SHOO Steven Madden Ltd

- EPS Increased 51.4% to $0.39 - LONG ISLAND CITY, N.Y., Nov. 2 /PRNewswire-FirstCall/ -- Steven Madden, Ltd. (NASDAQ:SHOO), a leading designer, wholesaler and marketer of fashion footwear for women, men and children, today announced financial results for the third quarter and nine months ended September 30, 2005. In line with recently updated expectations, third quarter net sales increased 12.9% to $100.1 million compared with $88.6 million reported in the same period last year. The Company's overall gross margin increased 70 basis points to 36.2% from 35.5% in the comparable quarter last year. This reflects margin improvement in nearly all wholesale divisions that was partially offset by a planned margin decline in the retail division. Operating expenses as a percent of sales also improved to 29.4% versus 30.2% in the same period of last year. Taken together, this resulted in a 53.4% increase in operating income to $9.0 million compared with $5.9 million in the same period last year. Net income increased 49.6% to $5.5 million, or $0.39 per diluted share, versus $3.7 million, or $0.26 per diluted share, in the prior year period. Revenues from the wholesale division, comprised of the Company's six primary brands, Steve Madden Womens, Steve Madden Mens, Stevies, l.e.i., Steven, and Candie's, increased 9.5% to $71.0 million for the quarter compared to $64.9 million reported in the year-ago period. During the quarter, retail revenues increased 22.3% to $29.1 million versus $23.8 million in the comparable period. Same-store sales were up 12.3% for the quarter. The Company opened four new stores and closed one permanent outlet store, ending the quarter with 98 Company-owned retail locations, including the Internet store. The Company remains on track to open a total of 12 stores during fiscal 2005. For the first nine months of 2005, net sales increased 12.1% to $284.4 million compared to $253.6 million in the same period last year. Net income was $11.8 million, or $0.85 per diluted share, versus $11.9 million, or $0.83 per diluted share, in the comparable period last year. The Company separately announced today that its Board of Directors has authorized a special one-time dividend of $1.00 per outstanding share of common stock that will be paid on November 23, 2005. "Our recent performance highlights significant progress on initiatives to increase sales and improve margins and profitability," stated Jamieson Karson, Chairman and Chief Executive Officer. "Solid top line growth in both the wholesale and retail divisions reflects the broad-based strength in our business and our brand. These factors, coupled with our efforts to improve operating efficiencies and inventory management during the quarter, enabled us to deliver a significant increase in our bottom line versus the prior year." Arvind Dharia, Chief Financial Officer, said, "We continue to be very pleased with the strong financial foundation that is in place. Our solid balance sheet boasts $99.6 million in cash, cash equivalents, and investment securities, no short- or long-term debt, and $180.3 million in total stockholders' equity." With respect to the current outlook, the Company anticipates annual 2005 net sales will increase in the low double digits over 2004, based on strong year-to-date performance across many of the Company's divisions and the Company's expectations for the remainder of the year. The Company also expects to achieve continued improvements in gross margin reflecting better inventory management and lower inventory markdowns. Taking these factors into account, the Company currently anticipates that full year earnings will be between $1.20 and $1.22 per diluted share. Mr. Karson commented, "As we move into the final quarter of fiscal 2005, we are confident that our business is in an optimal position to achieve even further operating improvements and overall growth. Further, as we announced in a separate press release today, our Board of Directors has approved a special one-time dividend which highlights the strength of our operations, our solid financial foundation, and the fact that we remain keenly focused on delivering enhanced value to our shareholders." The Company also announced that Richard Olicker, President, will be leaving the Company in conjunction with the expiration of his employment agreement on December 31, 2005. The Company has initiated a search to fill the role of President. However, as a result of recent hires and internal promotions there is significant breadth and depth in experience at the senior management level. The current team is well positioned to absorb Mr. Olicker's responsibilities in the near term and cover all management functions of the business until a permanent replacement is named. In particular, recently appointed Chief Operating Officer Awadhesh Sinha will be responsible for operations across the Company's various divisions and for generating additional efficiencies and enhancements to the business model. Additionally, Amelia Newton, recently named Executive Vice President of Wholesale Sales, will continue to be responsible for managing the Company's wholesale customer base as well as overseeing key accounts to improve profitability. Mr. Karson concluded, "Richard has been a valued collaborator and business partner during his five-year tenure at Steven Madden, Ltd. His knowledge and management skills have added significantly to the success of our Company and we thank him for his contribution during a variety of transitions in the business and through many industry challenges. We wish him great success in his future endeavors. "We will now begin the search for a new President, however, we are fortunate to have a strong and experienced management team securely in place that will continue to support, strengthen, and grow the business. As our recent performance indicates, we are collectively achieving great success and will remain focused on improving the profitability of our various divisions, expanding and diversifying the business, building the Steven Madden, Ltd. brand, and positioning the Company for long-term success." Conference Call Information Interested shareholders are invited to listen to the third quarter earnings conference call scheduled for today, Wednesday, November 2, 2005 at 10:00 a.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed by logging onto: http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=113367&eventID=1146022 An online archive of the broadcast will be available within one hour of the conclusion of the call and will be accessible until November 16, 2005. Additionally, a replay of the call can be accessed by dialing 877-519-4471, pin number 6663118 and will be available through November 4, 2005. Steven Madden, Ltd. designs and markets fashion-forward footwear for women, men and children. The shoes are sold through Steve Madden retail stores, department stores, apparel and footwear specialty stores, and on-line at http://www.stevemadden.com/. The Company has several licenses for the Steve Madden brand, including handbags, eyewear, hosiery, and belts, and owns and operates 95 retail stores under its Steve Madden brand and two retail stores under its Steven brand. The Company is also the licensee for l.e.i. Footwear, Candie's Footwear and UNIONBAY Men's Footwear. Statements in this press release that are not statements of historical or current fact 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, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates" or "plans" to be uncertain and forward-looking. The forward looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission. CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended Sept 30, Sept 30, Sept 30, Sept 30, 2005 2004 2005 2004 Net Sales $100,067 $88,610 $284,361 $253,612 Cost of sales 63,836 57,160 181,302 158,178 Gross profit 36,231 31,450 103,059 95,434 Commission and licensing fee income - net 2,217 1,175 5,241 3,224 Operating expenses 29,447 26,758 88,902 79,635 Impairment of cost in excess of fair value of net assets acquired - - (519) - Income from operations 9,001 5,867 18,879 19,023 Interest and other income, net 504 488 1,398 1,497 Income before provision for income tax 9,505 6,355 20,277 20,520 Provision for income tax 3,992 2,669 8,516 8,618 Net income $5,513 $3,686 $11,761 $11,902 Basic income per share $0.41 $0.28 $0.89 $0.90 Diluted income per share $0.39 $0.26 $0.85 $0.83 Weighted average common shares outstanding - Basic 13,503 13,177 13,272 13,243 Weighted average common shares outstanding - Diluted 14,045 14,220 13,776 14,328 BALANCE SHEET HIGHLIGHTS (in thousands) Sept 30, 2005 Dec 31, 2004 Sept 30, 2004 Consolidated Consolidated Consolidated (Unaudited) (Unaudited) Cash and cash equivalents $55,708 $30,853 $18,128 Investment securities 43,919 49,124 50,408 Total current assets 146,558 121,094 112,445 Total assets 203,868 186,430 181,154 Total current liabilities 21,204 19,677 12,264 Total stockholder's equity $180,291 $164,665 $166,749 DATASOURCE: Steven Madden, Ltd. CONTACT: Ed Rosenfeld, Vice President of Strategic Planning-Finance of Steven Madden, Ltd., +1-718-446-1800; or Investor Relations, Cara O'Brien, or Lauren Puffer, or Media, Melissa Merrill, all of Financial Dynamics, +1-212-850-5600, for Steven Madden, Ltd. Web site: http://www.stevemadden.com/

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