SHOO Steven Madden Ltd

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 first quarter ended March 31, 2010.

• First quarter net sales increased 22.5% to $131.6 million.
• Retail comparable store sales increased 13.6% for the first quarter.
• Operating margin reached 18.9% of sales in the first quarter 2010, compared with operating margin of 9.6% in the same period of 2009.
• First quarter net income increased 134% to $15.4 million, or $0.55 per diluted share, compared to $6.6 million, or $0.24 per diluted share adjusted for stock split, in the prior year's first quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "We are extremely pleased with the continued momentum in our core business as well as with the initial success of our recent initiatives. Steve and the design team continue to capitalize on the latest trends with fresh, fashion-forward product, leading to strong demand for our existing brands. At the same time, our new business ventures – including Big Buddha, Elizabeth and James, Olsenboye and Madden – are off to a great start and are expected to contribute nicely to our sales and earnings growth in 2010 and beyond.”

First Quarter 2010 Results

First quarter net sales were $131.6 million compared to $107.4 million reported in the comparable period of 2009. Net sales from the wholesale business were $103.1 million compared to $81.3 million in the first quarter of 2009, driven by strong gains in the Company’s existing wholesale footwear divisions as well as contributions from our new license for the Elizabeth and James brand and our recent acquisitions, Madden Zone and Big Buddha. Retail net sales grew 9.1% to $28.5 million compared to $26.1 million in the first quarter of the prior year despite a smaller store base. Same store sales increased 13.6%.

Gross margin improved to 45.5% from 40.5%, reflecting margin improvement in both the wholesale and retail divisions. Gross margin in the wholesale business increased to 42.5% from 38.1% in the prior year's first quarter due primarily to higher initial mark-ups and more full-price selling. Retail gross margin increased to 56.7% from 47.8% in the comparable period of the prior year as a result of less discounting and higher initial mark-ups.

Operating expenses as a percent of sales were 31.4% compared to 33.6% in the same period of the prior year, due to leverage on increased sales.

Operating income for the first quarter increased to $24.9 million, or 18.9% of net sales, compared with operating income of $10.3 million, or 9.6% of net sales, in the same period of 2009.

Net income increased 134% to $15.4 million, or $0.55 per diluted share, compared to $6.6 million, or $0.24 per diluted share adjusted for the 3-for-2 stock split, in the prior year's first quarter.

During the first quarter of 2010, the Company closed five stores and opened one, ending the quarter with 85 retail locations, including the Internet store.

At the end of the first quarter, cash, cash equivalents and marketable securities totaled $157.4 million.

Arvind Dharia, Chief Financial Officer, commented, "We maintained a healthy balance sheet during the first quarter of 2010 supported by strong operating cash flow and prudent capital management.”

Company Outlook

For fiscal 2010, the Company now expects sales to increase 17% – 19%. Diluted EPS is now expected to be in the range of $2.30 – $2.40, compared to previous guidance of diluted EPS in the range of $2.07 – $2.20 on an adjusted basis to address our recently effected 3-for-2 stock split in the form of a stock dividend on the Company’s outstanding common stock.

Conference Call Information

As previously announced, interested stockholders are invited to listen to the first quarter earnings conference call scheduled for today, Tuesday, May 4, 2010, 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 888-203-1112, passcode 7481052, and will be available until June 4, 2010.

About Steve Madden

Steve Madden designs, sources, markets, and sells fashion-forward footwear and accessories for women, men and children under both owned and licensed brands.

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 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.

CONSOLIDATED STATEMENT OF OPERATIONS DATA

 

    (In thousands, except per share data)   Quarter Ended Mar 31 2010 Mar 31 2009 (Unaudited) (Unaudited) Net sales $ 131,608 $ 107,429 Cost of sales   71,671   63,942 Gross profit 59,937 43,487 Commission and licensing fee income 6,184 2,905 Operating expenses   41,262   36,088 Income from operations 24,859 10,304 Interest and other income, net   784   396 Income before provision for income taxes 25,643 10,700 Provision for income taxes   10,258   4,123 Net income $ 15,385 $ 6,577  

 

Post-split

Basic income per share $ 0.56 $ 0.25 Diluted income per share $ 0.55 $ 0.24   Weighted average common shares outstanding - Basic       27,455   26,834 Weighted average common shares outstanding - Diluted       28,155   26,958  

 

Pre-split

Basic income per share $ 0.84 $ 0.37 Diluted income per share $ 0.82 $ 0.37   Weighted average common shares outstanding - Basic       18,304   17,889 Weighted average common shares outstanding - Diluted       18,770   17,972

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

      (In thousands)   Mar 31 2010 Dec 31, 2009

Mar 31 2009

(Unaudited)   (Unaudited)   Cash and cash equivalents $ 69,221 $ 69,266 $ 63,235 Marketable securities (current and non-current) 88,172 85,684 29,395 Total current assets 198,341 191,369 167,081 Total assets 355,970 326,859 254,145 Total current liabilities 51,186 52,362 34,061 Total liabilities 69,901 59,072 40,045 Total stockholders' equity 286,069 267,787 214,100