Steve Madden Announces Third Quarter 2013 Results

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 third quarter ended September 30, 2013.

For the Third Quarter 2013:
  • 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.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We delivered a solid quarter in a difficult retail environment. Our wholesale footwear business exhibited broad-based strength, with 11% growth in branded footwear and 38% growth in private label footwear. Our accessories business was more challenging, with a sales decline due primarily to weakness in the cold weather accessories and belt categories. Our retail business was also softer than expected, due in large part to weak retail traffic trends. Despite these challenges, we believe that this quarter demonstrated that our flagship Steve Madden brand is stronger than ever. We recorded double-digit percentage gains in our Steve Madden wholesale business in both footwear and accessories, both domestically and abroad, as well as in our Steve Madden Men’s and Madden Girl wholesale footwear businesses. With Steve and his design team continuing to create on-trend merchandise assortments and the core brand gaining market share, we are confident we can continue to advance our growth objectives.”

Third Quarter 2013 Segment Results

Net 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 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, 2013
 

September 30, 2012

September 30, 2013
 

September 30, 2012
 
Net sales

$

394,791

 
$ 356,883

$

971,341

 
$ 911,545
Cost of sales   255,088     225,668     618,463     579,983  
Gross profit 139,703 131,215 352,878 331,562
Commission and licensing fee income, net 4,937 3,875 13,003 12,600
Operating expenses 76,543 73,573 215,735 205,482
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 44,082 37,813 97,117 86,628
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
 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)
   

As of

September 30, 2013
 

December 31, 2012
 

September 30, 2012
(Unaudited) (Unaudited)
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
Inventories 99,668 63,683 84,044
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
Other assets   8,566     8,971     9,410  
Total assets $ 907,141   $ 804,039   $ 795,308  
 
Accounts payable $ 127,800 $ 83,427 $ 96,725
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
Noncontrolling interest   121     (180 )   (153 )
Total liabilities and stockholders' equity $ 907,141   $ 804,039   $ 795,308  
 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

(Unaudited)

          Nine Months Ended

September 30, 2013
   

September 30, 2012
 
 
Net cash provided by operating activities $ 57,670 $ 14,758
 

Investing Activities
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 )
 

Financing Activities
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  

Copyright Business Wire 2010

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