Steven Madden CEO Discusses Q3 2010 Results - Earnings Call Transcript
Steven Madden, Ltd. (
)
Q3 2010 Earnings Call
November 02, 2010 08:30 am ET
Executives
Jean Fontana - ICR
Ed Rosenfeld - Chairman & CEO
Analysts
Scott Krasik - BB&T Capital Markets
Camilo Lyon - Wedbush Securities
Jeff Van Sinderen - B. Riley
Claire Gallagher - CapStone Investments
Sam Poser - Sterne Agee
Steven Martin - Slater Capital Management
Presentation
Operator
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Steve Madden, Ltd. Q1 2009 Earnings Call Transcript
Good day everyone and welcome to the Steve Madden third quarter 2010 earnings conference call. As a reminder today's call is being recorded. For opening remarks and introductions I would like to turn the call over to Jean Fontana of ICR. Please go ahead, Ms. Fontana.
Jean Fontana
Thank you. Good morning, everyone. Thank you for joining us for the discussion of Steve Madden's third quarter 2010 earnings results. Before we begin, I would like to remind you that statements in this conference call that are not statements of historical or current facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks and uncertainties and other unknown facts that could cause actual results to be materially different from historical results or any future results expressed or implied by such forward-looking statements.
Statements contained herein are also subject to generally other risks and uncertainties that are described from time-to-time in the company's reports and registration statements filed with the SEC. Also, please refer to today's earnings release for more information on risk factors; this could cause actual results to differ.
Finally, please note that any forward-looking statements in this using this conference call cannot be relied upon as current after this date.
I would now like to turn the call over to Ed Rosenfeld, Chairman and CEO of Steve Madden.
Ed Rosenfeld
Thanks, Jean. Good morning and thank you for joining us today. We are pleased to deliver the highest quarterly sales and earnings in our company's history in third quarter 2010.
Consolidated net sales rose 31% to a 184.1 million and operating profit grew 32% to 37.4 million for 20.3% of net sales. Our performance reflects continued momentum in our core businesses as well as significant contributions from our newer business ventures.
Our wholesale business continued its strong performance. The net sales increasing 37% to 153.1 million as compared to a $112 million in the third quarter of last year driven by strong gains in both the footwear and accessories businesses.
On the footwear side, sales grew 34% to123.3 million versus 92.2 million last year driven by robust increases in the Madden Girl, Steve Madden Men's and international divisions as well as by the contribution from Madden our new men's brand that we introduced in December of 2009. Net sales also benefited from the transition of our footwear business with Wal-Mart from a buying agency model to a selling agency model which means its revenue is now recorded on the top line and not on the other income line on the income statement.
Madden Girl recorded the biggest sale increase in dollars in the quarter as continued strong sell-throughs retail resulted in an increased investment in the brand from all of Madden Girl's largest customers.
International was our fastest growing division on our percentage basis recoding 99% top line increase in the quarter. In addition to over 100% year-over-year increases in existing territories Asia and Mexico, we also had contributions from four new territories that we launched in the last six months, Saudi Arabia, Australia, Russia and Central America.
Our Men's business was another bright spot. In addition to a strong increase in our Steve Madden Men's business, we also continued to roll-out our new Madden brand. Madden made its first shipments to May Season in the quarter and we believe May Season is a very promising account for the Madden brand.
In wholesale accessories, net sales grew 51% to 29.8 million in the quarter compared to 19.8 million a year ago. In addition to the sales contribution from Big Buddha which we acquired in February of this year and which is performing ahead of expectations, our accessories segment recorded 26% organic growth on the top line in the quarter. This outstanding performance distributed by healthy gains in Steve Madden and Betsey Johnson's handbags and belts as well as the big increase in our price label handbag business with Wal-Mart through our Madden Zone division.
In our retail division, net sales increased 10% to 31.1 million versus 28.2 million in last year's third quarter, despite the fact that we've had six nets to our close-in since the end of third quarter last year. Thanks to Steve and his team, we believe our stores have never looked better in terms of merchandise assortment. The on trend product in our stores translated into outstanding results. We delivered a comparable store sales increase of 15.7% for the quarter driven by increases in both the units and AUR. Booties and Pumps were the main product drivers. For the 12 month ended September 30th 2010, our retail stores did $710 in sales per square foot. This compares to $628 in sales per square foot for stores open for the 12 month ended September 30th, 2009, this represents the first time our sales per square foot has been over 700 since the beginning of 2007. We closed two stores in the quarter ending Q3 with 82 company-owned retail locations including our internet store.
Consolidated gross margins for third quarter decreased to 42.1% from 44% in the comparable period last year and a declined wholesale gross margin was partially offset by an increase in retail gross margin.
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