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Steve Madden Announces Record Third Quarter 2012 Results

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LONG ISLAND CITY, N.Y.--(BUSINESS WIRE)--

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, 2012.

For the Third Quarter 2012:

  • Net sales increased 13.7% to $356.9 million.
  • Retail comparable store sales increased 8.6%.
  • Gross margin improved to 36.8% compared to 34.9% in the third quarter of 2011.
  • The effective tax rate was 35.4% compared to 39.0% in the prior year's third quarter due to the reinvestment, indefinitely, of a portion of earnings from the Company's foreign operations in such foreign operations.
  • Net income was $37.9 million, or $0.86 per diluted share. Net income included a $5.1 million impairment charge and a $0.9 million charge for bad debt, both related to the bankruptcy of Bakers Footwear Group. On an after-tax basis, these charges negatively impacted net income by $3.7 million, or $0.08 per diluted share. Net income in the third quarter of 2011 was $31.9 million, or $0.74 per diluted share.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "We saw continued strength in the business during the third quarter, delivering the highest quarterly sales and earnings in the Company's 22 year history. We achieved double-digit sales growth, gross margin improvement and operating expense leverage in both our wholesale and retail businesses in the quarter. Our flagship Steve Madden brand performed particularly well, as consumers continue to respond to our fashion-forward, on-trend product. Overall, we are pleased with the momentum in our business and are confident that we can continue to drive strong sales and earnings growth in the balance of 2012 and beyond.”

Third Quarter 2012 Results

Third quarter net sales increased 13.7% to $356.9 million compared to $313.9 million in the same period of 2011. Net sales from the wholesale business grew 12.0% to $311.5 million compared to $278.3 million in the third quarter of 2011, driven by strong growth in the Steve Madden Women's business as well as the benefit from the acquisition of SM Canada. Retail net sales rose 27.2% to $45.3 million compared to $35.6 million in the third quarter of the prior year. Same store sales increased 8.6% following a 13.2% increase in the prior year's third quarter.

Gross margin expanded 190 basis points to 36.8% in the third quarter of 2012 compared to 34.9% in the same period last year. Gross margin in the wholesale business was 33.3% compared to 31.9% in the prior year's third quarter, with improvements in both the wholesale footwear and wholesale accessories businesses. Retail gross margin increased to 60.7% in the third quarter of 2012 compared to 58.4% in the third quarter of 2011, due primarily to the impact from the higher-margin SM Canada retail business as well as reduced promotional activity.

Operating expenses as a percentage of sales remained flat to the prior year's third quarter at 20.6% as a result of leverage on higher sales in both wholesale and retail, offset by an increased mix of retail, which has higher operating expenses as a percentage of sales than the wholesale business.

Operating income for the third quarter was $56.4 million, or 15.8% of net sales. Excluding the aforementioned charges for impairment and bad debt related to the bankruptcy of Bakers Footwear Group, operating income for the third quarter was $62.4 million, or 17.5% of net sales, compared to operating income of $50.5 million, or 16.1% of net sales, in the same period of 2011.

Third quarter net income was $37.9 million, or $0.86 per diluted share. Net income included a $5.1 million impairment charge and a $0.9 million charge for bad debt, both related to the bankruptcy of Bakers Footwear Group. On an after-tax basis, these charge negatively impacted net income by $3.7 million, or $0.08 per diluted share. Net income in the third quarter of 2011 was $31.9 million, or $0.74 per diluted share.

The Company opened three Steve Madden full-price stores in the third quarter and ended the quarter with 99 company-operated retail locations, including eight outlets and two Internet stores.

For the First Nine Months of 2012:

  • For the first nine months of 2012, net sales increased 32.3% to $911.5 million from $688.8 million in the comparable period last year.
  • Net income was $86.7 million, or $1.97 per diluted share, for the first nine months of 2012. Net income for the first nine months of 2011 was $73.5 million, or $1.70 per diluted share.

At the end of the third quarter, cash, cash equivalents and marketable securities totaled $154.4 million.

Company Outlook

For fiscal 2012, the Company now expects that net sales will increase 25 – 26% from 2011. Diluted EPS is now expected to be in the range of $2.64 – $2.69. The current EPS guidance includes the aforementioned charges for impairment and bad debt related to the bankruptcy of Bakers Footwear Group, which were not included in the previous EPS guidance of $2.67 – $2.77 and negatively impacted EPS by $0.08.

Conference Call Information

As previously announced, interested stockholders are invited to listen to the third quarter earnings conference call scheduled for today, Thursday, November 1, 2012, 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. Additionally, a replay of the call can be accessed by dialing 877-870-5176 (U.S.) and 858-384-5517 (international), passcode 9118472, and will be available until December 1, 2012.

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 owned brands including Steve Madden, Steven by Steve Madden, Madden Girl, Stevies, Betsey Johnson, Betseyville, Report, R2 by Report, Big Buddha, Wild Pair and Cejon, the Company is the licensee of various brands, including Olsenboye for footwear, handbags and belts, Elizabeth and James, Superga, l.e.i. and GLO for footwear and Daisy Fuentes for handbags. The Company also designs and sources products under private label brand names for various retailers. The Company's wholesale distribution includes department stores, specialty stores, luxury retailers, national chains and mass merchants. The Company also operates 104 retail stores (including the Company's three online stores). The Company licenses certain of its brands to third parties for the marketing and sale of certain products, including for ready-to-wear, outerwear, intimate apparel, eyewear, hosiery, jewelry, fragrance, luggage and bedding and bath products.

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 Nine Months Ended
Sep. 30, 2012   Sep. 30, 2011 Sep. 30, 2012   Sep 30, 2011
 
Net sales $ 356,883 $ 313,887 $ 911,545 $ 688,794
Cost of sales   225,668     204,434     579,983     426,114  
Gross profit 131,215 109,453 331,562 262,680
Commission and licensing fee income, net 3,875 5,649 12,600 14,648
Operating expenses 73,573 64,594 205,482 162,177
Impairment charges and provision for litigation   5,144     -     9,454    
Income from operations 56,373 50,508 129,226 115,151
Interest and other income, net   2,138     1,732     4,271     4,905  
Income before provision for income taxes 58,511 52,240 133,497 120,056
Provision for income taxes   20,698     20,372     46,869     46,641  
Net income 37,813 31,868 86,628 73,415
Net income (loss) attributable to noncontrolling interest   (83 )   (43 )   (35 )   (132 )
Net income attributable to Steven Madden, Ltd $ 37,896   $ 31,911   $ 86,663   $ 73,547  
 
 
Basic income per share $ 0.88   $ 0.75   $ 2.02   $ 1.74  
Diluted income per share $ 0.86   $ 0.74   $ 1.97   $ 1.70  
 
 
Basic weighted average common shares outstanding 43,131 42,430 42,936 42,180
Diluted weighted average common shares outstanding 44,237 43,407 44,021 43,153
 
           

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

 
As of
Sep. 30, 2012

Dec. 31, 2011

Sep. 30, 2011
(Unaudited) (Unaudited)
Cash and cash equivalents $ 64,927 $ 102,830 $ 35,141
Marketable securities (current & non current) 89,428 77,663 76,659
Accounts receivables, net 245,072 153,424 219,155
Inventories 84,044 59,644 77,042
Other current assets 30,871 25,000 23,880
Property and equipment, net 43,497 31,587 30,400
Goodwill and intangibles, net 228,059 174,462 170,756
Other assets   9,410     15,176     17,981  
Total assets $ 795,308   $ 639,786   $ 651,014  
 
Accounts payable $ 96,725 $ 69,747 $ 86,894
Contingent payment liability (current & non current) 57,751 37,921 40,023
Other current liabilities 44,701 51,208 71,143
Other long term liabilities 9,777 6,152 5,953
Total Steven Madden, Ltd stockholders' equity 586,507 474,876 447,133
Noncontrolling interest   (153 )   (118 )   (132 )
Total liabilities and stockholders' equity $ 795,308   $ 639,786   $ 651,014  
 
   
STEVEN MADDEN, LTD AND SUBSIDIARIES

CONSOLIDATED CASH FLOW DATA

(In thousands)
(Unaudited)
 
Nine Months Ended
Sep. 30, 2012   Sep. 30, 2011
 
 
Net cash provided by operating activities $ 14,758 $ 7,385
 

Investing Activities

Purchase of property and equipment (15,617 ) (12,246 )
Purchases / sales of marketable securities, net (8,805 ) 50,902
Purchase of note receivable (3,085 ) -
Payment of contingent liability (7,076 ) -
Acquisition, net of cash acquired   (29,367 )   (85,234 )
Net cash used in investing activities (63,950 ) (46,578 )
 
Net cash provided by financing activities 11,289 8,183
 
Net decrease in cash and cash equivalents (37,903 ) (31,010 )
 
Cash and cash equivalents - beginning of period 102,830 66,151
   
Cash and cash equivalents - end of year period $ 64,927   $ 35,141  

ICR, Inc.
Investor Relations
Jean Fontana/Megan Crudele, 203-682-8200
www.icrinc.com


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