SHOO
$33.23
Steven Maddens
$.05
.15%
Earnings Details
1st Quarter March 2019
Thursday, April 25, 2019 6:59:00 AM
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Summary

Steven Madden Raises Guidance, but Remains In-line with Estimates

Steven Maddens (SHOO) reported 1st Quarter March 2019 earnings of $0.42 per share on revenue of $410.9 million. The consensus earnings estimate was $0.37 per share. Revenue grew 5.6% on a year-over-year basis.

The company said it expects 2019 earnings of $1.78 to $1.86 per share on revenue of $1.73 billion to $1.77 billion. The company's previous guidance was earnings of $1.75 to $1.83 per share on revenue of $1.72 billion to $1.75 billion and the current consensus earnings estimate is $1.81 per share on revenue of $1.74 billion for the year ending December 31, 2019.

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
$0.42
Earnings Whisper
-
Consensus Estimate
$0.37
Reported Revenue
$410.9 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Steve Madden Announces Record First Quarter 2019 Results

LONG ISLAND CITY, N.Y., April 25, 2019 (GLOBE NEWSWIRE) -- 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 Relations
Danielle McCoy
718-308-2611
InvestorRelations@stevemadden.com

 

Steve Madden logo.jpg

Source: Steve Madde