Steve Madden Announces Record Results For Second Quarter 2011

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 ended June 30, 2011.
  • Second quarter net sales increased 31.8% to $209.2 million.
  • Retail comparable store sales increased 11.6% for the second quarter.
  • Second quarter net income increased 20.1% to $23.8 million, or $0.55 per diluted share, compared to $19.8 million, or $0.47 per diluted share in the prior year’s second quarter, adjusted for a three-for-two stock split payable to shareholders of record on May 20, 2011.
  • Increase in fiscal 2011 diluted EPS guidance to a range of $2.15 to $2.20.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "Our second quarter results reflect solid execution across the Company. Our flagship Steve Madden brand led the way, as the trend-right merchandise created by Steve and his design team resulted in strong gains in the Steve Madden Women’s Wholesale, Retail and International divisions. In addition, we further enhanced our footwear and accessories offerings in the quarter with the acquisitions of Topline and Cejon, both completed in May. We believe that the continued momentum in our core business, combined with the expansion opportunities in our newer businesses, sets the stage for long term sales and earnings growth for the Company.”

Second Quarter 2011 Results

Second quarter net sales were $209.2 million compared to $158.7 million reported in the comparable period of 2010. Net sales from the wholesale business rose 35.6% to $175.2 million from $129.2 million in the second quarter of 2010. The growth was primarily driven by (i) strong gains in the Steve Madden Women’s and International businesses; (ii) the transition of the Company's Target private label and Olsenboye footwear businesses from the buying agency model to the wholesale model; and (iii) net sales contributions from the recent acquisitions, Topline and Cejon, both completed in May. Retail net sales grew 15.3% to $34.0 million from $29.5 million in the second quarter of the prior year. Same store sales increased 11.6% following a 7.4% increase in the prior year’s second quarter. The Company opened 1 full-price store and 1 outlet store, acquired 1 Report store in the Topline acquisition, and closed 3 stores in the quarter.

Gross margin was 40.2% in the second quarter as compared to 43.4% in the comparable period of 2010. Gross margin in the wholesale business was 35.4% in the second quarter as compared to 38.7% in the prior year's second quarter, with the decrease due to sales mix shifts as a result of the inclusion of the Company’s Target private label footwear business in net sales and the addition of the Topline business, which is largely private label and therefore carries a lower gross margin than the rest of our wholesale business. Excluding these businesses, gross margin in the wholesale business would have been moderately higher in the second quarter as compared to the second quarter of last year. Retail gross margin increased to 64.8% for the second quarter from 63.9% in the comparable period of the prior year as a result of more full-price selling and reduced discounting.

Operating expenses as a percent of sales were 24.5% for the second quarter compared to 26.5% in the same period of the prior year, due to leverage on increased sales.

Operating income for the second quarter was $37.2 million, or 17.8% of net sales, compared with operating income of $32.1 million, or 20.2% of net sales, in the same period of 2010.

Net income increased 20.1% to $23.8 million, or $0.55 per diluted share, in the second quarter compared to $19.8 million, or $0.47 per diluted share in the prior year’s second quarter, adjusted for a three-for-two stock split payable to shareholders of record on May 20, 2011.

The Company ended the quarter with 83 retail locations, including the Company’s Internet store.

Six-Month 2011 Results

For the first six months of 2011, net sales increased 29.2% to $374.9 million from $290.3 million in the comparable period last year.

Net income was $41.6 million, or $0.97 per diluted share, for the first six months of 2011 compared to $35.2 million or $0.83 per diluted share in the first six months of 2010, adjusted for a three-for-two stock split payable to shareholders of record on May 20, 2011.

At the end of the second quarter, cash, cash equivalents and marketable securities totaled $132.2 million.

Arvind Dharia, Chief Financial Officer, commented, "Our strong financial performance and prudent capital management has enabled us to make strategic investments while maintaining a strong balance sheet.”

Company Outlook

For fiscal 2011, the Company now expects net sales to increase 47 – 49% compared to 2010. Diluted EPS is now expected to be in the range of $2.15 – $2.20, compared to previous guidance of diluted EPS in the range of $2.03 – $2.10.

Conference Call Information

As previously announced, interested stockholders are invited to listen to the second quarter earnings conference call scheduled for today, Tuesday, August 2, 2011, 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.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. Additionally, a replay of the call can be accessed by dialing 877-870-5176, passcode 4439336, and will be available until September 2, 2011.

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 owned brands including Steve Madden, Steven by Steve Madden, Madden Girl, Stevies, Betsey Johnson, Betseyville, Report, Report Signature, R2 by Report and Big Buddha, the Company is the licensee of various brands, including Olsenboye for footwear, handbags and belts, Elizabeth and James, Superga, l.e.i. and GLO for footwear and Daisy Fuentes for handbags. The Company also designs and sources products under private label brand names for various retailers. The Company's wholesale distribution includes department stores, specialty stores, luxury retailers, national chains and mass merchants. The Company also operates 83 retail stores (including the Company's online store). The Company licenses certain of its brands to third parties for the marketing and sale of certain products, including for ready-to-wear, outerwear, intimate apparel, eyewear, hosiery, jewelry, fragrance and bedding and bath products.

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 forward-looking statements and the projections upon which the forward-looking statements are based. Factors that 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 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 STATEMENTS OF OPERATIONS DATA
(Unaudited)
(In thousands, except per share amounts)
 
Three months ended Six Months Ended
Jun 30, 2011 Jun 30, 2010 June 30, 2011 June 30,2010
 
Net sales $ 209,152 $ 158,664 $ 374,907 $ 290,272
Cost of sales   125,057   89,815   221,680   161,486
Gross profit 84,095 68,849 153,227 128,786
Commission and licensing fee income, net 4,432 5,229 8,999 11,413
Operating expenses   51,339   42,025   97,583   83,287
Income from operations 37,188 32,053 64,643 56,912
Interest and other income, net   1,656   942   3,173   1,726
Income before provision for income taxes 38,844 32,995 67,816 58,638
Provision for income taxes   15,149   13,196   26,269   23,454
Net income 23,695 19,799 41,547 35,184
Net loss attributable to noncontrolling interest   89   -   89   -
Net income attributable to Steven Madden, Ltd $ 23,784 $ 19,799 $ 41,636 $ 35,184
 
 
Basic income per share $ 0.56 $ 0.48 $ 0.99 $ 0.85
Diluted income per share $ 0.55 $ 0.47 $ 0.97 $ 0.83
 
Weighted average common shares
outstanding - Basic   42,156   41,442   42,053   41,313
Weighted average common shares
outstanding - Diluted   43,259   42,455   43,025   42,344
       
 

STEVEN MADDEN, LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
 
 
Jun 30, 2011 Dec 31, 2010 Jun 30, 2010
(Unaudited) (Unaudited)
 
Cash and cash equivalents $ 31,261 $ 66,151 $ 42,807
Marketable securities (current & non current) 100,937 127,606 121,155
Receivables, net 160,606 70,948 85,087
Inventories 67,723 39,557 44,466
Other current assets 19,285 20,122 22,525
Property and equipment, net 25,896 20,791 21,297
Goodwill and intangibles, net 172,364 81,275 51,444
Other assets   18,205     21,246   12,573
Total assets $ 596,277   $ 447,696 $ 401,354
 
Accounts payable $ 96,208 $ 37,089 $ 44,309
Contingent payment liability - current portion 5,899 - -
Other current liabilities 39,203 34,342 31,070
Contingent payment liability 36,904 12,372 12,000
Other long term liabilities 5,915 6,595 6,804
Total Steven Madden, Ltd stockholders' equity 412,237 357,298 307,171
Noncontrolling interest   (89 )   -   -
Total liabilities and stockholders' equity $ 596,277   $ 447,696 $ 401,354
       
 

STEVEN MADDEN, LTD AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA
(Unaudited)
(In thousands)
 
Six months ended
Jun 30, 2011 Jun 30, 2010
 
 
Net cash provided by operating activities $ 21,894 $ 20,851
 

Investing Activities
Purchase of property and equipment (5,973 ) (1,232 )
Purchases / sales of marketable securities, net 27,097 (34,825 )
Acquisitions, net of cash acquired   (85,234 )   (11,119 )
Net cash used in investing activities (64,110 ) (47,176 )
 
Net cash provided (used) in financing activities 7,326 (134 )
   
Net decrease in cash and cash equivalents (34,890 ) (26,459 )
 
Cash and cash equivalents at the beginning of the period 66,151 69,266
   
Cash and cash equivalents at the end of the period $ 31,261   $ 42,807  

Copyright Business Wire 2010

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