Steven Madden Ltd.

31/07/2024 | Press release | Distributed by Public on 31/07/2024 11:06

Steve Madden Announces Second Quarter 2024 Results Form 8 K

Steve Madden Announces Second Quarter 2024 Results

LONG ISLAND CITY, N.Y., July 31, 2024 - Steven Madden, Ltd. (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel, today announced financial results for the second quarter ended June 30, 2024.

Amounts referred to as "Adjusted" are non-GAAP measures that exclude the items defined as "Non-GAAP Adjustments" in the "Non-GAAP Reconciliation" section.

Second Quarter 2024 Results

● Revenue increased 17.6% to $523.6 million, compared to $445.3 million in the same period of 2023.
● Gross profit as a percentage of revenue was 41.5%, compared to 42.6% in the same period of 2023.
● Operating expenses as a percentage of revenue were 31.3%, compared to 32.7% in the same period of 2023. Adjusted operating expenses as a percentage of revenue were 31.1%, compared to 32.6% in the same period of 2023.
● Income from operations totaled $46.9 million, or 9.0% of revenue, compared to $44.0 million, or 9.9% of revenue, in the same period of 2023. Adjusted income from operations totaled $54.5 million, or 10.4% of revenue, compared to $44.5 million, or 10.0% of revenue, in the same period of 2023.
● Net income attributable to Steven Madden, Ltd. was $35.4 million, or $0.49 per diluted share, compared to $34.5 million, or $0.46 per diluted share, in the same period of 2023. Adjusted net income attributable to Steven Madden, Ltd. was $41.2 million, or $0.57 per diluted share, compared to $34.9 million, or $0.47 per diluted share, in the same period of 2023.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "We delivered strong results in the second quarter, with revenue increasing 18% and Adjusted diluted EPS rising 23% compared to the same period in 2023. This performance was driven by exceptional growth in the accessories and apparel categories and robust gains in international markets and direct-to-consumer channels, demonstrating our team's strong execution of our key strategic initiatives. While the near-term operating environment remains choppy, we are confident that our core strengths - our brands, business model and people - will enable us to drive sustainable revenue and earnings growth over the long term."

Second Quarter 2024 Channel Results

Revenue for the wholesale business was $385.3 million, a 22.5% increase compared to the second quarter of 2023. Excluding the newly acquired Almost Famous, wholesale revenue increased 8.2%. Wholesale footwear revenue increased 0.9%. Wholesale accessories/apparel revenue increased 86.0%, or 29.8% excluding Almost Famous. Gross profit as a percentage of wholesale revenue was 33.1%, compared to 33.6% in the second quarter of 2023 driven by the impact of Almost Famous.

Direct-to-consumer revenue was $136.4 million, a 6.4% increase compared to the second quarter of 2023. Gross profit as a percentage of direct-to-consumer revenue increased to 64.3%, compared to 63.7% in the second quarter of 2023 driven by reduced promotional activity.

The Company ended the quarter with 273 brick-and-mortar retail stores and five e-commerce websites, as well as 27 company-operated concessions in international markets.

Balance Sheet and Cash Flow Highlights

As of June 30, 2024, cash, cash equivalents and short-term investments totaled $192.2 million. Inventory totaled $241.6 million, compared to $207.8 million at the end of the second quarter of 2023.

During the second quarter of 2024, the Company spent $38.2 million on repurchases of its common stock, which includes shares acquired through the net settlement of employees' stock awards.

Quarterly Cash Dividend

The Company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend is payable on September 23, 2024 to stockholders of record as of the close of business on September 13, 2024.

2024 Outlook

For fiscal 2024, the Company continues to expect revenue will increase 11% to 13% compared to 2023. The Company expects diluted EPS will be in the range of $2.43 to $2.53. The Company continues to expect Adjusted diluted EPS will be in the range of $2.55 to $2.65.

Conference Call Information

Interested stockholders are invited to listen to the conference call scheduled for today, July 31, 2024, at 8:30 a.m. Eastern Time, which will include a discussion of the Company's second quarter 2024 earnings results and 2024 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/fqn8ogri 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. In addition to marketing products under its own brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo® and GREATS®, Steve Madden licenses footwear, handbags and other accessory 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:

● geopolitical tensions in the regions in which we operate and any related challenging macroeconomic conditions globally that may materially adversely affect our customers, vendors, and partners, and the duration and extent to which these factors may impact our future business and operations, results of operations and financial condition;
● 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 hiring and retention of key personnel;
● the Company's ability to successfully implement growth strategies and integrate acquired businesses;
● 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 Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Net sales $ 521,709 $ 442,837 $ 1,072,276 $ 904,574
Licensing fee income 1,844 2,465 3,658 4,562
Total revenue 523,553 445,302 1,075,934 909,136
Cost of sales 306,424 255,432 633,990 524,174
Gross profit 217,129 189,870 441,944 384,962
Operating expenses 163,709 145,830 328,428 294,411
Change in valuation of contingent payment liability 6,550 - 8,200 -
Impairment of intangible - - 1,700 -
Income from operations 46,870 44,040 103,616 90,551
Interest and other income, net 1,354 1,956 2,909 3,976
Income before provision for income taxes 48,224 45,996 106,525 94,527
Provision for income taxes 11,276 10,923 25,015 22,668
Net income 36,948 35,073 81,510 71,859
Less: net income attributable to noncontrolling interest 1,572 544 2,200 600
Net income attributable to Steven Madden, Ltd. $ 35,376 $ 34,529 $ 79,310 $ 71,259
Basic income per share $ 0.50 $ 0.47 $ 1.10 $ 0.96
Diluted income per share $ 0.49 $ 0.46 $ 1.09 $ 0.95
Basic weighted average common shares outstanding 71,458 73,613 71,875 74,053
Diluted weighted average common shares outstanding 72,004 74,883 72,430 75,361
Cash dividends declared per common share $ 0.21 $ 0.21 $ 0.42 $ 0.42

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

As of
June 30, 2024 December 31, 2023 June 30, 2023
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 180,457 $ 204,640 $ 258,056
Short-term investments 11,761 15,173 16,358
Accounts receivable, net of allowances 36,624 40,246 41,332
Factor accounts receivable 341,967 320,723 256,627
Inventories 241,643 228,990 207,839
Prepaid expenses and other current assets 28,448 29,009 24,282
Income tax receivable and prepaid income taxes 19,208 16,051 23,405
Total current assets 860,108 854,832 827,899
Note receivable - related party - - 201
Property and equipment, net 49,056 47,199 42,267
Operating lease right-of-use asset 143,480 122,783 116,871
Deposits and other 15,553 16,250 10,858
Deferred tax assets 609 609 2,135
Goodwill 183,374 180,003 168,967
Intangibles, net 122,884 126,267 101,047
Total Assets $ 1,375,064 $ 1,347,943 $ 1,270,245
LIABILITIES
Current liabilities:
Accounts payable $ 189,772 $ 161,140 $ 130,417
Accrued expenses 143,127 154,751 134,469
Operating leases - current portion 44,961 40,342 36,593
Income taxes payable 7,204 5,998 7,773
Contingent payment liability - current portion 11,957 3,325 1,153
Accrued incentive compensation 8,909 12,068 7,237
Total current liabilities 405,930 377,624 317,642
Contingent payment liability - long-term portion 9,543 9,975 -
Operating leases - long-term portion 112,988 98,536 96,277
Deferred tax liabilities 9,078 8,606 3,923
Other liabilities 5,169 5,170 10,686
Total Liabilities 542,708 499,911 428,528
STOCKHOLDERS' EQUITY
Total Steven Madden, Ltd. stockholders' equity 808,279 829,598 824,516
Noncontrolling interest 24,077 18,434 17,201
Total stockholders' equity 832,356 848,032 841,717
Total Liabilities and Stockholders' Equity $ 1,375,064 $ 1,347,943 $ 1,270,245

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended
June 30, 2024 June 30, 2023
Cash flows from operating activities:
Net income $ 81,510 $ 71,859
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation 12,579 12,239
Depreciation and amortization 9,569 7,257
Loss on disposal of fixed assets 75 193
Impairment of intangible 1,700 -
Impairment of lease right-of-use asset - 95
Accrued interest on note receivable - related party - (4 )
Notes receivable - related party - 204
Change in valuation of contingent payment liability 8,200 -
Other operating activities 238 26
Changes, net of acquisitions, in:
Accounts receivable 2,787 (3,395 )
Factor accounts receivable (22,988 ) (6,256 )
Inventories (10,938 ) 22,417
Prepaid expenses, income tax receivables, prepaid taxes, and other assets (4,700 ) (8,572 )
Accounts payable and accrued expenses 18,122 (7,316 )
Accrued incentive compensation (3,109 ) (4,551 )
Leases and other liabilities 756 (1,939 )
Net cash provided by operating activities 93,801 82,257
Cash flows from investing activities:
Capital expenditures (9,272 ) (7,793 )
Purchases of short-term investments (10,510 ) (11,406 )
Maturity/sale of short-term investments 13,485 10,445
Acquisition of business (4,259 ) -
Other investing activities 371 -
Net cash used in investing activities (10,185 ) (8,754 )
Cash flows from financing activities:
Common stock repurchased and net settlements of stock awards (75,549 ) (64,235 )
Proceeds from exercise of stock options 749 870
Investment of noncontrolling interest - 4,582
Cash dividends paid on common stock (30,708 ) (31,895 )
Net cash used in financing activities (105,508 ) (90,678 )
Effect of exchange rate changes on cash and cash equivalents (2,291 ) 518
Net decrease in cash and cash equivalents (24,183 ) (16,657 )
Cash and cash equivalents - beginning of period 204,640 274,713
Cash and cash equivalents - end of period $ 180,457 $ 258,056

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, 2024 June 30, 2023 June 30, 2024 June 30, 2023
GAAP gross profit $ 217,129 $ 189,870 $ 441,944 $ 384,962
Non-GAAP Adjustments 126 - 333 -
Adjusted gross profit $ 217,255 $ 189,870 $ 442,277 $ 384,962

Table 2 - Reconciliation of GAAP operating expenses to Adjusted operating expenses

Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
GAAP operating expenses $ 163,709 $ 145,830 $ 328,428 $ 294,411
Non-GAAP Adjustments (958 ) (495 ) (1,623 ) (1,676 )
Adjusted operating expenses $ 162,751 $ 145,335 $ 326,805 $ 292,735

Table 3 - Reconciliation of GAAP income from operations to Adjusted income from operations

Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
GAAP income from operations $ 46,870 $ 44,040 $ 103,616 $ 90,551
Non-GAAP Adjustments 7,633 495 11,855 1,676
Adjusted income from operations $ 54,503 $ 44,535 $ 115,471 $ 92,227

Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes

Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
GAAP provision for income taxes $ 11,276 $ 10,923 $ 25,015 $ 22,668
Non-GAAP Adjustments 1,799 116 2,793 394
Adjusted provision for income taxes $ 13,075 $ 11,039 $ 27,808 $ 23,062

Table 5 - Reconciliation of GAAP net income attributable to noncontrolling interest to Adjusted net income attributable to noncontrolling interest

Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
GAAP net income attributable to noncontrolling interest $ 1,572 $ 544 $ 2,200 $ 600
Non-GAAP Adjustments - - 130 -
Adjusted net income attributable to noncontrolling interest $ 1,572 $ 544 $ 2,330 $ 600

Table 6 - Reconciliation of GAAP net income attributable to Steven Madden, Ltd. to Adjusted net income attributable to Steven Madden, Ltd.

Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
GAAP net income attributable to Steven Madden, Ltd. $ 35,376 $ 34,529 $ 79,310 $ 71,259
Non-GAAP Adjustments 5,835 378 8,931 1,282
Adjusted net income attributable to Steven Madden, Ltd. $ 41,211 $ 34,907 $ 88,241 $ 72,541
GAAP diluted net income per share $ 0.49 $ 0.46 $ 1.09 $ 0.95
Adjusted diluted net income per share $ 0.57 $ 0.47 $ 1.22 $ 0.96

Table 7 - Reconciliation of GAAP diluted net income per share to Adjusted diluted net income per share in 2024 outlook

2024 Outlook
Low End High End
GAAP diluted net income per share $ 2.43 $ 2.53
Non-GAAP Adjustments 0.12 0.12
Adjusted diluted net income per share $ 2.55 $ 2.65

Non-GAAP Adjustments include the items below.

For the second quarter of 2024:

● $0.1 million pre-tax ($0.1 million after-tax) expense in connection with the purchase accounting fair value adjustment of inventory from acquired businesses, included in cost of goods sold.
● $1.0 million pre-tax ($0.7 million after-tax) expense in connection with an acquisition and formation of joint ventures, included in operating expenses.
● $6.6 million pre-tax ($5.0 million after-tax) expense in connection with the change in valuation of a contingent consideration in connection with the acquisition of Almost Famous.

For the second quarter of 2023:

● $0.5 million pre-tax ($0.4 million after-tax) expense in connection with certain severances and termination benefits, included in operating expenses.

Contact

Steven Madden, Ltd.

VP of Corporate Development & Investor Relations

Danielle McCoy

718-308-2611

[email protected]