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 third quarter ended September 30, 2010.

• Third quarter net sales increased 31.4% to $184.1 million.
• Operating margin was 20.3% of sales in the third quarter of 2010, compared with operating margin of 20.2% in the same period of 2009.
• Third quarter net income increased 28.5% to $22.9 million, or $0.81 per diluted share, compared to $17.8 million, or $0.64 per diluted share, in the prior year's third quarter.

"We are pleased to once again report the highest quarterly sales and earnings in our Company’s history. Our results for the third quarter of 2010 were driven by the ongoing strength of our core business, continued momentum in our international segment and meaningful contributions from a number of our newer brands including Big Buddha and Madden,” commented Edward Rosenfeld, Chairman and Chief Executive Officer. “In addition, our recently acquired Betsey Johnson brand offers tremendous growth potential and is a great complement to our current brand portfolio. Looking ahead, we are excited about the initiatives we have in place and feel confident that we can continue to drive top and bottom line growth.”

Third Quarter 2010 Results

Third quarter net sales were $184.1 million compared to $140.1 million reported in the comparable period of 2009. Net sales from the wholesale business were $153.1 million compared to $112.0 million in the third quarter of 2009, a 36.7% increase driven by strong gains in Madden Girl, Steve Madden Men’s, and the international business, as well as by the sales contributions from Big Buddha and Madden. Sales also benefited from the transition of one of the Company's mass merchant customers from a buying agency model to a selling agency model. Retail net sales grew 10.2% to $31.1 million from $28.2 million in the third quarter of the prior year. Sales were driven by an increase in same store sales of 15.7%, partially offset by six net store closings since the third quarter of 2009.

Gross margin was 42.1% in the third quarter as compared to 44.0% in the comparable period of 2009, reflecting a decline in the wholesale segment gross margin partially offset by margin improvement in the retail segment. Gross margin in the wholesale business decreased to 38.8% in the third quarter from 41.2% in the prior year's third quarter driven by (i) mix shifts, including the growth of the international business and the inclusion of the results of the Company’s footwear business with one its mass merchant customers in the sales line and (ii) an increase in off-price sales. Retail gross margin increased to 58.1% for the third quarter from 55.2% in the comparable period of the prior year as a result of strong full-price selling and reduced discounting.

Operating expenses as a percent of sales declined to 25.4% for the third quarter compared to 27.9% in the same period of the prior year, due to leverage on higher sales.

Operating income for the third quarter increased to $37.4 million, or 20.3% of net sales, compared with operating income of $28.3 million, or 20.2% of net sales, in the same period of 2009.

Third quarter net income increased 28.5% to $22.9 million, or $0.81 per diluted share, compared to $17.8 million, or $0.64 per diluted share in the prior year's third quarter.

During the third quarter of 2010, the Company closed 2 stores, ending the quarter with 82 retail locations, including the Internet store.

Nine-Month 2010 Results

For the first nine months of 2010, net sales were $474.4 million compared to $364.0 million in the comparable period last year.

Operating income for the first nine months increased 62.6% to $94.3 million, or 19.9% of net sales, compared with operating income of $58.0 million, or 15.9% of net sales, in the same period of 2009.

Net income was $58.1 million, or $2.06 per diluted share, for the first nine months of 2010, compared to $36.6 million, or $1.34 per diluted share, in the first nine months of 2009.

At the end of the third quarter, cash, cash equivalents and marketable securities totaled $152.6 million.

Company Outlook

For fiscal 2010, the Company now expects net sales will increase 24% – 25% compared to fiscal 2009. Diluted EPS is expected to be in the range of $2.57 – $2.62. This compares to previous guidance of diluted EPS in the range of $2.45 – $2.55.

Conference Call Information

As previously announced, interested stockholders are invited to listen to the third quarter earnings conference call scheduled for today, Tuesday, November 2, 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 877-870-5176, passcode 6514987, and will be available until December 2, 2010.

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, Betsey Johnson, Betseyville and Big Buddha, the Company is the licensee of various brands, including Olsenboye for footwear, handbags and belts, Elizabeth and James, 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 82 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, cold weather accessories, 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.  

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA

 

(In thousands, except per share amounts)

  Three Months Ended Nine Months Ended Sep 30, 2010 Sep 30, 2009 Sep 30, 2010 Sep 30, 2009

(Unaudited)

(Unaudited)

Net sales $ 184,118 $ 140,138 $ 474,390 $ 364,039 Cost of sales   106,610   78,462   268,096   209,313 Gross profit 77,508 61,676 206,294 154,726 Commission and licensing fee income 6,587 5,726 18,000 15,993 Operating expenses   46,707   39,088   129,994   112,729 Income from operations 37,388 28,314 94,300 57,990 Interest and other income, net   1,201   488   2,927   1,252 Income before provision for income taxes 38,589 28,802 97,227 59,242 Provision for income taxes   15,673   10,971   39,127   22,690 Net income $ 22,916 $ 17,831 $ 58,100 $ 36,552     Basic income per share $ 0.83 $ 0.66 $ 2.11 $ 1.35 Diluted income per share $ 0.81 $ 0.64 $ 2.06 $ 1.34  

 

             

Weighted average common shares outstanding - Basic

  27,680     27,152     27,593     27,003

 

             

Weighted average common shares outstanding - Diluted

  28,235     27,674     28,236     27,359    

STEVEN MADDEN LTD.

 

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

    (In thousands)  

Sep 30, 2010

Dec 31, 2009 Sep 30, 2009

(Unaudited)

(Unaudited)

  Cash and cash equivalents $ 29,045 $ 69,266 $ 47,622 Marketable securities (Current & non current) 123,574 85,684 78,069 Total current assets 209,003 191,369 182,550 Total assets 430,014 326,859 316,290 Total current liabilities 76,626 52,362 61,144 Total liabilities 95,697 59,072 66,392 Total stockholders' equity 334,317 267,787 249,898