SHOO
$29.86
Steven Maddens
$.29
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Earnings Details
3rd Quarter September 2018
Tuesday, October 30, 2018 6:59:00 AM
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Summary

Steven Maddens Beats

Steven Maddens (SHOO) reported 3rd Quarter September 2018 earnings of $0.65 per share on revenue of $458.5 million. The consensus earnings estimate was $0.61 per share on revenue of $470.3 million. The Earnings Whisper number was $0.63 per share. Revenue grew 3.9% on a year-over-year basis.

The company said it expects 2018 earnings of $1.76 to $1.78 per share on revenue of $1.64 billion to $1.66 billion. The company's previous guidance was earnings of $1.73 to $1.78 per share on revenue of $1.63 billion to $1.66 billion and the current consensus earnings estimate is $1.79 per share on revenue of $1.65 billion for the year ending December 31, 2018.

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
$0.65
Earnings Whisper
$0.63
Consensus Estimate
$0.61
Reported Revenue
$458.5 Mil
Revenue Estimate
$470.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Steve Madden Announces Third Quarter Results

~ Narrows Full Year 2018 Guidance to the High End ~
~ Increases Quarterly Dividend ~

LONG ISLAND CITY, N.Y., Oct. 30, 2018 (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 third quarter ended September 30, 2018.

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

All share and per share data provided herein is adjusted retroactively for the three-for-two stock split effective October 12, 2018.

For the Third Quarter 2018:

  • Net sales increased 3.9% to $458.5 million compared to $441.2 million in the same period of 2017.

  • Gross margin was 38.2% compared to 37.6% in the same period last year, an increase of 60 basis points.

  • Operating expenses as a percentage of sales were 24.0% compared to 23.8% of sales in the same period of 2017.  Adjusted operating expenses as a percentage of sales were 23.9% compared to 23.7% in the same period of 2017.

  • Income from operations totaled $70.2 million, or 15.3% of net sales, compared to $65.4 million, or 14.8% of net sales, in the same period of 2017.  Adjusted income from operations was $70.6 million, or 15.4% of net sales, compared to Adjusted income from operations of $65.9 million, or 14.9% of net sales, in the same period of 2017.

  • Net income attributable to Steven Madden, Ltd. was $55.6 million, or $0.64 per diluted share, compared to $44.2 million, or $0.51 per diluted share, in the prior year's third quarter.  Adjusted net income attributable to Steven Madden, Ltd. was $55.9 million, or $0.65 per diluted share, compared to $44.5 million, or $0.51 per diluted share, in the prior year's third quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are pleased with our performance in the third quarter, which included strong financial results as well as progress on a number of our key strategic initiatives.  In addition to robust growth in our core Steve Madden Women’s wholesale business, we saw strong gains in international markets, outstanding performance in Blondo and a significant acceleration in our e-commerce business.  The momentum in these areas – combined with the power of our brands and the strength of our business model – bolsters our confidence that we can continue to deliver long-term growth and value creation going forward.”

Third Quarter 2018 Segment Results

Net sales for the wholesale business increased 3.1% to $388.5 million in the third quarter of 2018, as a strong gain in wholesale accessories was partially offset by a modest decline in wholesale footwear driven by the transition of the Company’s business with one of its private label customers from the wholesale model to the buying agency model.  Gross margin in the wholesale business increased to 34.3% compared to 33.9% in last year’s third quarter, with gross margin improvement in both wholesale footwear and wholesale accessories.

Retail net sales in the third quarter rose 8.8% to $69.9 million compared to $64.3 million in the third quarter of the prior year.  Same store sales increased 5.5% in the quarter, including a solid gain in bricks and mortar locations and a strong increase in the Company’s e-commerce business.  Retail gross margin rose to 60.1% in the third quarter of 2018, up 80 basis points compared to 59.3% in the third quarter of the prior year due to improved gross margin in the Company’s e-commerce business.

The Company ended the quarter with 210 company-operated retail locations, including seven Internet stores, as well as 46 company-operated concessions in international markets.

The Company’s effective tax rate for the third quarter of 2018 was 20.8% compared to 32.1% in the third quarter of 2017.  The reduction in the Company’s effective tax rate compared to the prior year was primarily a result of the impact of the Tax Cuts and Jobs Act.

Balance Sheet and Cash Flow

During the third quarter of 2018, the Company repurchased 416,264 shares of the Company’s common stock for approximately $15.8 million, which includes shares acquired through the net settlement of employee stock awards.

As of September 30, 2018, cash, cash equivalents, and current marketable securities totaled $230.4 million.

Increased Quarterly Dividend

The Company’s Board of Directors approved a quarterly cash dividend of $0.14 per share, reflecting a 5% increase over the previous quarterly dividend.  The dividend will be paid on December 31, 2018, to stockholders of record at the close of business on December 21, 2018.

Updated Fiscal Year 2018 Outlook

For fiscal year 2018, the Company now expects net sales will increase 6% to 7% over net sales in 2017, the high end of the previous range of 5% to 7%.  The Company expects diluted EPS for fiscal year 2018 will be in the range of $1.70 to $1.72, the high end of the previous range of $1.67 to $1.72.  The Company expects Adjusted diluted EPS for fiscal year 2018 will be in the range of $1.76 to $1.78, the high end of the previous range of $1.73 to $1.78.

Non-GAAP Adjustments

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

For the third quarter 2018:

  • $0.4 million pre-tax ($0.3 million after-tax) expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, included in operating expenses.

For the third quarter 2017:

  • $0.5 million pre-tax ($0.3 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 2018:

  • $2.8 million pre-tax ($2.1 million after-tax) expense in connection with a provision for legal charges, included in operating expenses.

  • $1.8 million pre-tax ($1.3 million after-tax) expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, included in operating expenses.

  • $1.2 million pre-tax ($0.9 million after-tax) expense in connection with a warehouse consolidation, included in operating expenses.

  • $1.0 million tax expense in connection with the impairment of the preferred interest investment in Brian Atwood Italia Holding, LLC recorded in fourth quarter 2017.

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 30, 2018, 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.  

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 Kate Spade®, Superga® and Anne Klein®. 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 210 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, 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, 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 STATEMENTS OF OPERATIONS DATA
(In thousands, except per share amounts)
(Unaudited)

  Three Months Ended Nine  Months Ended
  September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
         
 Net sales$458,482 $441,193 $1,243,249 $1,181,728
 Cost of sales 283,265  275,302  779,525  743,723
 Gross profit 175,217  165,891  463,724  438,005
 Commission and licensing fee income, net 4,994  4,746  10,897  10,838
 Operating expenses 110,007  105,194  326,276  310,725
 Income from operations 70,204  65,443  148,345  138,118
 Interest and other income, net 872  564  2,502  1,956
 Income before provision for income taxes 71,076  66,007  150,847  140,074
 Provision for income taxes 14,757  21,181  32,885  45,703
 Net income 56,319  44,826  117,962  94,371
 Less: Net income attributable to noncontrolling interest 756  596  1,316  1,019
 Net income attributable to Steven Madden, Ltd.$55,563 $44,230 $116,646 $93,352
         
         
 Basic income per share$0.68 $0.54 $1.43 $1.13
 Diluted income per share$0.64 $0.51 $1.35 $1.07
         
 Basic weighted average common shares       
 outstanding 81,727  82,356  81,832  82,935
 Diluted weighted average common shares       
 outstanding 86,574  86,627  86,273  86,841

 

STEVEN MADDEN, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)

  As of    
  September 30, 2018 December 31, 2017 September 30, 2017
  (Unaudited)   (Unaudited)
 Cash and cash equivalents$172,537 $181,214 $92,080
 Marketable securities 57,896  93,550  84,815
 Accounts receivable, net 332,049  240,909  337,200
 Inventories 147,491  110,324  124,117
 Other current assets 43,966  49,044  44,621
 Property and equipment, net 65,472  71,498  73,922
 Goodwill and intangibles, net 295,269  299,842  305,622
 Other assets 10,379  10,780  9,026
 Total assets$1,125,059 $1,057,161 $1,071,403
       
 Accounts payable$94,636 $66,955 $102,906
 Contingent payment liability (current & non current) 3,000  10,000  23,050
 Other current liabilities 121,894  132,657  106,485
 Other long term liabilities 38,332  38,617  35,961
 Total Steven Madden, Ltd. stockholders' equity 859,770  802,821  797,061
 Noncontrolling interest 7,427  6,111  5,940
 Total liabilities and stockholders' equity$1,125,059 $1,057,161 $1,071,403

 

STEVEN MADDEN, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW DATA
(In thousands)
(Unaudited)

    Nine  Months Ended
    September 30, 2018 September 30, 2017
       
       
 Net cash provided by operating activities  $46,467  $35,010 
       
 Investing Activities     
 Purchases of property and equipment   (8,164)  (11,710)
 Sales of marketable securities, net   33,842   28,290 
 Repayment of notes receivable   -   221 
 Acquisition, net of cash acquired   -   (17,396)
 Net cash provided by (used in) investing activities   25,678   (595)
       
 Financing Activities     
 Common stock share repurchases for treasury   (50,881)  (73,226)
 Payment of contingent liability   (7,000)  (7,359)
 Proceeds from exercise of stock options   12,801   11,312 
 Cash dividends paid   (35,147)  - 
 Net cash used in financing activities   (80,227)  (69,273)
       
 Effect of exchange rate changes on cash and cash equivalents  (595)  823 
       
 Net decrease in cash and cash equivalents   (8,677)  (34,035)
       
 Cash and cash equivalents - beginning of period   181,214   126,115 
       
 Cash and cash equivalents - end of period  $172,537  $92,080 


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         
         Nine Months Ended 
         September 30, 2017 
 Consolidated         
 GAAP gross profit       $438,005  
           
 Non-cash expense associated with the purchase accounting fair value         
 adjustment of inventory acquired in the Schwartz & Benjamin acquisition        1,654  
           
 Adjusted gross profit       $439,659  
           
 Wholesale         
 GAAP gross profit       $325,717  
           
 Non-cash expense associated with the purchase accounting fair value adjustment         
 of inventory acquired in the Schwartz & Benjamin acquisition        1,654  
           
 Adjusted gross profit       $327,371  
           
 Table 2 - Reconciliation of GAAP operating expenses to Adjusted operating expenses        
   Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended 
   September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 
           
 GAAP operating expenses $110,007  $105,194  $326,276  $310,725  
           
 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  (406)  (488)  (1,787)  (1,255) 
           
 Expense in connection with a warehouse consolidation  -   -   (1,241)  -  
           
 Bad debt expense associated with the Payless ShoeSource bankruptcy  -   -   -   (7,500) 
           
 Adjusted operating expenses $109,601  $104,706  $320,411  $301,970  
           
 Table 3 - Reconciliation of GAAP income from operations to Adjusted income from operations       
   Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended 
   September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 
           
 GAAP Income from Operations $70,204  $65,443  $148,345  $138,118  
           
 Non-cash expense associated with the purchase accounting fair value         
 adjustment of inventory acquired in the Schwartz & Benjamin acquisition  -   -   -   1,654  
           
 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  406   488   1,787   1,255  
           
 Expense in connection with a warehouse consolidation  -   -   1,241   -  
           
 Bad debt expense associated with the Payless ShoeSource bankruptcy  -   -   -   7,500  
           
 Adjusted Income from Operations $70,610  $65,931  $154,210  $148,527  
           
 Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes       
   Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended 
   September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 
           
 GAAP provision for income taxes $14,757  $21,181  $32,885  $45,703  
           
 Tax effect of non-cash expense associated with the purchase accounting fair         
 value adjustment of inventory acquired in the Schwartz & Benjamin acquisition  -   -   -   579  
           
 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  102   181   462   465  
           
 Tax effect of expense in connection with a warehouse consolidation  -   -   327   -  
           
 Tax expense in connection with the impairment of the preferred interest         
 investment in Brian Atwood Italia Holding, LLC recorded in fourth         
 quarter 2017  -   -   (1,028)  -  
           
 Tax effect of bad debt expense associated with the Payless ShoeSource         
 bankruptcy  -   -   -   964  
           
 Adjusted provision for income taxes $14,859  $21,362  $33,348  $47,711  
           
 Table 5 - Reconciliation of GAAP net income to Adjusted net income         
   Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended 
   September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 
           
 GAAP net income attributable to Steven Madden, Ltd. $55,563  $44,230  $116,646  $93,352  
           
 After-tax impact of non-cash expense associated with the purchase         
 accounting fair value adjustment of inventory acquired in the Schwartz &         
 Benjamin acquisition  -   -   -   1,075  
           
 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  304   307   1,325   790  
           
 After-tax impact of expense in connection with a warehouse consolidation  -   -   914   -  
           
 Tax expense in connection with the impairment of the preferred interest         
 investment in Brian Atwood Italia Holding, LLC recorded in fourth         
 quarter 2017  -   -   1,028   -  
           
 After-tax impact of bad debt expense associated with the Payless         
 ShoeSource bankruptcy  -   -   -   6,536  
           
 Adjusted net income attributable to Steven Madden, Ltd. $55,867  $44,537  $122,048  $101,753  
           
 GAAP diluted income per share $0.64  $0.51  $1.35  $1.07  
 Adjusted diluted income per share $0.65  $0.51  $1.41  $1.17  

Contact

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

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Source: Steve Madden