SHOO
$41.10
Steven Maddens
($.05)
(.12%)
Earnings Details
2nd Quarter June 2017
Tuesday, August 01, 2017 6:59:00 AM
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Summary

Steven Maddens Beats

Steven Maddens (SHOO) reported 2nd Quarter June 2017 earnings of $0.51 per share on revenue of $374.1 million. The consensus earnings estimate was $0.45 per share on revenue of $353.8 million. The Earnings Whisper number was $0.46 per share. Revenue grew 15.0% on a year-over-year basis.

The company said it expects 2017 earnings of $2.18 to $2.24 per share on revenue of $1.53 billion to $1.55 billion. The company's previous guidance was earnings of $2.12 to $2.18 per share on revenue of $1.51 billion to $1.54 billion and the current consensus earnings estimate is $2.18 per share on revenue of $1.53 billion for the year ending December 31, 2017.

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
$0.51
Earnings Whisper
$0.46
Consensus Estimate
$0.45
Reported Revenue
$374.1 Mil
Revenue Estimate
$353.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Steve Madden Announces Second Quarter 2017 Results

Steve Madden (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(R), Dolce Vita(R), Betsey Johnson(R), Report(R), Big Buddha(R), Brian Atwood(R), Cejon(R), Blondo(R) and Mad Love(R), Steve Madden is a licensee of various brands, including Kate Spade(R), Superga(R) and Avec Les Filles(R). 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 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 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
413
1,653
acquisition
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
413
1,653
acquisition
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
767
767
& Benjamin
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
413
1,653
acquisition
Expense incurred in connection with the integration of the Schwartz
767
767
& Benjamin
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
153
578
acquisition
Tax effect of expense incurred in connection with the integration of
284
284
the
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
483
483
integration of the
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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SOURCE: Steve Madden

ICR, Inc.
Investor Relations
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203-682-8200
www.icrinc.com