U.S. Markets closed

Steve Madden Announces Record First Quarter 2019 Results

~ Raises Full Year 2019 Guidance ~

LONG ISLAND CITY, N.Y., April 25, 2019 (GLOBE NEWSWIRE) -- Steve Madden (SHOO), a leading designer and marketer of fashion footwear and accessories for women, men and children, today announced financial results for the first quarter ended March 31, 2019.

Amounts referred to as “Adjusted” exclude the items that are described under the heading “Non-GAAP Adjustments.”

For the First Quarter 2019:

  • Net sales increased 5.6% to $410.9 million compared to $389.0 million in the same period of 2018.
  • Gross margin was 38.2% compared to 36.2% in the same period last year, an increase of 200 basis points.
  • Operating expenses as a percentage of net sales were 27.6% compared to 27.7% of net sales in the same period of 2018. Adjusted operating expenses as a percentage of net sales were 27.9% compared to 26.9% of net sales in the same period of 2018.
  • Income from operations totaled $44.7 million, or 10.9% of net sales, compared to $36.6 million, or 9.4% of net sales, in the same period of 2018. Adjusted income from operations was $45.1 million, or 11.0% of net sales, compared to Adjusted income from operations of $39.6 million, or 10.2% of net sales, in the same period of 2018.
  • Net income attributable to Steven Madden, Ltd. was $34.5 million, or $0.41 per diluted share, compared to $28.7 million, or $0.33 per diluted share, in the prior year’s first quarter. Adjusted net income attributable to Steven Madden, Ltd. was $35.1 million, or $0.42 per diluted share, compared to $31.0 million, or $0.36 per diluted share, in the prior year’s first quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are off to a strong start in 2019, with first quarter results exceeding our expectations. Our flagship Steve Madden brand was the highlight in the quarter with robust increases in the wholesale footwear and accessories businesses as well as outstanding performance on stevemadden.com. Given the strong performance in the first quarter and the encouraging trends we are seeing in the business, we are raising our net sales and Adjusted EPS guidance for 2019. Looking ahead, we are confident that, based on our strong brand portfolio, consistency in delivering on-trend product and proven business model, we are well-positioned to drive sustainable growth and shareholder value over the long term.”

First Quarter 2019 Segment Results

Net sales for the wholesale business increased 5.1% to $348.1 million in the first quarter of 2019, driven by strong growth in wholesale accessories. Wholesale footwear net sales increased slightly, as strong growth in Steve Madden and the addition of Anne Klein were mostly offset by not recognizing sales to Payless ShoeSource in the current period. Gross margin in the wholesale business increased to 34.5% compared to 32.6% in last year’s first quarter, with gross margin improvement in wholesale footwear partially offset by a decline in wholesale accessories due to sales mix.

Retail net sales in the first quarter rose 8.6% to $62.8 million compared to $57.9 million in the first quarter of the prior year. Same store sales increased 6.3% in the quarter driven by strong performance in the Company’s e-commerce business. Retail gross margin rose to 58.5% in the first quarter of 2019, up 180 basis points compared to 56.7% in the first quarter of the prior year due to improved gross margin in the Company’s e-commerce business.

The Company ended the quarter with 225 company-operated retail locations, including seven internet stores, as well as 33 company-operated concessions in international markets.

The Company’s effective tax rate for the first quarter of 2019 was 23.1% compared to 21.4% in the first quarter of 2018. On an Adjusted basis, the effective tax rate was 22.6% compared to 21.7% in the first quarter of the prior year.

Balance Sheet and Cash Flow

During the first quarter of 2019, the Company repurchased 525,491 shares of the Company’s common stock for approximately $17.2 million, which includes shares acquired through the net settlement of employee stock awards. On April 24, 2019, the Board of Directors approved an increase in the Company's share repurchase authorization of $124.0 million, bringing the total authorization up to $200.0 million.

As of March 31, 2019, cash, cash equivalents and current marketable securities totaled $221.6 million.

Quarterly Dividend

The Company’s Board of Directors approved a quarterly cash dividend of $0.14 per share. The dividend will be paid on June 28, 2019, to stockholders of record at the close of business on June 18, 2019.

Updated Fiscal Year 2019 Outlook

The Company is raising its fiscal year 2019 guidance. For fiscal year 2019, the Company now expects net sales will increase 5% to 7% over net sales in 2018 compared to the previous guidance of a 4% to 6% increase over net sales in 2018. The Company now expects diluted EPS for fiscal year 2019 will be in the range of $1.76 to $1.84 compared to the prior range of $1.70 to $1.78. The Company now expects Adjusted diluted EPS for fiscal year 2019 will be in the range of $1.78 to $1.86 compared to the prior range of $1.75 to $1.83.

Non-GAAP Adjustments

Amounts referred to as “Adjusted” exclude the items below.

For the first quarter 2019:

  • $1.6 million pre-tax ($1.4 million after-tax) bad debt expense associated with the Payless ShoeSource bankruptcy, included in licensing and commission income, net.
  • $0.7 million pre-tax ($0.6 million after-tax) expense in connection with a provision for early lease termination charges, included in operating expenses.
  • $1.9 million pre-tax ($1.4 million after-tax) net benefit associated with the change in a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement as of December 31, 2019, included in operating expenses.

For the first quarter 2018:

  • $2.8 million pre-tax ($2.1 million after-tax) expense in connection with a provision for legal charges, included in operating expenses.
  • $0.3 million pre-tax ($0.2 million after-tax) expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, included in operating expenses.

For the fiscal year 2019:

  • $2.0 million pre-tax ($1.6 million after-tax) in expense expected to be incurred in connection with early lease termination charges.
  • $1.6 million pre-tax ($1.4 million after-tax) bad debt expense associated with the Payless ShoeSource bankruptcy.
  • $0.6 million pre-tax ($0.4 million after-tax) in expense expected to be incurred in connection with an office consolidation.
  • $1.9 million pre-tax ($1.4 million after-tax) net benefit associated with the change in a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement as of December 31, 2019.

Reconciliations of amounts on a GAAP basis to Adjusted amounts are presented in the Non-GAAP Reconciliation tables at the end of this release and identify and quantify all excluded items.

Conference Call Information

Interested stockholders are invited to listen to the third quarter earnings conference call scheduled for today, April 25, 2019, at 8:30 a.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed by logging onto http://www.stevemadden.gcs-web.com. An online archive of the broadcast will be available within one hour of the conclusion of the call and will be accessible for a period of 30 days following the call.

About Steve Madden

Steve Madden designs, sources and markets fashion-forward footwear and accessories for women, men and children. In addition to marketing products under its own brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo®, Report®, Brian Atwood®, Cejon®, Mad Love® and Big Buddha®, Steve Madden is a licensee of various brands, including Anne Klein®, Kate Spade®,  Superga® and DKNY®. Steve Madden also designs and sources products under private label brand names for various retailers. Steve Madden’s wholesale distribution includes department stores, specialty stores, luxury retailers, national chains and mass merchants. Steve Madden also operates 225 retail stores (including Steve Madden’s seven Internet stores). Steve Madden licenses certain of its brands to third parties for the marketing and sale of certain products, including ready-to-wear, outerwear, eyewear, hosiery, jewelry, fragrance, luggage and bedding and bath products. For local store information and the latest Steve Madden booties, pumps, men’s and women’s boots, fashion sneakers, dress shoes, sandals and more, visit http://www.stevemadden.com.

Safe Harbor

This press release and oral statements made from time to time by representatives of the Company contain certain “forward looking statements” as that term is defined in the federal securities laws. The events described in forward looking statements may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of the Company’s plans or strategies, projected or anticipated benefits from acquisitions to be made by the Company, or projections involving anticipated revenues, earnings or other aspects of the Company’s operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward looking statements. The Company cautions you that these statements concern current expectations about the Company’s future results and condition and are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projections upon which the statements are based. Factors which may affect the Company’s results include, but are not limited to, the risks and uncertainties discussed in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission. Any one or more of these uncertainties, risks and other influences could materially affect the Company’s results of operations and financial condition and whether forward looking statements made by the Company ultimately prove to be accurate and, as such, the Company’s actual results, performance and achievements could differ materially from those expressed or implied in these forward looking statements. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA

(In thousands, except per share amounts)

(Unaudited)

    Three Months Ended

 
    March 31, 2019   March 31, 2018
         
Net sales   $ 410,940     $ 389,014  
Cost of sales   253,943     248,281  
Gross profit   156,997     140,733  
Commission and licensing fee income, net   1,227     3,659  
Operating expenses   113,564     107,835  
Income from operations   44,660     36,557  
Interest and other income, net   1,192     597  
Income before provision for income taxes   45,852     37,154  
Provision for income taxes   10,587     7,956  
Net income   35,265     29,198  
Less: Net income attributable to noncontrolling interest   740     525  
Net income attributable to Steven Madden, Ltd.   $ 34,525     $ 28,673  
         
Basic income per share   $ 0.43     $ 0.35  
         
Diluted income per share   $ 0.41     $ 0.33  
         
Basic weighted average common shares outstanding   80,534     82,092  
         
Diluted weighted average common shares outstanding   84,255     85,989  


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

        As of    
    March 31, 2019   December 31, 2018   March 31, 2018
    (Unaudited)       (Unaudited)
             
Cash and cash equivalents   $ 160,256     $ 200,031     $ 125,383  
Marketable securities (current & non current)   61,383     66,968     75,176  
Accounts receivable, net   295,880     266,452     300,092  
Inventories   115,260     137,247     94,367  
Other current assets   28,285     32,427     47,975  
Property and equipment, net   63,657     64,807     69,599  
Operating lease right-of-use assets   181,896          
Goodwill and intangibles, net   289,965     291,423     298,539  
Other assets   13,172     13,215     10,802  
Total assets   $ 1,209,754     $ 1,072,570     $ 1,021,933  
             
Accounts payable   $ 62,564     $ 79,802     $ 65,296  
Contingent payment liability (current & non current)       3,000     3,000  
Operating leases (current & non current)   195,798          
Other current liabilities   103,584     141,887     107,023  
Other long-term liabilities   17,262     33,199     38,392  
Total Steven Madden, Ltd. stockholders’ equity   819,695     805,814     801,586  
Noncontrolling interest   10,851     8,868     6,636  
Total liabilities and stockholders’ equity   $ 1,209,754     $ 1,072,570     $ 1,021,933  


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

(Unaudited)

    Three Months Ended
    March 31, 2019   March 31, 2018
         
Net cash used in operating activities   $ (15,754 )   $ (27,217 )
         
Investing Activities        
Purchases of property and equipment   (3,399 )   (2,946 )
Sales of marketable securities, net   6,165     16,888  
Net cash provided by investing activities   2,766     13,942  
         
Financing Activities        
Common stock share repurchases for treasury   (17,154 )   (25,677 )
Investment of noncontrolling interest   1,283      
Payment of contingent liability       (7,000 )
Proceeds from exercise of stock options   722     1,519  
Cash dividends paid   (12,042 )   (11,758 )
Net cash used in financing activities   (27,191 )   (42,916 )
         
Effect of exchange rate changes on cash and cash equivalents   404     360  
         
Net decrease in cash and cash equivalents   (39,775 )   (55,831 )
         
Cash and cash equivalents - beginning of period   200,031     181,214  
         
Cash and cash equivalents - end of period   $ 160,256     $ 125,383  


STEVEN MADDEN, LTD. AND SUBSIDIARIES

NON-GAAP RECONCILIATION

(In thousands, except per share amounts)

(Unaudited)

The Company uses non-GAAP financial information to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. Additionally, the Company believes the information assists investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that are not indicative of its core business. The non-GAAP financial information is provided in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP.

Table 1 - Reconciliation of GAAP licensing and commission income, net to Adjusted licensing and commission income, net
    Three Months Ended    
    March 31, 2019    
         
GAAP licensing and commission income, net   $ 1,227      
         
Bad debt expense associated with the Payless ShoeSource bankruptcy   1,552      
         
Adjusted licensing and commission income, net   $ 2,779      


Table 2 - Reconciliation of GAAP operating expenses to Adjusted operating expenses
    Three Months Ended   Three Months Ended
    March 31, 2019   March 31, 2018
         
GAAP operating expenses   $ 113,564     $ 107,835  
         
Expense in connection with provision for early lease termination charges   (749 )    
         
Net benefit in connection with the change in a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement   1,868      
         
Expense in connection with provision for legal charges       (2,837 )
         
Expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring       (250 )
         
Adjusted operating expenses   $ 114,683     $ 104,748  


Table 3 - Reconciliation of GAAP income from operations to Adjusted income from operations
    Three Months Ended   Three Months Ended
    March 31, 2019   March 31, 2018
         
GAAP income from operations   $ 44,660     $ 36,557  
         
Bad debt expense associated with the Payless ShoeSource bankruptcy   1,552      
         
Expense in connection with provision for early lease termination charges   749      
         
Net benefit in connection with the change in a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement   (1,868 )    
         
Expense in connection with provision for legal charges       2,837  
         
Expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring       250  
         
Adjusted income from operations   $ 45,093     $ 39,644  


Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes
    Three Months Ended   Three Months Ended
    March 31, 2019   March 31, 2018
         
GAAP provision for income taxes   $ 10,587     $ 7,956  
         
Tax effect of bad debt expense associated with the Payless ShoeSource bankruptcy   170      
         
Tax effect of expense in connection with provision for early lease termination charges   188      
         
Tax effect of the net benefit in connection with the change in a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement   (469 )    
         
Tax effect of expense in connection with provision for legal charges       702  
         
Tax effect of expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring       62  
         
Adjusted provision for income taxes   $ 10,476     $ 8,720  


Table 5 - Reconciliation of GAAP net income to Adjusted net income        
    Three Months Ended   Three Months Ended
    March 31, 2019   March 31, 2018
         
GAAP net income attributable to Steven Madden, Ltd.   $ 34,525     $ 28,673  
         
After-tax impact of bad debt expense associated with the Payless ShoeSource bankruptcy   1,383      
         
After-tax impact of expense in connection with early lease termination charges   561      
         
After-tax impact of the net benefit in connection with the change in a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement   (1,399 )    
         
After-tax impact of expense in connection with provision for legal charges       2,135  
         
After-tax impact of expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring       188  
         
Adjusted net income attributable to Steven Madden, Ltd.   $ 35,070     $ 30,996  
         
GAAP diluted income per share   $ 0.41     $ 0.33  
         
Adjusted diluted income per share   $ 0.42     $ 0.36  

Contact

Steven Madden, Ltd.
Director of Corporate Development & Investor Relations
Danielle McCoy
718-308-2611
InvestorRelations@stevemadden.com