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 second quarter ended June 30,
2017.
Amounts referred to as “Adjusted” exclude the items that are
described under the heading “Non-GAAP Adjustments.”
For the Second Quarter 2017:
- Net sales increased 15.0% to $374.1
million compared to $325.4 million in the same period of 2016.
- Gross margin was 37.3%. Adjusted gross
margin was 37.4% as compared to 37.2% in the same period last year,
an increase of 20 basis points.
- Operating expenses as a percentage of
sales were 26.6%. Adjusted operating expenses as a percentage of
sales were 26.4% as compared to 27.0% of sales in the same period
of 2016.
- Operating income totaled $41.9 million,
or 11.2% of net sales. Adjusted operating income was $43.1 million,
or 11.5% of net sales, compared with operating income of $35.9
million, or 11.0% of net sales, in the same period of 2016.
- Net income was $29.0 million, or $0.50
per diluted share. Adjusted net income was $29.7 million, or $0.51
per diluted share, compared to $24.7 million, or $0.41 per diluted
share, in the prior year's second quarter.
Edward Rosenfeld, Chairman and Chief Executive Officer,
commented, “The strong momentum in our business continued into the
second quarter, as we delivered another quarter of robust sales and
earnings growth despite the challenging retail environment. Once
again, we saw outstanding performance in our core Steve Madden
Women’s wholesale footwear division, where our trend-right product
assortment continues to resonate with consumers and drive market
share gains. As we look ahead to the balance of the year, we are
taking a prudent approach to planning our business in light of
industry headwinds. That said, the strength of our brands and our
business model gives us confidence that we are well-positioned to
navigate the uncertain environment.”
Second Quarter 2017 Segment Results
Net sales for the wholesale business increased 16.3% to $305.6
million in the second quarter of 2017. Excluding the results of the
recently acquired Schwartz & Benjamin, wholesale net sales
increased 8.4% to $284.9 million from $262.9 million in the second
quarter of 2016, driven by a strong increase in the wholesale
footwear business. Gross margin in the wholesale business was
31.6%. Excluding the non-cash expense associated with the purchase
accounting fair value adjustment of inventory acquired in the
Schwartz & Benjamin acquisition, Adjusted gross margin in the
wholesale business was 31.7% compared to 31.1% in last year’s
second quarter, driven by strong margin improvement in the Steve
Madden Women’s wholesale footwear division.
Retail net sales in the second quarter increased 9.6% to $68.5
million compared to $62.5 million in the second quarter of the
prior year. Same store sales increased 2.2% in the quarter compared
to a 5.4% same store sales increase in the second quarter of 2016.
Retail gross margin decreased slightly to 62.6% in the second
quarter of 2017 as compared to 62.8% in the second quarter of the
prior year.
During the second quarter, the Company opened one full price
store and one outlet store in the U.S. as well as one full price
store in Canada, and converted one U.S. full price store to an
outlet location. The Company ended the quarter with 193
company-operated retail locations, including four Internet
stores.
The Company’s effective tax rate for the second quarter of 2017
was 31.9%. Excluding the tax impact of the non-cash expense
associated with the purchase accounting fair value adjustment of
inventory acquired in the Schwartz & Benjamin acquisition and
the expense in connection with the integration of the Schwartz
& Benjamin acquisition and the related restructuring, the
Adjusted effective tax rate was 32.0% compared to 31.8% in the
second quarter of the prior year.
Balance Sheet and Cash Flow
During the second quarter of 2017, the Company repurchased
820,848 shares of the Company’s common stock for approximately
$30.8 million, which includes shares acquired through the net
settlement of employee stock awards.
As of June 30, 2017, cash, cash equivalents, and current and
non-current marketable securities totaled $198.6 million.
Company Outlook
The Company now expects that net sales in fiscal year 2017 will
increase 9% to 11% over net sales in 2016. The Company now expects
that diluted EPS on a GAAP basis for fiscal year 2017 will be in
the range of $2.03 to $2.09. The Company now expects that Adjusted
diluted EPS for fiscal year 2017 will be in the range of $2.18 to
$2.24.
Non-GAAP Adjustments
Amounts referred to as “Adjusted” exclude the items below.
For the second quarter 2017:
- $0.4 million pre-tax ($0.3 million
after-tax) in non-cash expense associated with the purchase
accounting fair value adjustment of inventory acquired in the
Schwartz & Benjamin acquisition, included in cost of
sales.
- $0.8 million pre-tax ($0.5 million
after-tax) in expense in connection with the integration of the
Schwartz & Benjamin acquisition and the related restructuring,
included in operating expenses.
For the fiscal year 2017:
- $1.7 million pre-tax ($1.1 million
after-tax) in non-cash expense associated with the purchase
accounting fair value adjustment of inventory acquired in the
Schwartz & Benjamin acquisition, included in cost of
sales.
- $1.5 million pre-tax ($1.0 million
after-tax) in expense incurred in connection with the integration
of the Schwartz & Benjamin acquisition and the related
restructuring, included in operating expenses.
- $7.5 million pre-tax ($6.5 million
after-tax) in estimated bad debt expense associated with the
Payless ShoeSource bankruptcy, included in operating expenses.
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 second
quarter earnings conference call scheduled for today, August 1,
2017, 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
1-844-512-2921 (U.S.) and 1-412-317-6671 (international), passcode
2298337, and will be available until September 1, 2017.
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®, Report®, Big Buddha®, Brian Atwood®,
Cejon®, Blondo® and Mad Love®, Steve Madden is a licensee of
various brands, including Kate Spade®, Superga® and Avec Les
Filles®. 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 193 retail stores (including Steve Madden's
four Internet stores). Steve Madden licenses certain of its brands
to third parties for the marketing and sale of certain products,
including for ready-to-wear, outerwear, intimate apparel, 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, 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 STATEMENTS OF OPERATIONS DATA
(In thousands, except per share amounts) (Unaudited) Three
Months Ended Six Months Ended
June 30, 2017 June
30, 2016 June 30, 2017 June 30,
2016 Net sales $ 374,148 $ 325,402 $ 740,535 $
654,759 Cost of sales 234,751 204,357 468,420
417,512 Gross profit 139,397 121,045 272,115 237,247
Commission and licensing fee income, net 2,166 2,784 6,092 4,955
Operating expenses 99,666 87,939 205,531
176,432 Income from operations 41,897 35,890 72,676 65,770
Interest and other income, net 708 546 1,392
370 Income before provision for income taxes 42,605 36,436
74,068 66,140 Provision for income taxes 13,582
11,594 24,523 17,402 Net income 29,023 24,842 49,545
48,738 Net income attributable to noncontrolling interest 59
105 423 342 Net income attributable to Steven
Madden, Ltd. $ 28,964 $ 24,737 $ 49,122 $ 48,396
Basic income per share $ 0.53 $ 0.43 $ 0.89 $ 0.84 Diluted income
per share $ 0.50 $ 0.41 $ 0.85 $ 0.81 Basic weighted average
common shares outstanding 55,161 57,430 55,487 57,572 Diluted
weighted average common shares outstanding 57,750 59,739 57,969
59,998
STEVEN MADDEN,
LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
(In thousands) As of
June 30, 2017
December 31, 2016 June 30, 2016
(Unaudited) (Unaudited) Cash and cash equivalents $ 99,411 $
126,115 $ 76,271 Marketable securities (current & non current)
99,195 110,054 122,690 Accounts receivables, net 255,260 200,958
216,564 Inventories 121,213 119,824 116,369 Other current assets
49,209 42,279 41,255 Property and equipment, net 74,129 72,381
73,485 Goodwill and intangibles, net 305,155 280,097 286,187 Other
assets 9,091 9,167 8,366 Total assets $
1,012,663 $ 960,875 $ 941,187 Accounts payable $ 101,447 $
80,584 $ 101,473 Contingent payment liability (current & non
current) 24,923 7,948 20,012 Other current liabilities 99,372
94,595 79,199 Other long term liabilities 37,191 36,676 39,725
Total Steven Madden, Ltd. stockholders' equity 748,036 740,867
700,437 Noncontrolling interest 1,694 205 341
Total liabilities and stockholders' equity $ 1,012,663 $ 960,875 $
941,187
STEVEN MADDEN,
LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED CASH FLOW DATA
(In thousands) (Unaudited) Six Months Ended
June 30,
2017 June 30, 2016 Net cash
provided by operating activities $ 49,474 $ 58,491
Investing
Activities
Purchases of property and equipment (7,672 ) (8,402 ) Sales of
marketable securities, net 11,641 842 Repayment of notes receivable
221 - Acquisition, net of cash acquired (17,396 ) -
Net cash used in investing activities (13,206 ) (7,560 )
Financing
Activities
Common stock share repurchases for treasury (63,941 ) (41,070 )
Purchase of noncontrolling interest - (3,759 ) Payment of
contingent liability (5,321 ) (6,281 ) Proceeds from exercise of
stock options 5,649 3,708 Net cash used
in financing activities (63,613 ) (47,402 ) Effect of
exchange rate changes on cash and cash equivalents 641 328
Net (decrease) increase in cash and cash equivalents (26,704 )
3,857 Cash and cash equivalents - beginning of period
126,115 72,414 Cash and cash equivalents - end of
period $ 99,411 $ 76,271
STEVEN MADDEN, LTD. AND
SUBSIDIARIESNON-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 gross profit to Adjusted gross
profit
Three Months Ended Six Months Ended
June 30, 2017
June 30, 2017
Consolidated
GAAP gross profit $ 139,397 $ 272,115 Non-cash expense
associated with the purchase accounting fair value adjustment of
inventory acquired in the Schwartz & Benjamin acquisition 413
1,653 Adjusted gross profit $ 139,810 $ 273,768
Wholesale
GAAP gross profit $ 96,519 $ 197,950 Non-cash expense
associated with the purchase accounting fair value adjustment
adjustment of inventory acquired in the Schwartz & Benjamin
acquisition 413 1,653
Adjusted gross profit
$ 96,932 $ 199,603
Table 2 -
Reconciliation of GAAP operating expenses to Adjusted operating
expenses
Three Months Ended Six Months Ended
June 30, 2017
June 30, 2017 GAAP operating expenses $ 99,666
$ 205,531 Expense incurred in connection with the
integration of the Schwartz & Benjamin 767 767 acquisition and
the related restructuring Bad debt expense associated with
the Payless ShoeSource bankruptcy - 7,500 Adjusted operating
expenses $ 98,899 $ 197,264
Table 3 -
Reconciliation of GAAP operating income to Adjusted operating
income
Three Months Ended Six Months Ended
June 30, 2017
June 30, 2017 GAAP operating income $ 41,897 $
72,676 Non-cash expense associated with the purchase
accounting fair value adjustment of inventory acquired in the
Schwartz & Benjamin acquisition 413 1,653 Expense
incurred in connection with the integration of the Schwartz &
Benjamin 767 767 acquisition and the related restructuring
Bad debt expense associated with the Payless ShoeSource bankruptcy
- 7,500 Adjusted operating income $ 43,077
$ 82,596
Table 4 -
Reconciliation of GAAP provision for income taxes to Adjusted
provision for income taxes
Three Months Ended Six Months Ended
June 30, 2017
June 30, 2017 GAAP provision for income taxes $
13,582 $ 24,523 Tax effect of non-cash expense associated
with the purchase accounting fair value adjustment of inventory
acquired in the Schwartz & Benjamin acquisition 153 578
Tax effect of expense incurred in connection with the integration
of the 284 284 Schwartz & Benjamin acquisition and the related
restructuring Tax effect of bad debt expense associated with
the Payless ShoeSource bankruptcy - 964 Adjusted provision
for income taxes $ 14,019 $ 26,349
Table 5 -
Reconciliation of GAAP net income to Adjusted net income
Three Months Ended Six Months Ended
June 30, 2017
June 30, 2017 GAAP net income attributable to
Steven Madden, Ltd. $ 28,964 $ 49,122 After-tax impact of
non-cash expense associated with the purchase accounting fair value
adjustment of inventory acquired in the Schwartz & Benjamin
acquisition 260 1,075 After-tax impact of expense incurred
in connection with the integration of the 483 483 Schwartz &
Benjamin acquisition and the related restructuring After-tax
impact of bad debt expense associated with the Payless ShoeSource
bankruptcy - 6,536 Adjusted net income attributable to
Steven Madden, Ltd. $ 29,707 $ 57,216 GAAP diluted income
per share $ 0.50 $ 0.85 Adjusted diluted income per share
$ 0.51 $ 0.99
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ICR, Inc.Investor RelationsJean Fontana/Megan
Crudele203-682-8200www.icrinc.com
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