Steven Madden, Ltd. (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 first
quarter ended March 31, 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.
First Quarter
2023 Results
- Revenue decreased 17.1% to
$463.8 million compared to $559.7 million in the same period
of 2022.
- Gross profit as a percentage of revenue was 42.1% compared to
40.7% in the same period of 2022.
- Operating expenses as a percentage
of revenue were 32.0% compared to 23.2% in the same period of 2022.
Adjusted operating expenses as a percentage of revenue were 31.8%
compared to 23.8% in the same period of 2022.
- Income from operations totaled
$46.5 million, or 10.0% of revenue, compared to
$97.9 million, or 17.5% of revenue, in the same period of
2022. Adjusted income from operations totaled $47.7 million, or
10.3% of revenue, compared to $94.4 million, or 16.9% of revenue,
in the same period of 2022.
- Net income attributable to Steven
Madden, Ltd. was $36.7 million, or $0.48 per diluted share,
compared to $74.5 million, or $0.94 per diluted share, in the
same period of 2022. Adjusted net income attributable to Steven
Madden, Ltd. was $37.6 million, or $0.50 per diluted share,
compared to $73.4 million or $0.92 per diluted share, in the same
period of 2022.
Edward Rosenfeld, Chairman and Chief Executive
Officer, commented, “In light of the challenging setup we faced in
the first quarter – including a choppy retail environment,
conservative order patterns from our wholesale customers, and
difficult comparisons with the prior year – we were pleased to
deliver revenue and earnings slightly ahead of expectations. We
also further reduced our inventory levels while driving strong
gross margin performance despite a promotional retail landscape,
demonstrating the benefits and durability of our business model in
challenging operating environments. As we move forward, we remain
focused on executing our strategic initiatives – most importantly,
utilizing our proven model to create trend-right products and bring
them to market quickly – and are confident that we can drive
sustainable growth and value creation over the long term.”
First Quarter
2023 Channel Results
Revenue for the wholesale business was
$362.1 million, a 19.3% decrease compared to the first quarter
of 2022, when wholesale revenue experienced outsized growth of
29.0% versus pre-COVID first quarter of 2019. Wholesale footwear
revenue decreased 18.6% compared to the first quarter of 2022, when
wholesale footwear revenue increased 25.4% versus pre-COVID first
quarter of 2019. Wholesale accessories/apparel revenue decreased
22.0% compared to the first quarter of 2022, when wholesale
accessories/apparel revenue increased 43.0% versus pre-COVID first
quarter of 2019. Gross profit as a percentage of wholesale revenue
increased to 37.0% compared to 35.2% in the first quarter of 2022
driven by margin improvement in the wholesale accessories/apparel
business.
Direct-to-consumer revenue was
$99.6 million, an 8.1% decrease compared to the first quarter
of 2022 driven by declines in both the brick-and-mortar and
e-commerce businesses. Gross profit as a percentage of
direct-to-consumer revenue was 59.2% compared to 62.3% in the first
quarter of 2022 driven by increased promotional activity.
The Company ended the quarter with 235
brick-and-mortar retail stores and five e-commerce websites, as
well as 21 company-operated concessions in international
markets.
Balance Sheet and Cash Flow
Highlights
As of March 31, 2023, cash, cash
equivalents and short-term investments totaled
$223.7 million.
During the first quarter of 2023, the Company
repurchased approximately $38.5 million of the Company’s common
stock, which includes shares acquired through the net settlement of
employees’ stock awards. On May 8, 2023, the Board of Directors
approved an increase in the Company's share repurchase
authorization of $189.9 million, bringing the total authorization
up to $250.0 million as of that date.
Quarterly Cash Dividend
The Company’s Board of Directors approved a
quarterly cash dividend of $0.21 per share. The dividend is payable
on June 23, 2023 to stockholders of record as of the close of
business on June 12, 2023.
2023 Outlook
For 2023, the Company continues to expect
revenue will decrease 6.5% to 8.0% compared to 2022. The Company
expects diluted EPS will be in the range of $2.39 to $2.49. The
Company continues to expect Adjusted diluted EPS will be in the
range of $2.40 to $2.50.
Conference Call Information
Interested stockholders are invited to listen to
the conference call scheduled for today, May 9, 2023, at 8:30 a.m.
Eastern Time, which will include a discussion of the Company's
first 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/pimky2s7 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 for women, men
and children. 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
sandals, dress shoes, fashion sneakers, boots, booties 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:
- 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;
- 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 |
|
March 31, 2023 |
|
March 31, 2022 |
|
|
|
|
Net sales |
$ |
461,737 |
|
$ |
557,344 |
Commission and licensing fee
income |
|
2,097 |
|
|
2,390 |
Total revenue |
|
463,834 |
|
|
559,734 |
Cost of sales |
|
268,742 |
|
|
331,836 |
Gross profit |
|
195,092 |
|
|
227,898 |
Operating expenses |
|
148,581 |
|
|
130,002 |
Income from operations |
|
46,511 |
|
|
97,896 |
Interest and other income –
net |
|
2,020 |
|
|
57 |
Income before provision for
income taxes |
|
48,531 |
|
|
97,953 |
Provision for income
taxes |
|
11,745 |
|
|
23,360 |
Net income |
|
36,786 |
|
|
74,593 |
Less: net income attributable
to noncontrolling interest |
|
56 |
|
|
80 |
Net income attributable to
Steven Madden, Ltd. |
$ |
36,730 |
|
$ |
74,513 |
|
|
|
|
Basic net income per
share |
$ |
0.49 |
|
$ |
0.96 |
|
|
|
|
Diluted net income per
share |
$ |
0.48 |
|
$ |
0.94 |
|
|
|
|
Basic weighted average common
shares outstanding |
|
74,498 |
|
|
77,251 |
|
|
|
|
Diluted weighted average
common shares outstanding |
|
75,855 |
|
|
79,663 |
|
|
|
|
Cash dividends declared per
common share |
$ |
0.21 |
|
$ |
0.21 |
|
|
|
|
|
|
STEVEN MADDEN, LTD. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(In thousands) |
|
|
|
|
As of |
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
|
(Unaudited) |
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
209,979 |
|
$ |
274,713 |
|
$ |
170,347 |
Short-term investments |
|
13,740 |
|
|
15,085 |
|
|
9,897 |
Accounts receivable, net of
allowances |
|
46,138 |
|
|
37,937 |
|
|
39,418 |
Factor accounts
receivable |
|
283,893 |
|
|
248,228 |
|
|
390,163 |
Inventories |
|
179,937 |
|
|
228,752 |
|
|
233,380 |
Prepaid expenses and other
current assets |
|
22,267 |
|
|
22,989 |
|
|
21,225 |
Income tax receivable and
prepaid income taxes |
|
12,079 |
|
|
15,853 |
|
|
3,673 |
Total current assets |
|
768,033 |
|
|
843,557 |
|
|
868,103 |
Note receivable – related
party |
|
301 |
|
|
401 |
|
|
696 |
Property and equipment,
net |
|
41,519 |
|
|
40,664 |
|
|
36,436 |
Operating lease right-of-use
asset |
|
112,501 |
|
|
90,264 |
|
|
83,994 |
Deposits and other |
|
11,750 |
|
|
12,070 |
|
|
4,304 |
Deferred taxes |
|
1,963 |
|
|
1,755 |
|
|
6,254 |
Goodwill – net |
|
168,228 |
|
|
168,085 |
|
|
168,409 |
Intangibles – net |
|
100,826 |
|
|
101,192 |
|
|
110,330 |
Total Assets |
$ |
1,205,121 |
|
$ |
1,257,988 |
|
$ |
1,278,526 |
LIABILITIES |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
101,678 |
|
$ |
130,542 |
|
$ |
121,428 |
Accrued expenses |
|
112,395 |
|
|
138,523 |
|
|
162,232 |
Operating leases – current
portion |
|
33,977 |
|
|
29,499 |
|
|
31,615 |
Income taxes payable |
|
3,934 |
|
|
9,403 |
|
|
23,195 |
Contingent payment liability –
current portion |
|
1,153 |
|
|
1,153 |
|
|
2,050 |
Accrued incentive
compensation |
|
4,105 |
|
|
11,788 |
|
|
4,740 |
Total current liabilities |
|
257,242 |
|
|
320,908 |
|
|
345,260 |
Operating leases – long-term
portion |
|
95,797 |
|
|
79,128 |
|
|
75,553 |
Deferred tax liabilities |
|
3,923 |
|
|
3,923 |
|
|
3,378 |
Other liabilities |
|
10,461 |
|
|
10,166 |
|
|
10,928 |
Total Liabilities |
|
367,423 |
|
|
414,125 |
|
|
435,119 |
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
Total Steven Madden, Ltd.
stockholders’ equity |
|
821,042 |
|
|
831,553 |
|
|
835,215 |
Noncontrolling interest |
|
16,656 |
|
|
12,310 |
|
|
8,192 |
Total stockholders’
equity |
|
837,698 |
|
|
843,863 |
|
|
843,407 |
Total Liabilities and
Stockholders’ Equity |
$ |
1,205,121 |
|
$ |
1,257,988 |
|
$ |
1,278,526 |
|
|
|
|
|
|
|
|
|
STEVEN MADDEN, LTD. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(In thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
36,786 |
|
|
$ |
74,593 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Stock-based compensation |
|
6,139 |
|
|
|
5,980 |
|
Depreciation and amortization |
|
3,366 |
|
|
|
5,223 |
|
Loss on disposal of fixed assets |
|
15 |
|
|
|
208 |
|
Impairment of lease right-of-use asset |
|
95 |
|
|
|
— |
|
Deferred taxes |
|
— |
|
|
|
(1,673 |
) |
Accrued interest on note receivable - related party |
|
(2 |
) |
|
|
(4 |
) |
Notes receivable - related party |
|
102 |
|
|
|
102 |
|
Change in valuation of contingent payment liabilities |
|
— |
|
|
|
(4,910 |
) |
Other operating activities |
|
623 |
|
|
|
— |
|
Changes, net of acquisitions, in: |
|
|
|
Accounts receivable |
|
(8,201 |
) |
|
|
(12,872 |
) |
Factor accounts receivable |
|
(35,665 |
) |
|
|
(25,181 |
) |
Inventories |
|
47,710 |
|
|
|
21,833 |
|
Prepaid expenses, income tax receivables, prepaid taxes, and other
assets |
|
4,791 |
|
|
|
9,802 |
|
Accounts payable and accrued expenses |
|
(60,461 |
) |
|
|
(80,642 |
) |
Accrued incentive compensation |
|
(7,683 |
) |
|
|
(10,131 |
) |
Leases and other liabilities |
|
(890 |
) |
|
|
(1,774 |
) |
|
|
|
|
Net cash used in operating activities |
|
(13,275 |
) |
|
|
(19,446 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Capital expenditures |
|
(3,791 |
) |
|
|
(3,596 |
) |
Purchase of a trademark |
|
— |
|
|
|
(2,000 |
) |
Purchases of short-term investments |
|
(6,722 |
) |
|
|
(9,668 |
) |
Maturity/sale of short-term investments |
|
8,087 |
|
|
|
44,488 |
|
|
|
|
|
Net cash (used in)/provided by investing activities |
|
(2,426 |
) |
|
|
29,224 |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Proceeds from exercise of stock options |
|
264 |
|
|
|
275 |
|
Investment of noncontrolling interest |
|
4,486 |
|
|
|
— |
|
Common stock purchased for treasury |
|
(38,451 |
) |
|
|
(42,399 |
) |
Cash dividends paid on common stock |
|
(16,039 |
) |
|
|
(16,774 |
) |
Net cash used in financing activities |
|
(49,740 |
) |
|
|
(58,898 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
707 |
|
|
|
(32 |
) |
Net decrease in cash and cash equivalents |
|
(64,734 |
) |
|
|
(49,152 |
) |
Cash and cash equivalents –
beginning of period |
|
274,713 |
|
|
|
219,499 |
|
|
|
|
|
Cash and cash equivalents –
end of period |
$ |
209,979 |
|
|
$ |
170,347 |
|
|
|
|
|
|
|
|
|
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 |
|
March 31, 2023 |
|
March 31, 2022 |
|
|
|
|
GAAP operating expenses |
$ |
148,581 |
|
|
$ |
130,002 |
Non-GAAP
Adjustments |
|
(1,181 |
) |
|
|
3,466 |
Adjusted operating expenses |
$ |
147,400 |
|
|
$ |
133,468 |
Table 2 - Reconciliation of GAAP income from operations to Adjusted
income from operations |
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
|
|
|
|
GAAP income from operations |
$ |
46,511 |
|
$ |
97,896 |
|
Non-GAAP
Adjustments |
|
1,181 |
|
|
(3,466 |
) |
Adjusted income from operations |
$ |
47,692 |
|
$ |
94,430 |
|
Table 3 - Reconciliation of GAAP provision for income taxes to
Adjusted provision for income taxes |
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
|
|
|
|
GAAP provision for income taxes |
$ |
11,745 |
|
$ |
23,360 |
|
Non-GAAP
Adjustments |
|
278 |
|
|
(2,333 |
) |
Adjusted provision for income taxes |
$ |
12,023 |
|
$ |
21,027 |
|
Table 4 - Reconciliation of GAAP net income attributable to Steven
Madden, Ltd. to Adjusted net income attributable to Steven Madden,
Ltd. |
|
Three Months Ended |
|
March 31, 2023 |
|
March 31, 2022 |
|
|
|
|
GAAP net income attributable to Steven Madden, Ltd. |
$ |
36,730 |
|
$ |
74,513 |
|
Non-GAAP
Adjustments |
|
904 |
|
|
(1,133 |
) |
Adjusted
net income attributable to Steven Madden, Ltd. |
$ |
37,634 |
|
$ |
73,380 |
|
|
|
|
|
GAAP
diluted net income per share |
$ |
0.48 |
|
$ |
0.94 |
|
|
|
|
|
Adjusted
diluted net income per share |
$ |
0.50 |
|
$ |
0.92 |
|
|
|
|
|
Adjusted diluted weighted average shares outstanding |
|
75,855 |
|
|
79,633 |
|
Table 5 - Reconciliation of GAAP diluted net income per share to
Adjusted diluted net income per share in 2023 outlook |
|
2023 Outlook |
|
Low End |
|
High End |
|
|
|
|
GAAP diluted net income per share |
$ |
2.39 |
|
$ |
2.49 |
Non-GAAP
Adjustments |
|
0.01 |
|
|
0.01 |
Adjusted diluted net income per share |
$ |
2.40 |
|
$ |
2.50 |
Non-GAAP Adjustments include the items
below.
For the first quarter of 2023:
- $1.2 million pre-tax ($0.9 million
after-tax) expense in connection with certain severances,
termination benefits, and a corporate office relocation, included
in operating expenses.
For the first quarter of 2022:
- $4.9 million pre-tax ($3.8 million
after-tax) benefit in connection with the change in valuation of
contingent considerations, included in operating expenses.
- $1.8 million pre-tax ($1.4 million
after-tax) expense in connection with the accelerated amortization
of a trademark, included in operating expenses.
- $0.3 million pre-tax ($0.2 million
after-tax) benefit in connection with the exit of a lease, included
in operating expenses.
- $1.5 million tax expense in
connection with a deferred tax adjustment.
For the 2023 outlook:
- $1.2 million pre-tax ($0.9 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
RelationsDanielle
McCoy718-308-2611InvestorRelations@stevemadden.com
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