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 fourth quarter and year ended December 31, 2010.

• Fourth quarter net sales increased 15.4% to $161.0 million.
• Wholesale sales increased 17.7% while retail sales rose 10.1%, with comparable store sales up 14.1% for the fourth quarter.
• Operating margin was 17.0% of sales in the fourth quarter of 2010, compared with operating margin of 15.0% in the same period of 2009.
• Fourth quarter net income increased 30.0% to $17.6 million, or $0.62 per diluted share, compared to $13.6 million, or $0.49 per diluted share, in the prior year's fourth quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "The fourth quarter marked a positive conclusion to an exciting and impressive year for our Company. Steve and his design team continued to deliver inspired, trend-right merchandise, enabling us to record double-digit sales growth in both our wholesale and retail divisions despite the tough comparisons from a year ago. The strong sales growth, combined with increased licensing royalty income and careful management of expenses, led to a 30% increase in net income for the quarter. As we look ahead, we will remain focused on maintaining momentum in our core business while continuing to diversify our business by developing our newer brands, expanding our international footprint and growing our accessories and licensing businesses.”

Fourth Quarter 2010 Results

Fourth quarter net sales were $161.0 million compared to $139.5 million reported in the comparable period of 2009. Net sales from the wholesale business were $115.8 million compared to $98.4 million in the fourth quarter of 2009, with particular strength in our international business as well as Madden Girl. New businesses, including Madden, Material Girl and Big Buddha, also contributed to the growth, as did the transition of two of the Company's mass merchant customers from a buying agency model to a wholesale model. Retail net sales grew 10.2% to $45.3 million compared to $41.1 million in the fourth quarter of the prior year despite a smaller store base. Same store sales for the fourth quarter of 2010 increased 14.1% following a 7.0% increase in last year’s fourth quarter.

Gross margin was 43.2% in the fourth quarter of 2010, compared to 44.1% in the same period last year. Gross margin in the wholesale business was 35.7% as compared to 37.9% in the prior year's fourth quarter, due primarily to (i) the inclusion of mass merchant revenue in the net sales line; (ii) an increased mix of international sales; and (iii) lower margin in the Steven division. Retail gross margin increased to 62.5% from 58.7% in the comparable period of the prior year, benefitting from increased full-price selling and reduced discounting as compared to the fourth quarter of 2009.

Operating expenses as a percent of sales for the fourth quarter of 2010 were 29.1% versus 31.8% in the same period of the prior year, due to leverage on increased sales.

Operating income for the fourth quarter of 2010 increased to $27.3 million, or 17.0% of sales, compared with operating income of $21.0 million, or 15.0% of sales, in the same period of 2009.

Net income for the fourth quarter of 2010 increased 30.0% to $17.6 million, or $0.62 per diluted share, compared to $13.6 million, or $0.49 per diluted share, in the prior year's fourth quarter.

During the fourth quarter of 2010, the Company opened one full-price store and one outlet store.

Full Year 2010 Results

For the full year ended December 31, 2010, net sales increased 26.2% to $635.4 million compared to $503.6 million in fiscal 2009.

Net income totaled $75.7 million, or $2.68 per diluted share, for the year ended December 31, 2010, compared to $50.1 million, or $1.82 per diluted share, in fiscal 2009.

The Company opened 3 stores and closed 8 underperforming stores during 2010, ending the year with 84 retail locations, including the Internet store.

At the end of the year, cash, cash equivalents and marketable securities totaled $193.8 million.

Arvind Dharia, Chief Financial Officer, commented, "We are pleased to have ended 2010 with a healthy balance sheet which provides us with a strong financial foundation to support our future growth initiatives."

Company Outlook

For the year ending December 31, 2011, the Company expects net sales to increase 20% - 22%. Excluding the transition of two businesses – a mass merchant private label business and the Olsenboye footwear business – from the commission income line to the net sales line on the income statement, the Company expects net sales to increase 10% - 12% during the year ending December 31, 2011. Diluted EPS is expected to be in the range of $3.00 to $3.10. Capital expenditures are planned to be approximately $10 million in 2011 as compared to $3.4 million in 2010. The Company plans to open 6 to 8 stores and to close between 5 and 7 locations in 2011.

Conference Call Information

As previously announced, interested stockholders are invited to listen to the fourth quarter earnings conference call scheduled for today, Tuesday, February 22, 2011, 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 6951979, and will be available until March 22, 2011.

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 81 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 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 AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS DATA

(In thousands, except per share amounts)                     Quarter Ended Year Ended Dec 31, 2010 Dec 31, 2009 Dec 31, 2010 Dec 31, 2009

(Unaudited)

(Unaudited)

(Unaudited)

  Net sales $ 161,028 $ 139,511 $ 635,418 $ 503,550 Cost of sales 91,468 78,048 359,564 287,361 Gross profit 69,560 61,463 275,854 216,189

Commission and licensing fee income, net

4,629 3,935 22,629 19,928 Operating expenses 46,865 44,420 176,859 157,149 Income from operations 27,324 20,978 121,624 78,968 Interest and other income, net 1,306 569 4,233 1,821 Income before provision for income taxes 28,630 21,547 125,857 80,789 Provision for income taxes 11,005 7,992 50,132 30,682 Net income $ 17,625 $ 13,555 $ 75,725 $ 50,107     Basic income per share $ 0.63 $ 0.50 $ 2.74 $ 1.85 Diluted income per share $ 0.62 $ 0.49 $ 2.68 $ 1.82   Weighted average common shares outstanding - Basic 27,822 27,257 27,651 27,068 Weighted average common shares outstanding - Diluted 28,468 27,858 28,295 27,485    

STEVEN MADDEN, LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET DATA

(In thousands)                 As of Dec 31, 2010 Dec 31, 2009

(Unaudited)

  Cash and cash equivalents $ 66,151 $ 69,266

Marketable securities (current & non current)

127,606 85,684 Receivables, net 70,948 58,605 Inventories 39,557 30,453 Other Current Assets 20,122 15,074 Property and equipment, net 20,791 23,793 Goodwill and intangible, net 81,275 31,029 Other assets 21,246 12,955 Total Assets $ 447,696 $ 326,859   Accounts payable $ 37,089 $ 24,544 Other current liabilities 34,342 27,818 Contingent payment liability 12,372 - Long term liabilities 6,595 6,710 Stockholders' equity 357,298 267,787 Total liabilities and stockholders' equity $ 447,696 $ 326,859    

STEVEN MADDEN, LTD AND SUBSIDIARIES

CONSOLIDATED CASH FLOW DATA

(In thousands)                 Year Ended Dec 31, 2010 Dec 31, 2009

(Unaudited)

  Net cash provided by operating activities $ 86,873 $ 64,342  

Investing Activities

Purchase of property and equipment (3,424 ) (3,399 )

Purchase / sales of marketable securities (net)

(42,571 ) (49,722 ) Advance payment on contingent liability (1,628 )

-

Purchase of notes receivable (7,004 )

-

Acquisitions, net of cash acquired   (40,602 )   (5,776 ) Net cash used in investing activities (95,229 ) (58,897 )  

Net cash provided (used) in financing activities

5,241 (25,767 )   Net decrease in cash and cash equivalents (3,115 ) (20,322 )   Cash and cash equivalents at the beginning of the year 69,266 89,588   Cash and cash equivalents at the end of the period $ 66,151 $ 69,266