SHOO
$34.11
Steven Maddens
($.73)
(2.10%)
Earnings Details
3rd Quarter September 2020
Tuesday, October 27, 2020 6:59:00 AM
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Summary

Steven Maddens (SHOO) Recent Earnings

Steven Maddens (SHOO) reported 3rd Quarter September 2020 earnings of $0.39 per share on revenue of $342.8 million. The consensus earnings estimate was $0.24 per share on revenue of $329.3 million. Revenue fell 31.1% compared to the same quarter a year ago.

Steven Madden Ltd designs, markets and sells fashion-forward name brand and private label footwear for women, men and children and name brand and private label fashion handbags and accessories.

Results
Reported Earnings
$0.39
Earnings Whisper
-
Consensus Estimate
$0.24
Reported Revenue
$342.8 Mil
Revenue Estimate
$329.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Steve Madden Announces Third Quarter 2020 Results

LONG ISLAND CITY, N.Y., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Steve Madden (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children, today announced financial results for the third quarter ended September 30, 2020.

Amounts referred to as “Adjusted” exclude the items that are described under the heading “Non-GAAP Adjustments.”

The Company reclassified commission and licensing fee income to Total Revenue and reclassified its respective expenses into Operating Expenses from previously labeled Commission and Licensing Fee Income - Net on the Company's Consolidated Statement of Operations for each period provided.

Third Quarter 2020 Review

  • Revenue decreased 30.9% to $346.9 million compared to $502.1 million in the same period of 2019.
  • Gross margin increased 130 basis points to 40.3% compared to 39.0% in the same period of 2019.
  • Operating expenses as a percentage of revenue were 31.7% compared to 25.5% in the same period of 2019.  Adjusted operating expenses as a percentage of revenue were 27.0% compared to 24.6% in the same period of 2019.
  • Loss from operations totaled ($3.0) million, or (0.9%) of revenue, compared to income from operations of $68.0 million, or 13.6% of revenue, in the same period of 2019.  Adjusted income from operations was $46.2 million, or 13.3% of revenue, compared to Adjusted income from operations of $72.3 million, or 14.4% of revenue, in the same period of 2019.
  • Net loss attributable to Steven Madden, Ltd. was ($6.9) million, or ($0.09) per diluted share, compared to net income attributable to Steven Madden, Ltd. of $52.5 million, or $0.63 per diluted share, in the same period of 2019.  Adjusted net income attributable to Steven Madden, Ltd. was $31.8 million, or $0.39 per diluted share, compared to Adjusted net income attributable to Steven Madden, Ltd. of $56.0 million, or $0.67 per diluted share, in the same period of 2019.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "While the COVID-19 pandemic continues to have a negative impact on our business, we were pleased to deliver third quarter revenue and earnings that significantly exceeded our expectations.  The swift actions we took to address the rapidly changing marketplace – adjusting our merchandise mix, accelerating our digital commerce initiatives and right-sizing our expense structure – have positioned us to continue to navigate the crisis and also to capitalize on market share opportunities going forward.  We remain confident that our strong brands, pristine balance sheet and proven business model will enable us to drive sustainable revenue and earnings growth as conditions normalize."

Third Quarter 2020 Segment Results

Revenue for the wholesale business decreased 32.7% to $283.8 million in the third quarter of 2020, including a 32.5% decline in wholesale footwear and a 33.3% decline in wholesale accessories/apparel.  Gross margin in the wholesale business increased 70 basis points to 34.6% compared to 33.9% in the third quarter of 2019.

Retail revenue decreased 22.1% to $59.0 million in the third quarter of 2020 due to a significant decline in the brick-and-mortar business, partially offset by strong growth in the e-commerce business.  Retail gross margin rose 50 basis points to 63.8% compared to 63.3% in the third quarter of 2019.

The Company ended the quarter with 221 company-operated retail stores, including eight internet stores, as well as 17 company-operated concessions in international markets.

The Company’s effective tax rate for the third quarter of 2020 was (145.6%) compared to 23.0% in the third quarter of 2019.  On an Adjusted basis, the effective tax rate for the third quarter of 2020 was 29.3% compared to 22.6% in the third quarter of 2019.

Balance Sheet

As of September 30, 2020, cash, cash equivalents and short-term investments totaled $257.2 million, and the Company had no outstanding borrowings.

Fiscal Year 2020 Outlook

Given the continued disruption and uncertainty related to the COVID-19 pandemic, the Company is not providing guidance at this time.

Non-GAAP Adjustments

Amounts referred to as “Adjusted” exclude the items below.

For the third quarter 2020:

  • $8.7 million pre-tax ($6.7 million after-tax) expense in connection with payments and a provision for early lease termination charges, included in operating expenses.
  • $4.6 million pre-tax ($3.5 million after-tax) expense associated with the impairment of store fixed assets, included in operating expenses.
  • $2.3 million pre-tax ($1.7 million after-tax) expense in connection with the impairment of lease right-of-use assets, included in operating expenses.
  • $1.0 million pre-tax ($0.7 million after-tax) expense in connection with restructuring and related charges, included in operating expenses.
  • $0.4 million pre-tax ($0.3 million after-tax) benefit in connection with the change in valuation of contingent considerations, included in operating expenses.
  • $33.0 million pre-tax ($25.2 million after-tax) expense associated with the impairment of certain trademarks.
  • $1.2 million loss in connection with the impairment of store fixed assets, impairment of lease right-of-use assets, restructuring and related charges attributable to noncontrolling interest.
  • $2.4 million tax expense in connection with deferred and foreign uncertain tax position adjustments.

For the third quarter 2019:

  • $3.1 million pre-tax ($2.3 million after-tax) expense in connection with a provision for early lease termination charges, included in operating expenses.
  • $1.1 million pre-tax ($0.8 million after-tax) expense in connection with the acquisitions of GREATS and BB Dakota, included in operating expenses.
  • $0.4 million tax expense in connection with deferred adjustments.

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, October 27, 2020, at 8:30 a.m. Eastern Time.  The call will be broadcast live over the Internet and can be accessed by logging onto https://investor.stevemadden.com.  An online archive of the broadcast will be available within two hours of the conclusion of the call and will remain available for 12 months following the live call.

About Steve Madden

Steve Madden designs, sources and markets fashion-forward footwear, accessories and apparel 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®, GREATS®, BB Dakota®, Mad Love® and Big Buddha®, Steve Madden is a licensee of various brands, including Anne Klein®, 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, mass merchants and online retailers.  Steve Madden also operates 221 retail stores (including eight 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, slippers, dress shoes, sandals and more, visit http://www.stevemadden.com.

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”, or “estimate”, 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:

  • the Company's ability to maintain adequate liquidity when negatively impacted by unforeseen events such as an epidemic or pandemic (COVID-19), which may cause disruption to the Company's business operations and temporary closure of Company-operated and wholesale partner retail stores, resulting in a significant reduction in revenue for an indeterminable period of time;
  • 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;
  • 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;
  • 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 meet the Company’s quality standards;
  • 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;
  • disruptions to product delivery systems and the Company’s ability to properly manage inventory;
  • the Company’s ability to adequately protect its trademarks and other intellectual property rights;
  • 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;
  • 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 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 STATEMENT OF OPERATIONS DATA

(In thousands, except per share amounts)

(Unaudited)

 Three Months Ended Nine Months Ended
 September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
        
Net sales$342,830  $497,308  $839,877  $1,353,222 
Commission and licensing fee income4,037  4,806  8,970  14,309 
Total revenue346,867  502,114  848,847  1,367,531 
Cost of sales206,990  306,277  519,618  839,849 
Gross profit139,877  195,837  329,229  527,682 
Operating expenses109,865  127,796  339,649  366,298 
Impairment of intangibles33,010    42,528  4,050 
(Loss) / income from operations(2,998) 68,041  (52,948) 157,334 
Interest and other income, net88  961  1,491  3,415 
(Loss) / income before provision for income taxes(2,910) 69,002  (51,457) 160,749 
Provision / (benefit) for income taxes4,236  15,886  (9,366) 36,257 
Net (loss) / income(7,146) 53,116  (42,091) 124,492 
Less: net (loss) / income attributable to noncontrolling interest(195) 653  (1,103) 932 
Net (loss) / income attributable to Steven Madden, Ltd.$(6,951) $52,463  $(40,988) $123,560 
        
Basic net (loss) / income per share$(0.09) $0.66  $(0.52) $1.55 
        
Diluted net (loss) / income per share$(0.09) $0.63  $(0.52) $1.48 
        
Basic weighted average common shares outstanding78,560  79,092  78,650  79,854 
        
Diluted weighted average common shares outstanding78,560  83,106  78,650  83,740 
        
Cash dividends declared per common share$  $0.14  $0.15  $0.42 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

   As of  
 September 30, 2020 December 31, 2019 September 30, 2019
 (Unaudited)   (Unaudited)
      
Cash and cash equivalents$223,820  $264,101  $167,492 
Short-term investments33,332  40,521  27,452 
Accounts receivable, net266,402  254,637  335,503 
Inventories109,683  136,896  148,053 
Other current assets14,597  22,724  28,586 
Property and equipment, net43,130  65,504  60,662 
Operating lease right-of-use assets111,732  155,700  162,385 
Goodwill and intangibles, net283,094  334,058  334,341 
Other assets18,620  4,506  17,991 
Total assets$1,104,410  $1,278,647  $1,282,465 
      
Accounts payable$65,666  $61,706  $90,278 
Operating leases (current & non-current)144,185  171,796  177,772 
Other current liabilities116,194  180,941  124,356 
Contingent payment liability1,420  9,124  9,770 
Other long-term liabilities9,205  13,856  30,053 
Total Steven Madden, Ltd. stockholders’ equity756,120  828,501  838,738 
Noncontrolling interest11,620  12,723  11,498 
Total liabilities and stockholders’ equity$1,104,410  $1,278,647  $1,282,465 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

(Unaudited)

 Nine Months Ended
 September 30, 2020 September 30, 2019
    
Net cash provided by operating activities$607  $83,158 
    
Investing Activities   
Capital expenditures(5,496) (9,211)
Maturity / sale of marketable securities and short-term investments, net6,020  40,331 
Acquisitions, net of cash acquired  (36,753)
Net cash provided by / (used in) investing activities524  (5,633)
    
Financing Activities   
Common stock purchased for treasury(29,796) (76,505)
Investment of noncontrolling interest359  1,283 
Distribution of noncontrolling interest earnings  (1,113)
Proceeds from exercise of stock options960  2,606 
Cash dividends paid(12,459) (35,805)
Net cash (used in) financing activities(40,936) (109,534)
    
Effect of exchange rate changes on cash and cash equivalents(476) (530)
    
Net (decrease) in cash and cash equivalents(40,281) (32,539)
    
Cash and cash equivalents - beginning of period264,101  200,031 
    
Cash and cash equivalents - end of period$223,820  $167,492 

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, 2020 September 30, 2019 September 30, 2020 September 30, 2019
        
GAAP operating expenses$109,865  $127,796  339,649  $366,298 
        
Expense in connection with payments / provision for early lease termination charges(8,746) (3,131) (8,888) (5,424)
        
Expense in connection with impairment of store fixed assets(4,585)   (16,597)  
        
Expense in connection with impairment of lease right-of-use assets(2,312)   (20,299)  
        
Expense in connection with restructuring and related charges(978)   (6,392)  
        
Benefit in connection with the change in valuation of contingent considerations409    5,020   
        
Expense in connection with benefits provided to furloughed employees    (1,991)  
        
Expense in connection with loan receivable    (697)  
        
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 the acquisitions of GREATS and BB Dakota  (1,078)   (1,078)
        
Net recovery in connection with the Payless ShoeSource bankruptcy      259 
        
Expense in connection with a divisional headquarters relocation      (669)
        
Adjusted operating expenses$93,653  $123,587  $289,805  $361,254 


Table 2 - Reconciliation of GAAP (loss) / income from operations to Adjusted income from operations
 Three Months Ended Nine Months Ended
 September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
        
GAAP (loss) / income from operations$(2,998) $68,041  $(52,948) $157,334 
        
Expense in connection with payments / provision for early lease termination charges8,746  3,131  8,888  5,424 
        
Expense in connection with impairment of store fixed assets4,585    16,597   
        
Expense in connection with impairment of lease right-of-use assets2,312    20,298   
        
Expense in connection with restructuring and related charges978    6,391   
        
Benefit in connection with the change in valuation of contingent considerations(409)   (5,020)  
        
Expense in connection with benefits provided to furloughed employees    1,991   
        
Expense in connection with loan receivable    697   
        
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 the acquisitions of GREATS and BB Dakota  1,078    1,078 
        
Net recovery in connection with the Payless ShoeSource bankruptcy      (259)
        
Expense in connection with a divisional headquarters relocation      669 
        
Impairment of certain trademarks33,010    42,528  4,050 
        
Adjusted income from operations$46,224  $72,250  $39,422  $166,428 



Table 3 - Reconciliation of GAAP provision / (benefit) for income taxes to Adjusted provision for income taxes
 Three Months Ended Nine Months Ended
 September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
        
GAAP provision / (benefit) for income taxes$4,236  $15,886  $(9,366) $36,257 
        
Tax effect of expense in connection with payments / provision for early lease termination charges2,071  786  2,105  1,361 
        
Tax effect of expense in connection with impairment of store fixed assets1,128    4,038   
        
Tax effect of expense in connection with impairment of lease right-of-use assets574    4,907   
        
Tax effect of expense in connection with restructuring and related charges232    1,284   
        
Tax effect of benefit in connection with the change in valuation of contingent considerations(97)   (1,189)  
        
Tax effect of expense in connection with benefits provided to furloughed employees    472   
        
Tax effect of expense in connection with provision for loan receivable    165   
        
Tax effect of 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 the acquisitions of GREATS and BB Dakota  271    271 
        
Tax effect of net recovery in connection with the Payless ShoeSource bankruptcy      85 
        
Tax effect of expense in connection with a divisional headquarters relocation      168 
        
Tax effect of impairment of certain trademarks7,817    10,071  1,017 
        
Tax expense in connection with deferred and foreign uncertain tax position adjustments(2,393) (383) (2,393) (383)
        
Adjusted provision for income taxes$13,568  $16,560  $10,094  $38,307 


Table 4 - Reconciliation of GAAP net (loss) /  income attributable to noncontrolling interest to Adjusted net income attributable to noncontrolling interest    
 Three Months Ended Nine Months Ended
 September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
        
GAAP net (loss) / income attributable to noncontrolling interest$(195) $653  $(1,103) $932 
        
Net loss in connection with impairment of store fixed assets, impairment of lease right-of-use assets, restructuring and related charges1,161    1,631   
        
Adjusted net income attributable to noncontrolling interest$966  $653  $923  $932 


Table 5 - Reconciliation of GAAP (loss) / income attributable to Steven Madden, Ltd. to Adjusted net income attributable to Steven Madden, Ltd.
 Three Months Ended Nine Months Ended
 September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
        
GAAP net (loss) / income attributable to Steven Madden, Ltd.$(6,951) $52,463   $(40,988) $123,560  
        
After-tax impact of expense in connection with payments / provision for early lease termination charges6,675   2,345   6,784   4,062  
        
After-tax impact of expense in connection with impairment of store fixed assets3,457   —   12,559   —  
        
After-tax impact of expense in connection with impairment of lease right-of-use assets1,737   —   15,390   —  
        
After-tax impact of expense in connection with restructuring and related charges746   —   4,876   —  
        
After-tax impact of benefit in connection with the change in valuation of contingent considerations(312) —   (3,831) —  
        
After-tax impact of expense in connection with benefits provided to furloughed employees—   —   1,520   —  
        
After-tax impact of expense in connection with provision for loan receivable—   —   532   —  
        
After-tax impact of 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 the acquisitions of GREATS and BB Dakota—   808   —   808  
        
After-tax impact of net recovery in connection with the Payless ShoeSource bankruptcy—   —   —   (344)
        
After-tax impact of expense in connection with a divisional headquarters relocation—   —   —   501  
        
After-tax impact of impairment of certain trademarks25,193   —   32,458   3,033  
        
Tax expense in connection with deferred and foreign uncertain tax position adjustments2,393   383   2,393   383  
        
Less: Net loss in connection with impairment of store fixed assets, impairment of lease right-of-use assets, restructuring and related charges attributable to noncontrolling interest(1,161) —   (1,631) —  
        
Adjusted net income attributable to Steven Madden, Ltd.$31,777   $55,999   $30,062   $130,604  
        
GAAP diluted (loss) / income per share$(0.09) $0.63   $(0.52) $1.48  
        
GAAP diluted weighted average shares outstanding78,560   83,106   78,650   83,740  
        
Adjusted diluted income per share$0.39   $0.67   $0.37   $1.56  
        
Adjusted diluted weighted average shares outstanding80,701   83,106   81,047   83,740  

Contact

Steven Madden, Ltd.
Director of Corporate Development & Investor Relations
Danielle McCoy
718-308-2611
InvestorRelations@stevemadden.com


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Source: Steve Madden