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Steve Madden Working On A Deal With Amazon? This Analyst Thinks So

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Steve Madden Working On A Deal With Amazon? This Analyst Thinks So
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Canaccord Genuity analyst Camilo Lyon thinks the shoe retailer is working on something big.

After meeting with Steven Madden, Ltd. (NASDAQ: SHOO) management, Lyon believes the shoe company is creating a private-label brand for Amazon.com, Inc. (NASDAQ: AMZN), a deal that will compound revenue generated through wholesale and Amazon Marketplace distribution.

“In thinking about Amazon's intent to drive the growth of its own brands...we see SHOO as the natural choice to be Amazon's private-label fashion footwear provider,” Lyon wrote in a Tuesday note.

Such a deal would bode well for Madden. The company already makes private labels for the likes of Target Corporation (NYSE: TGT), Wal-Mart Stores Inc (NYSE: WMT) and Payless, deals that comprise about 22 percent of its business.

“With the potential tailwinds of Amazon scaling that business, private label could become a larger piece of the overall business quickly and replace the lost revenue from shrinking retailers like Payless,” Lyon wrote.

Global Synergy

The analyst suspects the firms are also developing an international distribution partnership for Madden’s online orders.

Use of Amazon’s international warehouses could simplify Madden’s delivery process as it works to multiply international sales, while at the same time helping Amazon penetrate markets still dominated by competing online retailers.

Deal Likelihood

Although Lyon reported that the distribution and private-label partnerships are still in early stages, Amazon did not confirm.

“As a company, we are always open to exploring new opportunities, but we have nothing to announce,” a representative told Benzinga.

Steve Madden did not respond to requests for comment.

However, Lyon backed his hypothesis with the scoop that Madden’s executive vice president of global e-commerce will soon relocate to Seattle to be closer to the online retail giant and enhance the relationship. He expects Madden to start on the Amazon-branded shoes by mid-2018.

Considering the long-term benefits of an Amazon deal, Canaccord reiterated its Buy rating on Steve Madden and issued a $47 price target. Madden closed the day at $42.60 per share.

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Image: By Kamguaowaeiloa (Own work) [CC BY-SA 3.0], via Wikimedia Commons

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