Steve Madden Announces Second Quarter 2016 Results

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

Steve Madden SHOO, a leading designer and marketer of fashion footwear and accessories for women, men and children, today announced financial results for the second quarter ended June 30, 2016.

For the Second Quarter 2016:

• Net sales increased 0.6% to $325.4 million compared to $323.6 million in the same period of 2015.
• Gross margin expanded 130 basis points to 37.2% as compared to 35.9% in the same period last year.
• Operating expenses as a percentage of sales were 27.0% compared to 25.5% of sales in the same period of 2015.
• Operating income totaled $35.9 million, or 11.0% of net sales, compared with operating income of $36.8 million, or 11.4% of net sales, in the same period of 2015.
• Net income was $24.7 million, or $0.42 per diluted share, compared to $24.5 million, or $0.40 per diluted share, in the prior year's second quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "We were pleased with our second quarter performance, which was highlighted by robust gains in our Steve Madden Women's and Dolce Vita wholesale footwear divisions as well as continued strong comparable store sales growth in our retail segment. While these core businesses are meeting or exceeding expectations, we are seeing softer than anticipated trends in our private label footwear business and with certain international distributors. Therefore, we are adjusting our sales outlook and now expect net sales for 2016 to increase 0% to 1% compared to 2015. Despite the lower sales expectation, we continue to expect that diluted EPS will be in the range of $1.93 to $2.03 due to better than anticipated gross margin trends and a reduction in our forecasted full year tax rate."

Second Quarter 2016 Segment Results

Net sales for the wholesale business were $262.9 million in the second quarter of 2016 compared to $266.7 million in the second quarter of 2015. Gross margin in the wholesale business increased to 31.1% compared to 29.8% in last year's second quarter driven by improvement in the wholesale footwear segment.

Retail net sales in the second quarter were $62.5 million compared to $56.9 million in the second quarter of the prior year. Same store sales increased 5.4% for the second quarter. Retail gross margin decreased to 62.8% in the second quarter of 2016 compared to 64.5% in the second quarter of 2015 due to the positive impact in the second quarter of 2015 of insurance proceeds related to prior period losses as well as the negative impact in the second quarter of 2016 of a stronger U.S. dollar on the Company's international retail businesses.

During the second quarter, the Company opened 2 full price stores and 7 outlet locations. The Company ended the quarter with 180 company-operated retail locations, including 4 Internet stores.

The effective tax rate for the second quarter of 2016 was 32.0% compared to 33.9% in the second quarter of the prior year.

Balance Sheet and Cash Flow

During the second quarter of 2016, the Company repurchased 792,933 shares of the Company's common stock for approximately $27.0 million, which includes shares acquired through the net settlement of employee stock awards.

As of June 30, 2016, cash, cash equivalents, and current and non-current marketable securities totaled $199.0 million.

Company Outlook

The Company has adjusted its sales outlook for fiscal year 2016. The Company now expects that net sales will increase 0% to 1% over net sales in 2015. The Company continues to expect diluted EPS for fiscal year 2016 to be in the range of $1.93 to $2.03.

Conference Call Information

Interested stockholders are invited to listen to the second quarter earnings conference call scheduled for today, August 2, 2016, 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 1-877-870-5176 (U.S.) and 1-858-384-5517 (international), passcode 8289304, and will be available until September 2, 2016.

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®, Report®, Big Buddha®, Brian Atwood®, Cejon®, Blondo® and Mad Love®, Steve Madden is the licensee of various brands, including Superga® for footwear in North America. 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 180 retail stores (including Steve Madden's four Internet stores). Steve Madden licenses certain of its brands to third parties for the marketing and sale of certain products, including for ready-to-wear, outerwear, intimate apparel, hosiery, jewelry, luggage and bedding and bath products. For local store information and the latest Steve Madden booties, pumps, men's and women's boots, 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 STATEMENT OF OPERATIONS DATA (In thousands, except per share amounts) Unaudited
			Three Months Ended							Six Months Ended
			June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015
Net sales			$	325,402		$	323,582			$	654,759		$	647,527
Cost of sales				204,357			207,436				417,512			420,003
Gross profit				121,045			116,146				237,247			227,524
Commission and licensing fee income, net				2,826			3,127				4,997			7,045
Operating expenses				87,981			82,456				176,474			164,860
Impairment charge				-			-				-			3,045
Income from operations				35,890			36,817				65,770			66,664
Interest and other income, net				546			670				370			1,166
Income before provision for income taxes				36,436			37,487				66,140			67,830
Provision for income taxes				11,659			12,723				21,164			23,131
Net income				24,777			24,764				44,976			44,699
Net income attributable to noncontrolling interest				105			261				342			372
Net income attributable to Steven Madden, Ltd.			$	24,672		$	24,503			$	44,634		$	44,327
Basic income per share			$	0.43		$	0.41			$	0.78		$	0.75
Diluted income per share			$	0.42		$	0.40			$	0.75		$	0.72
Basic weighted average common shares
outstanding				57,430			59,302				57,572			59,453
Diluted weighted average common shares
outstanding				59,174			61,417				59,474			61,747

STEVEN MADDEN, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands)
			As of
			June 30, 2016			December 31, 2015			June 30, 2015
			(Unaudited)						(Unaudited)
Cash and cash equivalents			$ 76,271			$ 72,414			$ 68,994
Marketable securities (current & non current)			122,690			120,889			120,639
Accounts receivables, net			216,564			198,384			218,878
Inventories			116,369			102,080			112,434
Other current assets			54,328			52,517			42,276
Property and equipment, net			73,485			72,010			70,036
Goodwill and intangibles, net			286,187			286,855			295,265
Other assets			9,011			9,236			10,119
Total assets			$ 954,905			$ 914,385			$ 938,641
Accounts payable			$ 101,473			$ 79,790			$ 105,431
Contingent payment liability (current & non current)			20,012			24,775			35,541
Other current liabilities			79,199			78,246			92,861
Other long term liabilities			53,443			52,911			32,004
Total Steven Madden, Ltd. stockholders' equity			700,437			678,404			672,369
Noncontrolling interest			341			259			435
Total liabilities and stockholders' equity			$ 954,905			$ 914,385			$ 938,641

STEVEN MADDEN, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED CASH FLOW DATA (In thousands) Unaudited
					Six Months Ended
					June 30, 2016					June 30, 2015
Net cash provided by operating activities					$	54,963				$	53,783
Investing Activities
Purchases of property and equipment						(8,402	)				(8,452	)
Sales (purchases) of marketable securities, net						842					(869	)
Repayment of notes receivable						-					240
Acquisitions, net of cash acquired						(3,665	)				(8,729	)
Net cash used in investing activities						(11,225	)				(17,810	)
Financing Activities
Common stock share repurchases for treasury						(41,070	)				(74,156	)
Payment of contingent liability						(6,281	)				(2,950	)
Proceeds from exercise of stock options						3,708					19,703
Tax benefit from the exercise of stock options						3,762					8,974
Net cash used in financing activities						(39,881	)				(48,429	)
Net increase (decrease) in cash and cash equivalents						3,857					(12,456	)
Cash and cash equivalents - beginning of period						72,414					81,450
Cash and cash equivalents - end of period					$	76,271				$	68,994

View source version on businesswire.com: http://www.businesswire.com/news/home/20160802005586/en/