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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report: November 8, 2023

(Date of earliest event reported)

 

STEVEN MADDEN, LTD.

(Exact name of registrant as specified in its charter)

 

Delaware   000-23702   13-3588231
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

52-16 Barnett Avenue, Long Island City, New York   11104
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (718) 446-1800

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.0001 per share   SHOO   The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On November 8, 2023, Steven Madden, Ltd. (the “Company”) issued a press release, furnished as Exhibit 99.1 and incorporated into this Item 2.02 by reference, announcing the Company’s financial results for the third quarter of its fiscal year ending December 31, 2023.

 

Item 8.01 Other Events.

 

The Company’s press release on November 8, 2023 also announced that the Company’s Board of Directors has declared a quarterly cash dividend of $0.21 per share on the Company’s outstanding shares of common stock. The dividend is payable on December 29, 2023 to stockholders of record as of the close of business on December 15, 2023.

 

The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in Item 2.02 of this Current Report is not intended to, and does not, constitute a determination or admission by the Company that the information in Item 2.02 of this Current Report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Company.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
   
99.1   Press Release, dated November 8, 2023, announcing the Company’s 2023 Third Quarter Results and Declaration of a Cash Dividend.
     
104   Cover Page Interactive Data File (formatted as Inline XBRL).

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: November 8, 2023

 

  STEVEN MADDEN, LTD.
     
  By: /s/ Edward Rosenfeld
  Name: Edward Rosenfeld
  Title: Chief Executive Officer

 

 

 

 

Exhibit 99.1

 

Steve Madden Announces Third Quarter 2023 Results

 

LONG ISLAND CITY, N.Y., November 8, 2023 – Steven Madden, Ltd. (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel, today announced financial results for the third quarter ended September 30, 2023.

 

Amounts referred to as “Adjusted” are non-GAAP measures that exclude the items defined as “Non-GAAP Adjustments” in the “Non-GAAP Reconciliation” section.

 

Third Quarter 2023 Results

 

Revenue decreased 0.7% to $552.7 million compared to $556.6 million in the same period of 2022.

 

Gross profit as a percentage of revenue was 42.1% compared to 41.2% in the same period of 2022.

 

Operating expenses as a percentage of revenue were 27.1%, which is the same percentage as in the same period of 2022. Adjusted operating expenses as a percentage of revenue were 27.0%, also the same percentage as in the same period of 2022.

 

Income from operations totaled $82.7 million, or 15.0% of revenue, compared to $78.8 million, or 14.1% of revenue, in the same period of 2022. Adjusted income from operations totaled $83.4 million, or 15.1% of revenue, compared to $79.0 million, or 14.2% of revenue, in the same period of 2022.

 

Net income attributable to Steven Madden, Ltd. was $64.4 million, or $0.87 per diluted share, compared to $61.3 million, or $0.79 per diluted share, in the same period of 2022. Adjusted net income attributable to Steven Madden, Ltd. was $65.1 million, or $0.88 per diluted share, compared to $61.5 million, or $0.79 per diluted share, in the same period of 2022.

 

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We were pleased to return to year-over-year earnings growth in the third quarter, demonstrating the strength and durability of our business model in challenging operating environments. Our team prudently managed inventory and expenses – which enabled us to drive operating margin improvement in both wholesale and direct-to-consumer channels – while continuing to invest in our long-term growth initiatives. While softer trends across the industry since September have left us incrementally more cautious on the near-term outlook, we remain confident that our core strengths – our people, brands and business model – will enable us to deliver sustainable revenue and earnings growth over the long term.”

 

Third Quarter 2023 Channel Results

 

Revenue for the wholesale business was $433.5 million, a 0.3% decrease compared to the third quarter of 2022. Wholesale footwear revenue decreased 7.5%, while wholesale accessories/apparel revenue increased 22.7%. Gross profit as a percentage of wholesale revenue increased to 35.9% compared to 35.3% in the third quarter of 2022 driven by margin improvement in the wholesale accessories/apparel segment.

 

Direct-to-consumer revenue was $116.4 million, a 1.8% decrease compared to the third quarter of 2022 driven by a decline in the e-commerce business. Gross profit as a percentage of direct-to-consumer revenue improved to 63.7% compared to 61.2% in the third quarter of 2022 driven by lower freight expenses and reduced promotional activity.

 

 

 

 

The Company ended the quarter with 251 brick-and-mortar retail stores and five e-commerce websites, as well as 22 company-operated concessions in international markets.

 

Balance Sheet and Cash Flow Highlights

 

As of September 30, 2023, cash, cash equivalents and short-term investments totaled $206.4 million. Inventory totaled $205.7 million, a 15.8% decrease compared to the third quarter of 2022.

 

During the third quarter of 2023, the Company spent $40.0 million on repurchases of its common stock, which includes shares acquired through the net settlement of employees’ stock awards.

 

Quarterly Cash Dividend

 

The Company’s Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend is payable on December 29, 2023 to stockholders of record as of the close of business on December 15, 2023.

 

Updated 2023 Outlook

 

The Company is updating its fiscal 2023 guidance. For fiscal 2023, the Company now expects revenue will decrease approximately 7% compared to 2022. The Company now expects diluted EPS will be approximately $2.35. The Company now expects Adjusted diluted EPS will be approximately $2.40.

 

Conference Call Information

 

Interested stockholders are invited to listen to the conference call scheduled for today, November 8, 2023, at 8:30 a.m. Eastern Time, which will include a discussion of the Company's third quarter 2023 earnings results and 2023 outlook. The call will be webcast live on the Company’s website at https://investor.stevemadden.com. A webcast replay of the conference call will be available on the Company's website or via the following webcast link https://edge.media-server.com/mmc/p/oqycft6w beginning today at approximately 10:00 a.m. Eastern Time.

 

About Steve Madden

 

Steve Madden designs, sources and markets fashion-forward footwear, accessories and apparel. In addition to marketing products under its own brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo® and GREATS®, Steve Madden licenses footwear and handbag categories for the Anne Klein® brand. Steve Madden also designs and sources products under private label brand names for various retailers. Steve Madden’s wholesale distribution includes department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers and independent stores. Steve Madden also directly operates brick-and-mortar retail stores and e-commerce websites. Steve Madden also licenses certain of its brands to third parties for the marketing and sale of certain products in the apparel, accessory and home categories. For local store information and the latest boots, booties, fashion sneakers, dress shoes, sandals, and more, please visit www.stevemadden.com, www.dolcevita.com and our other branded websites.

 

 

 

 

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995

 

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, among others, statements regarding revenue and earnings guidance, plans, strategies, objectives, expectations and intentions. Forward-looking statements can be identified by words such as: “may”, “will”, “expect”, “believe”, “should”, “anticipate”, “project”, “predict”, “plan”, “intend”, “estimate”, or “confident” and similar expressions or the negative of these expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent the Company’s current beliefs, expectations, and assumptions regarding anticipated events and trends affecting its business and industry based on information available as of the time such statements are made. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which may be outside of the Company’s control. The Company’s actual results and financial condition may differ materially from those indicated in these forward-looking statements. As such, investors should not rely upon them. Important risk factors include:

 

geopolitical tensions in the regions in which we operate and any related challenging macroeconomic conditions globally that may materially adversely affect our customers, vendors, and partners, and the duration and extent to which these factors may impact our future business and operations, results of operations and financial condition;

 

the Company’s ability to navigate shifting macro-economic environments, including but not limited to inflation and the potential for recessionary conditions;

 

the Company’s ability to accurately anticipate fashion trends and promptly respond to consumer demand;

 

the Company’s ability to compete effectively in a highly competitive market;

 

the Company’s ability to adapt its business model to rapid changes in the retail industry;

 

supply chain disruptions to product delivery systems and logistics, and the Company’s ability to properly manage inventory;

 

the Company’s reliance on independent manufacturers to produce and deliver products in a timely manner, especially when faced with adversities such as work stoppages, transportation delays, public health emergencies, social unrest, changes in local economic conditions, and political upheavals as well as their ability to meet the Company’s quality standards;

 

the Company’s dependence on the retention and hiring of key personnel;

 

the Company’s ability to successfully implement growth strategies and integrate acquired businesses;

 

changes in trade policies and tariffs imposed by the United States government and the governments of other nations in which the Company manufactures and sells products;

 

the Company’s ability to adequately protect its trademarks and other intellectual property rights;

 

the Company’s ability to maintain adequate liquidity when negatively impacted by unforeseen events such as an epidemic or a pandemic, which may cause disruption to the Company’s business operations for an indeterminable period of time;

 

legal, regulatory, political and economic risks that may affect the Company’s sales in international markets;

  

changes in U.S. and foreign tax laws that could have an adverse effect on the Company’s financial results;

 

additional tax liabilities resulting from audits by various taxing authorities;

 

cybersecurity risks and costs of defending against, mitigating, and responding to data security threats and breaches impacting the Company;

 

the Company’s ability to achieve operating results that are consistent with prior financial guidance; and

 

other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

 

The Company does not undertake, and disclaims, any obligation to publicly update any forward-looking statement, including, without limitation, any guidance regarding revenue or earnings, whether as a result of new information, future developments, or otherwise.

 

 

 

 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(In thousands, except per share amounts)

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   September 30, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
                 
Net sales  $549,846   $553,120   $1,454,420   $1,643,144 
Commission and licensing fee income   2,886    3,523    7,448    8,222 
Total revenue   552,732    556,643    1,461,868    1,651,366 
Cost of sales   320,107    327,167    844,281    976,227 
Gross profit   232,625    229,476    617,587    675,139 
Operating expenses   149,887    150,724    444,298    433,252 
Income from operations   82,738    78,752    173,289    241,887 
Interest and other income – net   1,922    1,340    5,898    106 
Income before provision for income taxes   84,660    80,092    179,187    241,993 
Provision for income taxes   19,552    18,335    42,219    56,728 
Net income   65,108    61,757    136,968    185,265 
Less: net income attributable to noncontrolling interest   695    460    1,295    995 
Net income attributable to Steven Madden, Ltd.  $64,413   $61,297   $135,673   $184,270 
                     
Basic net income per share  $0.88   $0.81   $1.84   $2.41 
                     
Diluted net income per share  $0.87   $0.79   $1.81   $2.35 
                     
Basic weighted average common shares outstanding   72,943    75,598    73,679    76,463 
                     
Diluted weighted average common shares outstanding   74,071    77,396    74,917    78,579 
                     
Cash dividends declared per common share  $0.21   $0.21   $0.63   $0.63 

 

 

 

 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands)

 

       As of     
   September 30, 2023   December 31, 2022   September 30, 2022 
   (Unaudited)       (Unaudited) 
ASSETS               
Current assets:               
Cash and cash equivalents  $191,804   $274,713   $139,194 
Short-term investments   14,641    15,085    9,051 
Accounts receivable, net of allowances   58,538    37,937    48,601 
Factor accounts receivable   342,871    248,228    341,141 
Inventories   205,693    228,752    244,315 
Prepaid expenses and other current assets   24,334    22,989    25,531 
Income tax receivable and prepaid income taxes   15,702    15,853    9,416 
Total current assets   853,583    843,557    817,249 
Note receivable – related party   100    401    499 
Property and equipment, net   44,920    40,664    36,861 
Operating lease right-of-use asset   113,058    90,264    90,407 
Deposits and other   10,567    12,070    3,655 
Deferred taxes   1,570    1,755    6,945 
Goodwill – net   168,612    168,085    167,652 
Intangibles – net   99,817    101,192    102,967 
Total Assets  $1,292,227   $1,257,988   $1,226,235 
LIABILITIES               
Current liabilities:               
Accounts payable  $140,623   $130,542   $99,173 
Accrued expenses   129,754    138,523    119,650 
Operating leases – current portion   36,521    29,499    30,234 
Income taxes payable   13,519    9,403    19,161 
Contingent payment liability   1,153    1,153    440 
Accrued incentive compensation   10,190    11,788    11,423 
Total current liabilities   331,760    320,908    280,081 
Operating leases – long-term portion   91,916    79,128    79,906 
Deferred tax liabilities   3,923    3,923    3,378 
Other liabilities   10,914    10,166    10,930 
Total Liabilities   438,513    414,125    374,295 
                
STOCKHOLDERS’ EQUITY               
Total Steven Madden, Ltd. stockholders’ equity   837,038    831,553    842,303 
Noncontrolling interest   16,676    12,310    9,637 
Total stockholders’ equity   853,714    843,863    851,940 
Total Liabilities and Stockholders’ Equity  $1,292,227   $1,257,988   $1,226,235 

 

 

 

 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands)

 

(Unaudited)

 

   Nine Months Ended 
   September 30, 2023   September 30, 2022 
Cash flows from operating activities:          
Net income  $136,968   $185,265 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock-based compensation   18,169    18,298 
Depreciation and amortization   11,138    15,425 
Loss on disposal of fixed assets   204    312 
Impairment of lease right-of-use asset   95     
Deferred taxes       (2,364)
Accrued interest on note receivable - related party   (6)   (12)
Notes receivable - related party   307    307 
Change in valuation of contingent payment liabilities       (6,520)
Other operating activities   417     
Changes, net of acquisitions, in:          
Accounts receivable   (20,601)   (25,623)
Factor accounts receivable   (93,274)   23,841 
Inventories   23,541    6,842 
Prepaid expenses, income tax receivables, prepaid taxes, and other assets   (264)   120 
Accounts payable and accrued expenses   4,991    (140,144)
Accrued incentive compensation   (1,598)   (3,448)
Leases and other liabilities   (2,331)   (5,213)
Payment of contingent consideration       (339)
           
Net cash provided by operating activities   77,756    66,747 
           
Cash flows from investing activities:          
Capital expenditures   (13,899)   (10,115)
Purchase of a trademark       (2,000)
Purchases of short-term investments   (15,979)   (38,951)
Maturity/sale of short-term investments   16,335    73,726 
           
Net cash (used in)/provided by investing activities   (13,543)   22,660 
           
Cash flows from financing activities:          
Common stock repurchased and net settlements of stock awards   (104,215)   (112,105)
Proceeds from exercise of stock options   1,171    415 
Investment of noncontrolling interest   4,582     
Cash dividends paid on common stock   (47,594)   (49,774)
Payment of contingent consideration       (4,770)
Distribution of noncontrolling interest   (1,102)    
Net cash used in financing activities   (147,158)   (166,234)
Effect of exchange rate changes on cash and cash equivalents   36    (3,478)
Net decrease in cash and cash equivalents   (82,909)   (80,305)
Cash and cash equivalents – beginning of period   274,713    219,499 
           
Cash and cash equivalents – end of period  $191,804   $139,194 

 

 

 

 

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 operating expenses to Adjusted operating expenses

 

   Three Months Ended   Nine Months Ended 
   September 30, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
                 
GAAP operating expenses  $149,887   $150,724   $444,298   $433,252 
Non-GAAP Adjustments   (622)   (203)   (2,298)   1,551 
Adjusted operating expenses  $149,265   $150,521   $442,000   $434,803 

 

Table 2 - Reconciliation of GAAP income from operations to Adjusted income from operations

 

   Three Months Ended   Nine Months Ended 
   September 30, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
                 
GAAP income from operations  $82,738   $78,752   $173,289   $241,887 
Non-GAAP Adjustments   622    203    2,298    (1,551)
Adjusted income from operations  $83,360   $78,955   $175,587   $240,336 

 

Table 3 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes

 

   Three Months Ended   Nine Months Ended 
   September 30, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
                 
GAAP provision for income taxes  $19,552   $18,335   $42,219   $56,728 
Non-GAAP Adjustments   (85)   47    309    (1,887)
Adjusted provision for income taxes  $19,467   $18,382   $42,528   $54,841 

 

Table 4 - Reconciliation of GAAP net income attributable to Steven Madden, Ltd. to Adjusted net income attributable to Steven Madden, Ltd.

 

   Three Months Ended   Nine Months Ended 
   September 30, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
                 
GAAP net income attributable to Steven Madden, Ltd.  $64,413   $61,297   $135,673   $184,270 
Non-GAAP Adjustments   707    155    1,989    335 
Adjusted net income attributable to Steven Madden, Ltd.  $65,120   $61,452   $137,662   $184,605 
                     
GAAP diluted net income per share  $0.87   $0.79   $1.81   $2.35 
                     
Adjusted diluted net income per share  $0.88   $0.79   $1.84   $2.35 

 

 

 

 

Table 5 - Reconciliation of GAAP diluted net income per share to Adjusted diluted net income per share in 2023 outlook

 

   2023 Outlook 
     
GAAP diluted net income per share  $2.35 
Non-GAAP Adjustments   0.05 
Adjusted diluted net income per share  $2.40 

 

Non-GAAP Adjustments include the items below.

 

For the third quarter of 2023:

 

$2.7 million pre-tax ($2.3 million after-tax) expense in connection with the write-off of an investment in a subsidiary in Asia, included in operating expenses.

 

$2.2 million pre-tax ($1.6 million after-tax) benefit in connection with the dissolution of an entity in Asia, included in operating expenses.

 

For the third quarter of 2022:

 

$1.8 million pre-tax ($1.4 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.

 

$1.6 million pre-tax ($1.2 million after-tax) benefit in connection with the change in valuation of contingent consideration, included in operating expenses.

 

For the 2023 outlook:

 

$2.7 million pre-tax ($2.3 million after-tax) expense in connection with the write-off of an investment in a subsidiary in Asia, included in operating expenses.

 

$2.2 million pre-tax ($1.6 million after-tax) benefit in connection with the dissolution of an entity in Asia, included in operating expenses.

 

$2.2 million pre-tax ($1.6 million after-tax) expense in connection with an acquisition and the formation of joint ventures, included in operating expenses.

 

$1.7 million pre-tax ($1.3 million after-tax) expense in connection with certain severances, termination benefits and a corporate office relocation, included in operating expenses.

 

Contact

 

Steven Madden, Ltd.

VP of Corporate Development & Investor Relations

Danielle McCoy

718-308-2611

InvestorRelations@stevemadden.com

 

 

 

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