• Steve Madden Announces Record Second Quarter 2019 Results

    Source: Nasdaq GlobeNewswire / 30 Jul 2019 11:59:01   Europe/London

    LONG ISLAND CITY, N.Y., July 30, 2019 (GLOBE NEWSWIRE) -- Steve Madden (Nasdaq: SHOO), a leading designer and marketer of fashion footwear and accessories for women, men and children, today announced financial results for the second quarter and six months ended June 30, 2019.

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

    For the Second Quarter 2019:

    • Net sales increased 12.4% to $445.0 million compared to $395.8 million in the same period of 2018.
    • Gross margin was 37.2% compared to 37.3% in the same period last year, a decrease of 10 basis points.
    • Operating expenses as a percentage of net sales were 26.9% compared to 27.4% of net sales in the same period of 2018.  Adjusted operating expenses as a percentage of net sales were 26.8% compared to 26.8% of net sales in the same period of 2018.
    • Income from operations totaled $44.6 million, or 10.0% of net sales, compared to $41.6 million, or 10.5% of net sales, in the same period of 2018.  Adjusted income from operations was $49.1 million, or 11.0% of net sales, compared to Adjusted income from operations of $44.0 million, or 11.1% of net sales, in the same period of 2018.
    • Net income attributable to Steven Madden, Ltd. was $36.6 million, or $0.44 per diluted share, compared to $32.4 million, or $0.38 per diluted share, in the prior year’s second quarter.  Adjusted net income attributable to Steven Madden, Ltd. was $39.5 million, or $0.47 per diluted share, compared to $35.2 million, or $0.41 per diluted share, in the prior year’s second quarter.

    Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We delivered a strong second quarter, with net sales growing 12% and Adjusted diluted EPS increasing 16% compared to the prior year period.  Our flagship Steve Madden brand was the highlight, with strong growth in the wholesale footwear and accessories businesses in both domestic and international markets, as well as exceptional growth on stevemadden.com.  Looking ahead, we remain on track to achieve our sales and Adjusted diluted EPS guidance for 2019 despite an estimated incremental headwind of approximately $0.05 per share related to the increase in the tariff on List 3 products from China from 10% to 25% in effect as of May 10.  Based on the strength of our brands and our business model – combined with our consistency in delivering on-trend product that resonates with consumers – we are confident that we can continue to drive sales and earnings growth and create value for shareholders over the long term.”

    Second Quarter 2019 Segment Results

    Net sales for the wholesale business increased 13.1% to $363.5 million in the second quarter of 2019, with strong growth in both the wholesale footwear and accessories businesses.  Wholesale footwear net sales rose 13.5% as robust growth in Steve Madden, the addition of Anne Klein and a strong increase in the Company's private label business (excluding Payless ShoeSource) more than offset not recognizing sales to Payless ShoeSource in the current period.  Wholesale accessories net sales increased 11.5% driven by a robust gain in Steve Madden handbags as well as strong growth in the private label business.  Gross margin in the wholesale business increased to 32.1% compared to 31.4% in last year’s second quarter driven by improvement in wholesale footwear.

    Retail net sales in the second quarter rose 9.6% to $81.5 million compared to $74.3 million in the second quarter of the prior year.  Same store sales increased 6.2% in the quarter driven by strong performance in the Company’s e-commerce business.  Retail gross margin declined to 59.7% in the second quarter of 2019 compared to 62.9% in the second quarter of the prior year due primarily to inventory liquidation and markdowns in connection with the wind-down of the Company's joint venture relationship in China as well as aggressive liquidation of slow-moving inventory in the Company’s North American retail operations.

    The Company ended the quarter with 224 company-operated retail locations, including six internet stores, as well as 31 company-operated concessions in international markets.

    The Company’s effective tax rate for the second quarter of 2019 was 21.3% compared to 23.9% in the second quarter of 2018.  On an Adjusted basis, the effective tax rate was 22.4% compared to 21.7% in the second quarter of the prior year.

    Balance Sheet and Cash Flow

    During the second quarter of 2019, the Company repurchased 1.1 million shares of the Company’s common stock for approximately $34.0 million, which includes shares acquired through the net settlement of employee stock awards.

    As of June 30, 2019, cash, cash equivalents and current marketable securities totaled $248.8 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 September 27, 2019, to stockholders of record at the close of business on September 17, 2019.

    Fiscal Year 2019 Outlook

    For fiscal year 2019, the Company continues to expect net sales will increase 5% to 7% over net sales in 2018.  The Company now expects diluted EPS for fiscal year 2019 will be in the range of $1.74 to $1.82.  The Company continues to expect Adjusted diluted EPS for fiscal year 2019 will be in the range of $1.78 to $1.86, despite an estimated incremental headwind of approximately $0.05 per share related to the increase in the tariff on List 3 products from 10% to 25% in effect as of May 10.

    Non-GAAP Adjustments

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

    For the second quarter 2019:

    • $0.1 million pre-tax ($0.1 million after-tax) recovery associated with the Payless ShoeSource bankruptcy, included in commission and licensing fee income, net and $1.7 million pre-tax ($1.6 million after-tax) recovery associated with the Payless ShoeSource bankruptcy, included in operating expenses.
    • $1.5 million pre-tax ($1.2 million after-tax) expense in connection with a provision for early lease termination charges, included in operating expenses.
    • $0.7 million pre-tax ($0.5 million after-tax) expense in connection with a divisional headquarters relocation, included in operating expenses.
    • $4.1 million pre-tax ($3.0 million after-tax) non-cash expense associated with the impairment of the Brian Atwood trademark.

    For the second quarter 2018:

    • $1.1 million pre-tax ($0.8 million after-tax) expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, included in operating expenses.
    • $1.2 million pre-tax ($0.9 million after-tax) expense in connection with a warehouse consolidation, included in operating expenses.
    • $1.0 million in tax expense in connection with the impairment of the preferred interest investment in Brian Atwood Italia Holding, LLC recorded in fourth quarter 2017.

    For the fiscal year 2019:

    • $0.3 million pre-tax ($0.3 million after-tax) recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy.
    • $2.3 million pre-tax ($1.7 million after-tax) in expense expected to be incurred in connection with early lease termination charges.
    • $0.7 million pre-tax ($0.5 million after-tax) expense in connection with a divisional headquarters relocation.
    • $4.1 million pre-tax ($3.0 million after-tax) non-cash expense associated with the impairment of the Brian Atwood trademark.
    • $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 second quarter earnings conference call scheduled for today, July 30, 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://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 224 retail stores (including Steve Madden’s six 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 Six Months Ended
     June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
            
    Net sales$444,974  $395,753  $855,914  $784,767 
    Cost of sales279,629  247,979   533,572  496,260 
    Gross profit165,345  147,774   322,342  288,507 
    Commission and licensing fee income, net3,147  2,244   4,374  5,903 
    Operating expenses119,809  108,434   233,373  216,269 
    Impairment charge4,050     4,050   
    Income from operations44,633  41,584   89,293  78,141 
    Interest and other income, net1,262  1,033   2,454  1,630 
    Income before provision for income taxes45,895  42,617   91,747  79,771 
    Provision for income taxes9,784  10,172   20,371  18,128 
    Net income36,111  32,445   71,376  61,643 
    Less: net (loss)/income attributable to noncontrolling interest   (461)
      35    279   560  
    Net income attributable to Steven Madden, Ltd.$36,572  $32,410  $  71,097  $61,083 
                 
    Basic income per share$0.46  $0.40  $0.89  $0.75 
                         
    Diluted income per share$0.44  $0.38  $0.85  $0.71 
                            
    Basic weighted average common shares outstanding   79,951     81,681   80,241   81,885  
                               
    Diluted weighted average common shares outstanding   83,869     86,258   84,064   86,123  
                               
    Cash dividends declared per common share $ 0.14   $0.13   $ 0.28   $0.26  


    STEVEN MADDEN, LTD. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED BALANCE SHEET DATA

    (In thousands)

       As of  
     June 30, 2019 December 31, 2018 June 30, 2018
     (Unaudited)   (Unaudited)
          
    Cash and cash equivalents$212,664  $200,031  $190,985 
    Marketable securities (current & non-current)36,096  66,968  66,449 
    Accounts receivable, net306,636  266,452  285,318 
    Inventories146,120  137,247  133,627 
    Other current assets39,287  32,427  37,772 
    Property and equipment, net61,654  64,807  67,378 
    Operating lease right-of-use assets179,320     
    Goodwill and intangibles, net286,129  291,423  295,454 
    Other assets13,654  13,215  10,659 
    Total assets$1,281,560  $1,072,570  $1,087,642 
          
    Accounts payable$107,436  $79,802  $100,463 
    Contingent payment liability (current & non-current)  3,000  3,000 
    Operating leases (current & non-current)193,295     
    Other current liabilities136,131  141,887  130,963 
    Other long-term liabilities17,142  33,199  22,923 
    Total Steven Madden, Ltd. stockholders’ equity818,354  805,814  823,622 
    Noncontrolling interest9,202  8,868  6,671 
    Total liabilities and stockholders’ equity$1,281,560  $1,072,570  $1,087,642 


    STEVEN MADDEN, LTD. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED CASH FLOW DATA

    (In thousands)

    (Unaudited)

     Six Months Ended
     June 30, 2019 June 30, 2018
        
    Net cash provided by operating activities$59,761  $44,927 
        
    Investing Activities   
    Purchases of property and equipment(6,214) (5,251)
    Sales of marketable securities, net32,062  24,896 
    Net cash provided by investing activities25,848  19,645 
        
    Financing Activities   
    Common stock share repurchases for treasury(51,156) (35,102)
    Investment of noncontrolling interest1,283   
    Distribution of noncontrolling interest earnings(1,113)  
    Payment of contingent liability  (7,000)
    Proceeds from exercise of stock options1,799  11,115 
    Cash dividends paid(23,987) (23,474)
    Net cash used in financing activities(73,174) (54,461)
        
    Effect of exchange rate changes on cash and cash equivalents198  (340)
        
    Net increase in cash and cash equivalents12,633  9,771 
        
    Cash and cash equivalents - beginning of period200,031  181,214 
        
    Cash and cash equivalents - end of period$212,664  $190,985 


    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
         Six Months
    Ended
         June 30, 2019     June 30, 2019
                
    GAAP commission and licensing fee income, net    $3,147      $4,374 
                
    (Recovery)/bad debt expense, net of recovery, associated with the Payless ShoeSource bankruptcy    (143)     1,409 
                
    Adjusted licensing and commission income, net    $3,004      $5,783 


    Table 2 - Reconciliation of GAAP operating expenses to Adjusted operating expenses    
     Three Months
    Ended
     Three Months
    Ended
     Six Months
    Ended
     Six Months
    Ended
     June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
            
    GAAP operating expenses$119,809  $108,434  $233,373  $216,269 
            
    Recovery associated with the Payless ShoeSource bankruptcy1,668    1,668   
            
    Expense in connection with provision for early lease termination charges(1,543)   (2,292)  
            
    Expense in connection with a divisional headquarters  relocation(669)   (669)  
            
    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  (1,131)   (1,381)
            
    Expense in connection with a warehouse consolidation  (1,241)   (1,241)
            
    Adjusted operating expenses$119,265  $106,063  $233,948  $210,811 


    Table 3 - Reconciliation of GAAP income from operations to Adjusted income from operations
     Three Months
    Ended
     Three Months
    Ended
     Six Months
    Ended
     Six Months
    Ended
     June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
            
    GAAP income from operations$44,633  $41,584  $89,293  $78,141 
            
    Recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy(1,811)   (259)  
            
    Expense in connection with provision for early lease termination charges1,543    2,292   
            
    Expense in connection with a divisional headquarters relocation669    669   
            
    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)  
            
    Impairment of the Brian Atwood trademark4,050    4,050   
            
    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  1,131    1,381 
            
    Expense in connection with a warehouse consolidation  1,241    1,241 
            
    Adjusted income from operations$49,084  $43,956  $94,177  $83,600 


    Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes
     Three Months
    Ended
     Three Months
    Ended
     Six Months
    Ended
     Six Months
    Ended
     June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
            
    GAAP provision for income taxes$9,784  $10,172  $20,371  $18,128 
            
    Tax effect of recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy(85)   85   
            
    Tax effect of expense in connection with provision for early lease termination charges387    575   
            
    Tax effect of expense in connection with a divisional headquarters relocation168    168   
            
    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 in connection with the impairment of the Brian Atwood trademark1,017    1,017   
            
    Tax expense in connection with the impairment of the preferred interest investment in Brian Atwood Italia Holding, LLC recorded in fourth quarter 2017  (1,028)   (1,028)
            
    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  298    360 
            
    Tax effect of expense in connection with a warehouse consolidation  327    327 
            
    Adjusted provision for income taxes$11,271  $9,769  $21,747  $18,489 


    Table 5 - Reconciliation of GAAP net income to Adjusted net income
     Three Months
    Ended
     Three Months
    Ended
     Six Months
    Ended
     Six Months
    Ended
     June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
            
    GAAP net income attributable to Steven Madden, Ltd.$36,572  $32,410  $71,097  $61,083 
            
    After-tax impact of a recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy(1,727)   (344)  
            
    After-tax impact of expense in connection with early lease termination charges1,156    1,717   
            
    After-tax impact of expense in connection with a divisional headquarters relocation501    501   
            
    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 associated with the impairment related to the Brian Atwood trademark3,033    3,033   
            
    Tax expense in connection with the impairment of the preferred interest investment in Brian Atwood Italia Holding, LLC recorded in fourth quarter 2017  1,028    1,028 
            
    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  833    1,021 
            
    After-tax impact of expense in connection with a warehouse consolidation  914    914 
            
    Adjusted net income attributable to Steven Madden, Ltd.$39,535  $35,185  $74,605  $66,181 
            
    GAAP diluted income per share$0.44  $0.38  $0.85  $0.71 
            
    Adjusted diluted income per share$0.47  $0.41  $0.89  $0.77 


    Contact

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

     

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