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 SUBSIDIARIESCONDENSED 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 SUBSIDIARIESCONDENSED 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 SUBSIDIARIESCONDENSED 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 SUBSIDIARIESNON-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 RelationsDanielle McCoy718-308-2611[email protected]
