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, 2019.
Amounts referred to as “Adjusted”
exclude the items that are described under the heading “Non-GAAP
Adjustments.”
For the First Quarter
2019:
- Net sales increased 5.6% to $410.9
million compared to $389.0 million in the same period of 2018.
- Gross margin was 38.2% compared to
36.2% in the same period last year, an increase of 200 basis
points.
- Operating expenses as a percentage
of net sales were 27.6% compared to 27.7% of net sales in the same
period of 2018. Adjusted operating expenses as a percentage of net
sales were 27.9% compared to 26.9% of net sales in the same period
of 2018.
- Income from operations totaled
$44.7 million, or 10.9% of net sales, compared to $36.6 million, or
9.4% of net sales, in the same period of 2018. Adjusted income from
operations was $45.1 million, or 11.0% of net sales, compared to
Adjusted income from operations of $39.6 million, or 10.2% of net
sales, in the same period of 2018.
- Net income attributable to Steven
Madden, Ltd. was $34.5 million, or $0.41 per diluted share,
compared to $28.7 million, or $0.33 per diluted share, in the prior
year’s first quarter. Adjusted net income attributable to Steven
Madden, Ltd. was $35.1 million, or $0.42 per diluted share,
compared to $31.0 million, or $0.36 per diluted share, in the prior
year’s first quarter.
Edward Rosenfeld, Chairman and Chief Executive
Officer, commented, “We are off to a strong start in 2019, with
first quarter results exceeding our expectations. Our flagship
Steve Madden brand was the highlight in the quarter with robust
increases in the wholesale footwear and accessories businesses as
well as outstanding performance on stevemadden.com. Given the
strong performance in the first quarter and the encouraging trends
we are seeing in the business, we are raising our net sales and
Adjusted EPS guidance for 2019. Looking ahead, we are confident
that, based on our strong brand portfolio, consistency in
delivering on-trend product and proven business model, we are
well-positioned to drive sustainable growth and shareholder value
over the long term.”
First Quarter 2019
Segment Results
Net sales for the wholesale business increased
5.1% to $348.1 million in the first quarter of 2019, driven by
strong growth in wholesale accessories. Wholesale footwear net
sales increased slightly, as strong growth in Steve Madden and the
addition of Anne Klein were mostly offset by not recognizing sales
to Payless ShoeSource in the current period. Gross margin in the
wholesale business increased to 34.5% compared to 32.6% in last
year’s first quarter, with gross margin improvement in wholesale
footwear partially offset by a decline in wholesale accessories due
to sales mix.
Retail net sales in the first quarter rose 8.6%
to $62.8 million compared to $57.9 million in the first quarter of
the prior year. Same store sales increased 6.3% in the quarter
driven by strong performance in the Company’s e-commerce business.
Retail gross margin rose to 58.5% in the first quarter of 2019, up
180 basis points compared to 56.7% in the first quarter of the
prior year due to improved gross margin in the Company’s e-commerce
business.
The Company ended the quarter with 225
company-operated retail locations, including seven internet stores,
as well as 33 company-operated concessions in international
markets.
The Company’s effective tax rate for the first
quarter of 2019 was 23.1% compared to 21.4% in the first quarter of
2018. On an Adjusted basis, the effective tax rate was 22.6%
compared to 21.7% in the first quarter of the prior year.
Balance Sheet and Cash Flow
During the first quarter of 2019, the Company
repurchased 525,491 shares of the Company’s common stock for
approximately $17.2 million, which includes shares acquired through
the net settlement of employee stock awards. On April 24, 2019, the
Board of Directors approved an increase in the Company's share
repurchase authorization of $124.0 million, bringing the total
authorization up to $200.0 million.
As of March 31, 2019, cash, cash
equivalents and current marketable securities totaled $221.6
million.
Quarterly Dividend
The Company’s Board of Directors approved a
quarterly cash dividend of $0.14 per share. The dividend will be
paid on June 28, 2019, to stockholders of record at the close of
business on June 18, 2019.
Updated Fiscal Year 2019
Outlook
The Company is raising its fiscal year 2019
guidance. For fiscal year 2019, the Company now expects net sales
will increase 5% to 7% over net sales in 2018 compared to the
previous guidance of a 4% to 6% increase over net sales in 2018.
The Company now expects diluted EPS for fiscal year 2019 will be in
the range of $1.76 to $1.84 compared to the prior range of $1.70 to
$1.78. The Company now expects Adjusted diluted EPS for fiscal year
2019 will be in the range of $1.78 to $1.86 compared to the prior
range of $1.75 to $1.83.
Non-GAAP Adjustments
Amounts referred to as “Adjusted” exclude the
items below.
For the first quarter 2019:
- $1.6 million pre-tax ($1.4 million
after-tax) bad debt expense associated with the Payless ShoeSource
bankruptcy, included in licensing and commission income, net.
- $0.7 million pre-tax ($0.6 million
after-tax) expense in connection with a provision for early lease
termination charges, included in operating expenses.
- $1.9 million pre-tax ($1.4 million
after-tax) net benefit associated with the change in a contingent
liability and the acceleration of amortization related to the
termination of the Kate Spade license agreement as of December 31,
2019, included in operating expenses.
For the first quarter 2018:
- $2.8 million pre-tax ($2.1 million
after-tax) expense in connection with a provision for legal
charges, included in operating expenses.
- $0.3 million pre-tax ($0.2 million
after-tax) expense in connection with the integration of the
Schwartz & Benjamin acquisition and the related restructuring,
included in operating expenses.
For the fiscal year 2019:
- $2.0 million pre-tax ($1.6 million
after-tax) in expense expected to be incurred in connection with
early lease termination charges.
- $1.6 million pre-tax ($1.4 million
after-tax) bad debt expense associated with the Payless ShoeSource
bankruptcy.
- $0.6 million pre-tax ($0.4 million
after-tax) in expense expected to be incurred in connection with an
office consolidation.
- $1.9 million pre-tax ($1.4 million
after-tax) net benefit associated with the change in a contingent
liability and the acceleration of amortization related to the
termination of the Kate Spade license agreement as of December 31,
2019.
Reconciliations of amounts on a GAAP basis to
Adjusted amounts are presented in the Non-GAAP Reconciliation
tables at the end of this release and identify and quantify all
excluded items.
Conference Call Information
Interested stockholders are invited to listen to
the third quarter earnings conference call scheduled for today,
April 25, 2019, 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.gcs-web.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.
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 own brands
including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo®,
Report®, Brian Atwood®, Cejon®, Mad Love® and Big Buddha®, Steve
Madden is a licensee of various brands, including Anne Klein®, Kate
Spade®, Superga® and DKNY®. Steve Madden also designs and
sources products under private label brand names for various
retailers. Steve Madden’s wholesale distribution includes
department stores, specialty stores, luxury retailers, national
chains and mass merchants. Steve Madden also operates 225 retail
stores (including Steve Madden’s seven Internet stores). Steve
Madden licenses certain of its brands to third parties for the
marketing and sale of certain products, including ready-to-wear,
outerwear, eyewear, hosiery, jewelry, fragrance, luggage and
bedding and bath products. For local store information and the
latest Steve Madden booties, pumps, men’s and women’s boots,
fashion sneakers, dress shoes, sandals and more, visit
http://www.stevemadden.com.
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 |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
Net
sales |
|
$ |
410,940 |
|
|
$ |
389,014 |
|
Cost
of sales |
|
253,943 |
|
|
248,281 |
|
Gross
profit |
|
156,997 |
|
|
140,733 |
|
Commission and licensing fee income, net |
|
1,227 |
|
|
3,659 |
|
Operating expenses |
|
113,564 |
|
|
107,835 |
|
Income from operations |
|
44,660 |
|
|
36,557 |
|
Interest and other income, net |
|
1,192 |
|
|
597 |
|
Income before provision for income taxes |
|
45,852 |
|
|
37,154 |
|
Provision for income taxes |
|
10,587 |
|
|
7,956 |
|
Net
income |
|
35,265 |
|
|
29,198 |
|
Less: Net income
attributable to noncontrolling interest |
|
740 |
|
|
525 |
|
Net
income attributable to Steven Madden, Ltd. |
|
$ |
34,525 |
|
|
$ |
28,673 |
|
|
|
|
|
|
Basic
income per share |
|
$ |
0.43 |
|
|
$ |
0.35 |
|
|
|
|
|
|
Diluted income per share |
|
$ |
0.41 |
|
|
$ |
0.33 |
|
|
|
|
|
|
Basic weighted average
common shares outstanding |
|
80,534 |
|
|
82,092 |
|
|
|
|
|
|
Diluted weighted
average common shares outstanding |
|
84,255 |
|
|
85,989 |
|
STEVEN MADDEN, LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
DATA
(In thousands)
|
|
|
|
As of |
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
March 31, 2018 |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
160,256 |
|
|
$ |
200,031 |
|
|
$ |
125,383 |
|
Marketable securities
(current & non current) |
|
61,383 |
|
|
66,968 |
|
|
75,176 |
|
Accounts receivable,
net |
|
295,880 |
|
|
266,452 |
|
|
300,092 |
|
Inventories |
|
115,260 |
|
|
137,247 |
|
|
94,367 |
|
Other current
assets |
|
28,285 |
|
|
32,427 |
|
|
47,975 |
|
Property and equipment,
net |
|
63,657 |
|
|
64,807 |
|
|
69,599 |
|
Operating lease
right-of-use assets |
|
181,896 |
|
|
— |
|
|
— |
|
Goodwill and
intangibles, net |
|
289,965 |
|
|
291,423 |
|
|
298,539 |
|
Other assets |
|
13,172 |
|
|
13,215 |
|
|
10,802 |
|
Total assets |
|
$ |
1,209,754 |
|
|
$ |
1,072,570 |
|
|
$ |
1,021,933 |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
62,564 |
|
|
$ |
79,802 |
|
|
$ |
65,296 |
|
Contingent payment
liability (current & non current) |
|
— |
|
|
3,000 |
|
|
3,000 |
|
Operating leases
(current & non current) |
|
195,798 |
|
|
— |
|
|
— |
|
Other current
liabilities |
|
103,584 |
|
|
141,887 |
|
|
107,023 |
|
Other long-term
liabilities |
|
17,262 |
|
|
33,199 |
|
|
38,392 |
|
Total Steven Madden,
Ltd. stockholders’ equity |
|
819,695 |
|
|
805,814 |
|
|
801,586 |
|
Noncontrolling
interest |
|
10,851 |
|
|
8,868 |
|
|
6,636 |
|
Total liabilities and
stockholders’ equity |
|
$ |
1,209,754 |
|
|
$ |
1,072,570 |
|
|
$ |
1,021,933 |
|
STEVEN MADDEN, LTD. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW
DATA
(In thousands)
(Unaudited)
|
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
Net cash used in
operating activities |
|
$ |
(15,754 |
) |
|
$ |
(27,217 |
) |
|
|
|
|
|
Investing
Activities |
|
|
|
|
Purchases of property
and equipment |
|
(3,399 |
) |
|
(2,946 |
) |
Sales of marketable
securities, net |
|
6,165 |
|
|
16,888 |
|
Net cash provided by
investing activities |
|
2,766 |
|
|
13,942 |
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
Common stock share
repurchases for treasury |
|
(17,154 |
) |
|
(25,677 |
) |
Investment of
noncontrolling interest |
|
1,283 |
|
|
— |
|
Payment of contingent
liability |
|
— |
|
|
(7,000 |
) |
Proceeds from exercise
of stock options |
|
722 |
|
|
1,519 |
|
Cash dividends
paid |
|
(12,042 |
) |
|
(11,758 |
) |
Net cash used in
financing activities |
|
(27,191 |
) |
|
(42,916 |
) |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
404 |
|
|
360 |
|
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
(39,775 |
) |
|
(55,831 |
) |
|
|
|
|
|
Cash and cash
equivalents - beginning of period |
|
200,031 |
|
|
181,214 |
|
|
|
|
|
|
Cash and cash
equivalents - end of period |
|
$ |
160,256 |
|
|
$ |
125,383 |
|
STEVEN MADDEN, LTD. AND
SUBSIDIARIES
NON-GAAP RECONCILIATION
(In thousands, except per share amounts)
(Unaudited)
The Company uses non-GAAP financial information
to evaluate its operating performance and in order to represent the
manner in which the Company conducts and views its business.
Additionally, the Company believes the information assists
investors in comparing the Company’s performance across reporting
periods on a consistent basis by excluding items that are not
indicative of its core business. The non-GAAP financial information
is provided in addition to, and not as an alternative to, the
Company’s reported results prepared in accordance with GAAP.
Table 1 - Reconciliation of GAAP licensing and
commission income, net to Adjusted licensing and commission income,
net |
|
|
Three Months Ended |
|
|
|
|
March 31, 2019 |
|
|
|
|
|
|
|
GAAP licensing and
commission income, net |
|
$ |
1,227 |
|
|
|
|
|
|
|
|
Bad debt expense associated with the Payless ShoeSource
bankruptcy |
|
1,552 |
|
|
|
|
|
|
|
|
Adjusted licensing and commission income, net |
|
$ |
2,779 |
|
|
|
Table 2 - Reconciliation of GAAP operating expenses to
Adjusted operating expenses |
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
GAAP operating
expenses |
|
$ |
113,564 |
|
|
$ |
107,835 |
|
|
|
|
|
|
Expense in connection with provision for early lease termination
charges |
|
(749 |
) |
|
— |
|
|
|
|
|
|
Net benefit in connection with the change in a contingent liability
and the acceleration of amortization related to the termination of
the Kate Spade license agreement |
|
1,868 |
|
|
— |
|
|
|
|
|
|
Expense in connection with provision for legal charges |
|
— |
|
|
(2,837 |
) |
|
|
|
|
|
Expense in connection with the integration of the Schwartz &
Benjamin acquisition and the related restructuring |
|
— |
|
|
(250 |
) |
|
|
|
|
|
Adjusted operating expenses |
|
$ |
114,683 |
|
|
$ |
104,748 |
|
Table 3 - Reconciliation of GAAP income from operations
to Adjusted income from operations |
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
GAAP income from
operations |
|
$ |
44,660 |
|
|
$ |
36,557 |
|
|
|
|
|
|
Bad debt expense associated with the Payless ShoeSource
bankruptcy |
|
1,552 |
|
|
— |
|
|
|
|
|
|
Expense in connection with provision for early lease termination
charges |
|
749 |
|
|
— |
|
|
|
|
|
|
Net benefit in connection with the change in a contingent liability
and the acceleration of amortization related to the termination of
the Kate Spade license agreement |
|
(1,868 |
) |
|
— |
|
|
|
|
|
|
Expense in connection with provision for legal charges |
|
— |
|
|
2,837 |
|
|
|
|
|
|
Expense in connection with the integration of the Schwartz &
Benjamin acquisition and the related restructuring |
|
— |
|
|
250 |
|
|
|
|
|
|
Adjusted income from operations |
|
$ |
45,093 |
|
|
$ |
39,644 |
|
Table 4 - Reconciliation of GAAP provision for income
taxes to Adjusted provision for income taxes |
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
GAAP provision for
income taxes |
|
$ |
10,587 |
|
|
$ |
7,956 |
|
|
|
|
|
|
Tax effect of bad debt expense associated with the Payless
ShoeSource bankruptcy |
|
170 |
|
|
— |
|
|
|
|
|
|
Tax effect of expense in connection with provision for early lease
termination charges |
|
188 |
|
|
— |
|
|
|
|
|
|
Tax effect of the net benefit in connection with the change in a
contingent liability and the acceleration of amortization related
to the termination of the Kate Spade license agreement |
|
(469 |
) |
|
— |
|
|
|
|
|
|
Tax effect of expense in connection with provision for legal
charges |
|
— |
|
|
702 |
|
|
|
|
|
|
Tax effect of expense in connection with the integration of the
Schwartz & Benjamin acquisition and the related
restructuring |
|
— |
|
|
62 |
|
|
|
|
|
|
Adjusted provision for income taxes |
|
$ |
10,476 |
|
|
$ |
8,720 |
|
Table 5 - Reconciliation of GAAP net income to Adjusted net
income |
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
GAAP net income
attributable to Steven Madden, Ltd. |
|
$ |
34,525 |
|
|
$ |
28,673 |
|
|
|
|
|
|
After-tax impact of bad debt expense associated with the Payless
ShoeSource bankruptcy |
|
1,383 |
|
|
— |
|
|
|
|
|
|
After-tax impact of expense in connection with early lease
termination charges |
|
561 |
|
|
— |
|
|
|
|
|
|
After-tax impact of the net benefit in connection with the change
in a contingent liability and the acceleration of amortization
related to the termination of the Kate Spade license agreement |
|
(1,399 |
) |
|
— |
|
|
|
|
|
|
After-tax impact of expense in connection with provision for legal
charges |
|
— |
|
|
2,135 |
|
|
|
|
|
|
After-tax impact of expense in connection with the integration of
the Schwartz & Benjamin acquisition and the related
restructuring |
|
— |
|
|
188 |
|
|
|
|
|
|
Adjusted net income attributable to Steven Madden, Ltd. |
|
$ |
35,070 |
|
|
$ |
30,996 |
|
|
|
|
|
|
GAAP diluted income per share |
|
$ |
0.41 |
|
|
$ |
0.33 |
|
|
|
|
|
|
Adjusted diluted income per share |
|
$ |
0.42 |
|
|
$ |
0.36 |
|
Contact
Steven Madden, Ltd.Director of Corporate Development &
Investor RelationsDanielle
McCoy718-308-2611InvestorRelations@stevemadden.com
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