SHOO
$43.99
Steven Maddens
$.27
.62%
Earnings Details
3rd Quarter September 2019
Tuesday, October 29, 2019 6:59:00 AM
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Summary

Steven Maddens Beats

Steven Maddens (SHOO) reported 3rd Quarter September 2019 earnings of $0.67 per share on revenue of $497.3 million. The consensus earnings estimate was $0.58 per share on revenue of $486.9 million. The Earnings Whisper number was $0.61 per share. Revenue grew 8.5% on a year-over-year basis.

The company said it now expects 2019 earnings of $1.92 to $1.95 per share on revenue of $1.769 billion to $1.778 billion. The company's previous guidance was earnings of $1.78 to $1.86 per share on revenue of $1.736 billion to $1.769 billion and the current consensus earnings estimate is $1.80 per share on revenue of $1.76 billion for the year ending December 31, 2019.

Steven Madden Ltd designs, markets and sells fashion-forward name brand and private label footwear for women, men and children and name brand and private label fashion handbags and accessories.

Results
Reported Earnings
$0.67
Earnings Whisper
$0.61
Consensus Estimate
$0.58
Reported Revenue
$497.3 Mil
Revenue Estimate
$486.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Steve Madden Announces Third Quarter 2019 Results

~ Raises Full Year 2019 Guidance ~
~ Increases Quarterly Dividend ~

LONG ISLAND CITY, N.Y., Oct. 29, 2019 (GLOBE NEWSWIRE) -- Steve Madden (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children, today announced financial results for the third quarter and nine months ended September 30, 2019.

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

For the Third Quarter 2019:

  • Net sales increased 8.5% to $497.3 million compared to $458.5 million in the same period of 2018.
  • Gross margin was 38.4% compared to 38.2% in the same period last year, an increase of 20 basis points.
  • Operating expenses as a percentage of net sales were 25.2% compared to 24.0% of net sales in the same period of 2018.  Adjusted operating expenses as a percentage of net sales were 24.3% compared to 23.9% of net sales in the same period of 2018.
  • Income from operations totaled $68.0 million, or 13.7% of net sales, compared to $70.2 million, or 15.3% of net sales, in the same period of 2018.  Adjusted income from operations was $72.3 million, or 14.5% of net sales, compared to Adjusted income from operations of $70.6 million, or 15.4% of net sales, in the same period of 2018.
  • Net income attributable to Steven Madden, Ltd. was $52.5 million, or $0.63 per diluted share, compared to $55.6 million, or $0.64 per diluted share, in the prior year’s third quarter.  Adjusted net income attributable to Steven Madden, Ltd. was $56.0 million, or $0.67 per diluted share, compared to $55.9 million, or $0.65 per diluted share, in the prior year’s third quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are pleased with our third quarter results, which included adjusted earnings that significantly exceeded our expectations driven by strong performance in our Steve Madden and Blondo brands.  We also completed two acquisitions during the quarter that provide meaningful growth opportunities going forward: GREATS, a pioneering digitally native sneaker brand, and BB Dakota, a contemporary women’s apparel company.  Based on the strong performance in third quarter and the continued momentum in our underlying business, we are raising our 2019 EPS guidance despite incremental earnings pressure from the implementation of the 15% tariff on List 4 products from China.  Looking out further, the power of our brands and the strength of our business model give us confidence that we can continue to drive earnings growth and create value for shareholders over the long term.”

Third Quarter 2019 Segment Results

Net sales for the wholesale business increased 8.5% to $421.6 million in the third quarter of 2019, with strong growth in the wholesale footwear and the wholesale accessories/apparel segments.  Wholesale footwear net sales rose 6.3% driven by gains in Blondo, Steve Madden Women's and private label. Wholesale accessories/apparel net sales increased 15.8% driven by strong growth in Steve Madden handbags as well as the addition of the BB Dakota apparel business.  Gross margin in the wholesale business decreased to 33.9% compared to 34.3% in last year’s third quarter as an increase in the wholesale footwear gross margin was more than offset by a decrease in the wholesale accessories/apparel gross margin due primarily to the tariff on goods imported from China.

Retail net sales in the third quarter rose 8.3% to $75.7 million compared to $69.9 million in the third quarter of the prior year.  Same store sales increased 5.1% in the quarter driven by strong performance in the Company’s e-commerce business.  Retail gross margin increased to 63.3% in the third quarter of 2019 compared to 60.1% in the third quarter of the prior year due primarily to reduced promotional activity.

The Company ended the quarter with 227 company-operated retail locations, including eight Internet stores, as well as 32 company-operated concessions in international markets.

The Company’s effective tax rate for the third quarter of 2019 was 23.0% compared to 20.8% in the third quarter of 2018.  On an Adjusted basis, the effective tax rate for the third quarter of 2019 was 22.6%.

Balance Sheet and Cash Flow

During the third quarter of 2019, the Company repurchased 784,757 shares of the Company’s common stock for approximately $25.3 million, which includes shares acquired through the net settlement of employee stock awards.

As of September 30, 2019, cash, cash equivalents and current marketable securities totaled $194.9 million.

Increased Quarterly Dividend

The Company’s Board of Directors approved a quarterly cash dividend of $0.15 per share, reflecting a 7% increase over the previous quarterly dividend.  The dividend will be paid on December 27, 2019, to stockholders of record at the close of business on December 16, 2019.

Updated Fiscal Year 2019 Outlook

The Company is raising its fiscal year 2019 net sales and diluted EPS guidance.  For fiscal year 2019, the Company now expects net sales will increase 7% to 7.5% over net sales in 2018 compared to previous guidance of a 5% to 7% increase over net sales in 2018.  The Company now expects diluted EPS for fiscal year 2019 will be in the range of $1.83 to $1.86 compared to the previous range of $1.74 to $1.82.  The Company now expects Adjusted diluted EPS for fiscal year 2019 will be in the range of $1.92 to $1.95 compared to the previous range of $1.78 to $1.86.

Non-GAAP Adjustments

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

For the third quarter 2019:

  • $3.1 million pre-tax ($2.3 million after-tax) expense in connection with a provision for early lease termination charges and impairment of lease right-of-use assets, included in operating expenses.
  • $1.1 million pre-tax ($0.8 million after-tax) expense in connection with the acquisitions of GREATS and BB Dakota, included in operating expenses.
  • $0.4 million tax expense in connection with deferred tax adjustments.

For the third quarter 2018:

  • $0.4 million pre-tax ($0.3 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 outlook:

  • $5.4 million pre-tax ($4.1 million after-tax) expense in connection with early lease termination charges and impairment of lease right-of-use assets.
  • $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.
  • $1.1 million pre-tax ($1.0 million after-tax) expense in connection with the acquisitions of GREATS and BB Dakota, included in operating expenses.
  • $0.7 million pre-tax ($0.5 million after-tax) expense in connection with a divisional headquarters relocation.
  • $0.3 million pre-tax ($0.3 million after-tax) recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy.
  • $0.5 million tax expense in connection with deferred tax adjustments.

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, October 29, 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, accessories and apparel 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®, GREATS®, BB Dakota®, 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 227 retail stores (including eight 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 Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
        
Net sales$497,308  $458,482  $1,353,222  $1,243,249 
Cost of sales306,277  283,265   839,849   779,525 
Gross profit191,031  175,217   513,373   463,724 
Commission and licensing fee income, net2,157  4,994   6,531   10,897 
Operating expenses125,147  110,007   358,520   326,276 
Impairment charges     4,050    
Income from operations68,041  70,204   157,334   148,345 
Interest and other income, net961  872   3,415   2,502 
Income before provision for income taxes69,002  71,076   160,749   150,847 
Provision for income taxes15,886  14,757   36,257   32,885 
Net income53,116  56,319   124,492   117,962 
Less: net income attributable to noncontrolling interest653  756   932   1,316 
Net income attributable to Steven Madden, Ltd.$52,463  $55,563  $123,560  $116,646 
        
Basic income per share$0.66  $0.68  $1.55  $1.43 
        
Diluted income per share$0.63  $0.64  $1.48  $1.35 
        
Basic weighted average common shares outstanding79,092  81,727   79,854   81,832 
        
Diluted weighted average common shares outstanding83,106  86,574   83,740   86,273 
        
Cash dividends declared per common share$0.14  $0.13  $0.42  $0.39 
              


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

   As of  
 September 30, 2019 December 31, 2018 September 30, 2018
 (Unaudited)   (Unaudited)
      
Cash and cash equivalents$167,492  $200,031  $172,537 
Marketable securities27,452  66,968  57,896 
Accounts receivable, net335,503  266,452  332,049 
Inventories148,053  137,247  147,491 
Other current assets28,586  32,427  43,966 
Property and equipment, net60,662  64,807  65,472 
Operating lease right-of-use assets162,385     
Goodwill and intangibles, net334,341  291,423  295,269 
Other assets17,991  13,215  10,379 
Total assets$1,282,465  $1,072,570  $1,125,059 
      
Accounts payable$90,278  $79,802  $94,636 
Operating leases (current & non-current)177,772     
Other current liabilities124,356  141,887  121,894 
Contingent payment liability9,770  3,000  3,000 
Other long-term liabilities30,053  33,199  38,332 
Total Steven Madden, Ltd. stockholders’ equity838,738  805,814  859,770 
Noncontrolling interest11,498  8,868  7,427 
Total liabilities and stockholders’ equity$1,282,465  $1,072,570  $1,125,059 
            


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

(Unaudited)

 Nine Months Ended
 September 30, 2019 September 30, 2018
    
Net cash provided by operating activities$83,158  $46,466 
    
Investing Activities   
Purchases of property and equipment(9,211) (8,164)
Sales of marketable securities, net40,331  33,842 
Acquisitions, net of cash acquired(36,753)  
Net cash (used in) / provided by investing activities(5,633) 25,678 
    
Financing Activities   
Common stock share repurchases for treasury(76,505) (50,880)
Investment of noncontrolling interest1,283   
Distribution of noncontrolling interest earnings(1,113)  
Payment of contingent liability  (7,000)
Proceeds from exercise of stock options2,606  12,801 
Cash dividends paid(35,805) (35,147)
Net cash used in financing activities(109,534) (80,226)
    
Effect of exchange rate changes on cash and cash equivalents(530) (595)
    
Net decrease in cash and cash equivalents(32,539) (8,677)
    
Cash and cash equivalents - beginning of period200,031  181,214 
    
Cash and cash equivalents - end of period$167,492  $172,537 
        


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 commission and licensing fee income, net to Adjusted commission and licensing fee income, net
 Nine Months Ended
 September 30, 2019
  
GAAP commission and licensing fee income, net$6,531 
  
Bad debt expense, net of recovery, associated with the Payless ShoeSource bankruptcy1,409 
  
Adjusted commission and licensing fee income, net$7,940 
    


     
Table 2 - Reconciliation of GAAP operating expenses to Adjusted operating expenses    
 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
        
GAAP operating expenses$125,147  $110,007  $358,520  $326,276 
        
Expense in connection with provision for early lease termination charges and impairment of lease right-of-use assets(3,131)   (5,424)  
        
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   
        
Recovery associated with the Payless ShoeSource bankruptcy    1,668   
        
Expense in connection with the acquisitions of GREATS and BB Dakota(1,078)   (1,078)  
        
Expense in connection with a divisional headquarters relocation    (669)  
        
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  (406)   (1,787)
        
Expense in connection with a warehouse consolidation      (1,241)
        
Adjusted operating expenses$120,938  $109,601  $354,885  $320,411 
                


Table 3 - Reconciliation of GAAP income from operations to Adjusted income from operations
 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
        
GAAP income from operations$68,041  $70,204  $157,334  $148,345 
        
Expense in connection with provision for early lease termination charges and impairment of lease right-of-use assets3,131    5,424   
        
Impairment of the Brian Atwood trademark    4,050   
        
Expense in connection with the acquisitions of GREATS and BB Dakota1,078    1,078   
        
Expense in connection with a divisional headquarters relocation    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)  
        
Recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy    (259)  
        
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  406    1,787 
        
Expense in connection with a warehouse consolidation      1,241 
        
Adjusted income from operations$72,250  $70,610  $166,428  $154,210 
                


Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes
 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
        
GAAP provision for income taxes$15,886  $14,757  $36,257  $32,885 
        
Tax effect of expense in connection with provision for early lease termination charges and impairment of lease right-of-use assets786    1,361   
        
Tax effect in connection with the impairment of the Brian Atwood trademark    1,017   
        
Tax effect of expense in connection with the acquisitions of GREATS and BB Dakota271    271   
        
Tax effect of expense in connection with a divisional headquarters relocation    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 of recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy    85   
        
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  102    462 
        
Tax effect of expense in connection with a warehouse consolidation      327 
        
Tax expense in connection with deferred tax adjustments(383)   (383)  
        
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)
        
Adjusted provision for income taxes$16,560  $14,859  38,307  $33,348 
               


Table 5 - Reconciliation of GAAP net income to Adjusted net income
 Three Months Ended Nine Months Ended
 September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
        
GAAP net income attributable to Steven Madden, Ltd.$52,463  $55,563  $123,560  $116,646 
        
After-tax impact of expense in connection with early lease termination charges and impairment of lease right-of-use assets2,345    4,062   
        
After-tax impact associated with the impairment related to the Brian Atwood trademark    3,033   
        
After-tax impact of expense in connection with the acquisitions of GREATS and BB Dakota808    808   
        
After-tax impact of expense in connection with a divisional headquarters relocation    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 of a recovery, net of bad debt expense, associated with the Payless ShoeSource bankruptcy    (344)  
        
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  304    1,325 
        
After-tax impact of expense in connection with a warehouse consolidation      914 
        
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 
        
Tax expense in connection with deferred tax adjustments383    383   
        
Adjusted net income attributable to Steven Madden, Ltd.$55,999  $55,867  $130,604  $122,048 
        
GAAP diluted income per share$0.63  $0.64  $1.48  $1.35 
        
Adjusted diluted income per share$0.67  $0.65  $1.56  $1.41 
                


Contact

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

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Source: Steve Madden