSW) to Sell.

GOLDMAN SAYS SELL: Both Steve Madden and DSW Inc. were downgraded to Sell from Neutral by Goldman analyst Taposh Bari, with lowered price targets of $27 and $20, respectively, that assumes downside risks of 23% and 24% for the footwear stocks. Bari cited generally sluggish discretionary spending and rich valuations for the downgrades. For Steve Madden specifically, Bari highlighted the company’s dependence on wholesale accounts with current high inventory levels, and increased competition from traditional athletic brands whose sportswear offerings have improved significantly as key issues. For DSW, Bari noted the company’s underexposure to key women’s athletic footwear trends, growth from SG&A, two years of tepid performance, and increased price transparency and competition as key issues.

PRICE ACTION: In late morning trading, shares of Steve Madden were down 2.5% to $34.33, while shares of DSW Inc. were lower by 5.5% to $24.76.

PEERS: Other footwear related companies were also trading lower, including Deckers Outdoor (DECK), which was down 1%, Caleres (CAL), which declined 3.6%, and Boot Barn (BOOT), which was lower by 1.5%. Crox (CROX), which reported fourth quarter results and gave first quarter guidance last night, was lower by about 10%.