- Net sales increased 10.6% to $394.8 million compared to $356.9 million in the same period of 2012.
- Retail comparable store sales decreased 3.5%.
- Gross margin declined to 35.4% as compared to 36.8% in the same period last year due primarily to a sales mix shift to the lower-margin private label footwear business.
- Consolidated operating expenses as a percentage of sales were 19.4% compared to 20.6% of sales in the same period of 2012 due to strong cost control and operating expense leverage on growing sales.
- Operating income totaled $68.1 million, or 17.2% of net sales, compared with operating income of $56.4 million, or 15.8% of net sales, in the same period of 2012. Operating income in the third quarter of 2012 included a $5.1 million impairment charge and a $0.9 million charge for bad debt, both related to the bankruptcy of Bakers Footwear Group. Excluding these charges, operating income for the third quarter of 2012 was $62.4 million, or 17.5% of net sales.
- Net income increased 16.1% to $44.0 million, or $0.66 per diluted share, compared to $37.9 million, or $0.57 per diluted share in the prior year's third quarter, adjusted for the three-for-two stock split effective October 2, 2013. Net income for the third quarter of 2012 included the aforementioned charges for impairment and bad debt related to the bankruptcy of Bakers Footwear Group. On an after-tax basis, these charge negatively impacted net income by $3.7 million, or $0.06 per diluted share.
Third Quarter 2013 Segment ResultsNet sales from the wholesale business grew 11.0% to $345.9 million in the third quarter compared to $311.5 million in the third quarter of 2012, with particular strength in the Steve Madden Women’s, Steve Madden Men’s, Madden Girl and International divisions, in addition to outstanding growth in the private label footwear business. Gross margin in the wholesale business was 31.9% compared to 33.3% in last year’s third quarter, due primarily to a sales mix shift toward the lower-margin private label footwear business. Retail net sales rose 7.8% to $48.9 million compared to $45.3 million in the third quarter of the prior year driven by the net opening of 18 new stores since the end of the third quarter last year. Same store sales for the third quarter of 2013 decreased 3.5%. Increased promotional activity resulted in retail gross margin of 60.2% in the third quarter of 2013 compared to 60.7% in the third quarter of 2012. The Company opened one Steve Madden full-price store and four Steve Madden outlet stores and closed its Report store in the third quarter. The Company ended the quarter with 117 company-operated retail locations, including 16 outlets and three Internet stores. Balance Sheet and Cash Flow During the quarter, the Company repurchased 1,042,644 shares of the Company’s common stock for $36.7 million. At the end of the third quarter, cash, cash equivalents, and current and non-current marketable securities totaled $234.7 million. Company Outlook The Company reaffirms fiscal year 2013 guidance that net sales are expected to increase 6 – 8% from 2012, and diluted EPS is expected to be in the range of $1.97 – $2.03, adjusted for the three-for-two stock split. Conference Call Information As previously announced, interested stockholders are invited to listen to the third quarter earnings conference call scheduled for today, Thursday, October 31, 2013, 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 1-877-870-5176 (U.S.) and 1-858-384-5517 (international), passcode 2288206, and will be available until November 30, 2013. 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, Freebird by Steven, Stevies, Betsey Johnson, Betseyville, Report Signature, Report, Big Buddha, Wild Pair, Cejon and Mad Love, the Company is the licensee of various brands, including Olsenboye for footwear, handbags and belts and Elizabeth and James, Superga, l.e.i. and GLO for footwear. The Company also designs and sources products under private label brand names for various retailers. The Company's wholesale distribution includes better department stores, major department stores, mid-tier department stores, specialty stores, luxury retailers, value priced retailers, national chains, mass merchants and catalog retailers. The Company also operates 117 retail stores (including the Company's three online stores). 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, swimwear, eyewear, hosiery, jewelry, watches, fragrance, luggage and bedding and bath products.
Safe HarborThis 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA (In thousands, except per share amounts) (Unaudited)
|Three Months Ended||Nine Months Ended|
|September 30, 2013||September 30, 2012||September 30, 2013||September 30, 2012|
|Cost of sales||255,088||225,668||618,463||579,983|
|Commission and licensing fee income, net||4,937||3,875||13,003||12,600|
|Impairment of note receivable and provision for litigation||-||5,144||-||9,454|
|Income from operations||68,097||56,373||150,146||129,226|
|Interest and other income, net||1,308||2,138||3,213||4,271|
|Income before provision for income taxes||69,405||58,511||153,359||133,497|
|Provision for income taxes||25,323||20,698||56,242||46,869|
|Net income (loss) attributable to noncontrolling interest||90||(83||)||769||(35||)|
|Net income attributable to Steven Madden, Ltd.||$||43,992||$||37,896||$||96,348||$||86,663|
|Basic income per share *||$||0.68||$||0.59||$||1.48||$||1.35|
|Diluted income per share *||$||0.66||$||0.57||$||1.44||$||1.31|
|Basic weighted average common shares outstanding*||64,450||64,697||64,926||64,404|
|Diluted weighted average common shares outstanding*||66,859||66,356||67,062||66,032|
|*prior year share and per share amounts have been adjusted to reflect the three-for-two stock split|
|September 30, 2013||December 31, 2012||September 30, 2012|
|Cash and cash equivalents||$||122,426||$||168,777||$||64,927|
|Marketable securities (current & non current)||112,279||97,487||89,428|
|Accounts receivables, net||249,706||167,701||245,072|
|Other current assets||31,962||24,808||30,871|
|Property and equipment, net||54,197||45,285||43,497|
|Goodwill and intangibles, net||228,337||227,327||228,059|
|Contingent payment liability (current & non current)||39,699||41,960||57,751|
|Other current liabilities||55,056||39,500||44,701|
|Other long term liabilities||16,838||12,752||9,777|
|Total Steven Madden, Ltd. stockholders' equity||667,627||626,580||586,507|
|Total liabilities and stockholders' equity||$||907,141||$||804,039||$||795,308|
|Nine Months Ended|
|September 30, 2013||September 30, 2012|
|Net cash provided by operating activities||$||57,670||$||14,758|
|Purchases of property and equipment||(16,415||)||(15,617||)|
|Purchases / sales of marketable securities, net||(20,402||)||(8,805||)|
|Purchase of notes receivable||-||(3,085||)|
|Payment of contingent liability||(6,952||)||(7,076||)|
|Acquisition, net of cash acquired||-||(29,367||)|
|Net cash used in investing activities||(43,769||)||(63,950||)|
|Common stock share repurchases for treasury||(69,465||)||-|
|Proceeds from exercise of stock options||4,935||6,991|
|Tax benefit from the exercise of stock options||4,278||4,298|
|Net cash (used for)/provided by financing activities||(60,252||)||11,289|
|Net decrease in cash and cash equivalents||(46,351||)||(37,903||)|
|Cash and cash equivalents - beginning of period||168,777||102,830|
|Cash and cash equivalents - end of period||$||122,426||$||64,927|