Steve Madden Announces Second Quarter 2022 Results

LONG ISLAND CITY, N.Y., July 27, 2022 (GLOBE NEWSWIRE) -- Steven Madden, Ltd. SHOO, a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children, today announced financial results for the second quarter ended June 30, 2022.

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

Second Quarter 2022 Review

  • Revenue increased 34.5% to $535.0 million compared to $397.9 million in the same period of 2021.
  • Gross profit as a percentage of revenue was 40.7% compared to 42.7% in the same period of 2021. The decline was driven by a shift in revenue mix from the higher-margin direct-to-consumer business to the lower-margin wholesale business.
  • Operating expenses as a percentage of revenue decreased to 28.5% compared to 30.6% in the same period of 2021. Adjusted operating expenses as a percentage of revenue decreased to 28.2% compared to 29.9% in the second quarter of 2021.
  • Income from operations totaled $65.2 million, or 12.2% of revenue, compared to $47.7 million, or 12.0% of revenue, in the same period of 2021. Adjusted income from operations totaled $67.0 million, or 12.5% of revenue, compared to $51.0 million, or 12.8% of revenue, in the second quarter of 2021.
  • Net income attributable to Steven Madden, Ltd. was $48.5 million, or $0.62 per diluted share, compared to $36.9 million, or $0.45 per diluted share, in the same period of 2021. Adjusted net income attributable to Steven Madden, Ltd. was $49.8 million, or $0.63 per diluted share, compared to $39.7 million, or $0.48 per diluted share, in the second quarter of 2021.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "We delivered strong results in the second quarter, with revenue and earnings growing robustly compared to the prior year and exceeding our expectations. While macro pressures have increased, making the near-term outlook more uncertain, we are confident that our core strengths – our people, brands and business model – leave us well-positioned to drive growth and create significant value for our stakeholders over the long term."

Second Quarter 2022 Channel Results

Revenue for the wholesale business was $397.1 million, a 51.5% increase compared to the second quarter of 2021, with a 47.1% increase in wholesale footwear and a 65.2% increase in wholesale accessories/apparel. Gross profit as a percentage of wholesale revenue increased to 31.6% compared to 30.6% in the second quarter of 2021.

Direct-to-consumer revenue was $135.5 million, a 2.2% increase compared to the second quarter of 2021. Gross profit as a percentage of direct-to-consumer revenue increased to 66.4% compared to 65.4% in the second quarter of 2021.

The Company ended the quarter with 213 brick-and-mortar retail stores and six e-commerce websites, as well as 19 company-operated concessions in international markets.

Balance Sheet and Cash Flow Highlights

As of June 30, 2022, cash, cash equivalents and short-term investments totaled $180.5 million.

During the second quarter of 2022, the Company repurchased approximately $34.6 million of the Company's 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 26, 2022 to stockholders of record as of the close of business on September 16, 2022.

Reiterating Fiscal 2022 Outlook

The Company is reiterating its fiscal 2022 guidance. For fiscal 2022, the Company expects revenue will increase 13% to 16% over fiscal 2021. The Company expects diluted EPS will be in the range of $2.87 to $2.97. The Company expects Adjusted diluted EPS will be in the range of $2.90 to $3.00.

Conference Call Information

Interested stockholders are invited to listen to the conference call scheduled for today, July 27, 2022, at 8:30 a.m. Eastern Time, which will include a discussion of the Company's second quarter 2022 earnings results and fiscal year outlook. The call will be webcast live on the Company's website at https://investor.stevemadden.com. The webcast is listen-only. Those interested in participating in the question-and-answer session may register for the conference call here. 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/42ck36vz 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®, GREATS®, BB Dakota® and Mad Love®, Steve Madden is a licensee of various brands, including Anne Klein® and Superga®. 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 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, including outerwear, eyewear, sunglasses, hosiery, jewelry, watches, swimwear, fragrance, luggage, bedding and bath products as well as other select product categories. For local store information and the latest Steve Madden boots, booties, dress shoes, fashion sneakers, sandals, slippers and more, please visit www.stevemadden.com.

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 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;
  • the Company's dependence on the retention and hiring of key personnel;
  • the Company's ability to successfully implement growth strategies and integrate acquired businesses;
  • 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 meet the Company's quality standards;
  • 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;
  • supply chain disruptions to product delivery systems and logistics, and the Company's ability to properly manage inventory;
  • 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 the ongoing COVID-19 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, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
Net sales$532,680  $394,797  $1,090,024  $753,698 
Commission and licensing fee income 2,309   3,097   4,699   5,221 
Total revenue 534,989   397,894   1,094,723   758,919 
Cost of sales 317,224   227,839   649,060   449,760 
Gross profit 217,765   170,055   445,663   309,159 
Operating expenses 152,526   121,860   282,528   232,308 
Impairment of fixed assets and lease right-of-use assets    477      1,089 
Income from operations 65,239   47,718   163,135   75,762 
Interest and other expense – net (1,291)  (777)  (1,234)  (814)
Income before provision for income taxes 63,948   46,941   161,901   74,948 
Provision for income taxes 15,033   9,600   38,393   15,276 
Net income 48,915   37,341   123,508   59,672 
Less: net income attributable to noncontrolling interest 455   489   535   1,623 
Net income attributable to Steven Madden, Ltd.$48,460  $36,852  $122,973  $58,049 
        
Basic net income per share$0.63  $0.47  $1.60  $0.74 
        
Diluted net income per share$0.62  $0.45  $1.55  $0.71 
        
Basic weighted average common shares outstanding 76,556   78,899   76,902   78,968 
        
Diluted weighted average common shares outstanding 78,714   82,061   79,190   81,981 
        
Cash dividends declared per common share$0.21  $0.15  $0.42  $0.30 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

   As of  
 June 30, 2022 December 31, 2021 June 30, 2021
 (Unaudited)   (Unaudited)
ASSETS     
Current assets:     
Cash and cash equivalents$150,929 $219,499 $262,144
Short-term investments 29,569  44,037  40,513
Accounts receivable, net of allowances 31,377  26,546  24,598
Factor accounts receivable 344,716  364,982  254,545
Inventories 306,547  255,213  125,525
Prepaid expenses and other current assets 31,047  20,845  20,549
Income tax receivable and prepaid income taxes 12,225  13,538  15,906
Total current assets 906,410  944,660  743,780
Note receivable – related party 598  794  987
Property and equipment, net 35,004  35,790  38,213
Operating lease right-of-use asset 85,608  85,449  97,222
Deposits and other 4,029  4,180  4,574
Deferred taxes 6,517  4,581  5,415
Goodwill – net 167,959  167,995  168,426
Intangibles – net 107,167  112,093  114,526
Total Assets$1,313,292 $1,355,542 $1,173,143
LIABILITIES     
Current liabilities:     
Accounts payable$105,130 $136,766 $91,822
Accrued expenses 219,005  243,163  139,717
Operating leases – current portion 31,074  30,759  33,561
Income taxes payable 14,100  4,522  1,477
Contingent payment liability – current portion 2,000  5,109  3,660
Accrued incentive compensation 8,334  14,871  8,921
Total current liabilities 379,643  435,190  279,158
Contingent payment liability – long term portion   6,960  4,381
Operating leases – long-term portion 76,023  80,072  92,179
Deferred tax liabilities 3,378  3,378  2,921
Other liabilities 10,930  9,404  11,982
Total Liabilities 469,974  535,004  390,621
      
STOCKHOLDERS' EQUITY     
Total Steven Madden, Ltd. stockholders' equity 833,534  812,098  774,335
Noncontrolling interest 9,784  8,440  8,187
Total stockholders' equity 843,318  820,538  782,522
Total Liabilities and Stockholders' Equity$1,313,292 $1,355,542 $1,173,143

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited) 

 Six Months Ended
 June 30, 2022 June 30, 2021
Cash flows from operating activities:   
Net income$123,508  $59,672 
Adjustments to reconcile net income to net cash provided by operating activities:   
Stock-based compensation 12,150   11,019 
Depreciation and amortization 10,471   7,993 
Loss on disposal of fixed assets 260   303 
Impairment of lease right-of-use asset and fixed assets    1,089 
Deferred taxes (1,936)  359 
Accrued interest on note receivable - related party (8)  (11)
Notes receivable - related party 204   204 
Change in valuation of contingent payment liabilities (4,960)  7,834 
Gain on sale of trademark    (8,000)
Recovery of receivables, related to the Payless ShoeSource bankruptcy    (919)
Changes, net of acquisitions, in:   
Accounts receivable (4,564)  1,365 
Factor accounts receivable 20,589   (1,874)
Inventories (53,222)  (24,105)
Prepaid expenses, income tax receivables, prepaid taxes, and other assets (7,676)  (2,125)
Accounts payable and accrued expenses (44,197)  35,836 
Accrued incentive compensation (6,537)  5,048 
Leases and other liabilities (3,457)  (1,765)
Payment of contingent consideration (339)   
    
Net cash provided by operating activities 40,286   91,923 
    
Cash flows from investing activities:   
Capital expenditures (5,263)  (2,782)
(Purchase)/sale of a trademark (2,000)  8,000 
Purchases of short-term investments (38,951)  (26,574)
Maturity/sale of short-term investments 53,803   26,460 
    
Net cash provided by investing activities 7,589   5,104 
    
Cash flows from financing activities:   
Proceeds from exercise of stock options 415   6,823 
Distribution of noncontrolling interest earnings    (2,859)
Acquisition of noncontrolling interest    (19,127)
Common stock purchased for treasury (77,027)  (42,794)
Cash dividends paid on common stock (33,389)  (24,772)
Payment of contingent consideration (4,770)   
Net cash used in financing activities (114,771)  (82,729)
Effect of exchange rate changes on cash and cash equivalents (1,674)  (18)
Net (decrease)/increase in cash and cash equivalents (68,570)  14,280 
Cash and cash equivalents – beginning of period 219,499   247,864 
    
Cash and cash equivalents – end of period$150,929  $262,144 

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 Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
GAAP operating expenses$152,526  $121,860  $282,528 $232,308 
Non-GAAP Adjustments (1,713)  (2,764)  1,753  (9,716)
Adjusted operating expenses$150,813  $119,096  $284,281 $222,592 


Table 2 - Reconciliation of GAAP income from operations to Adjusted income from operations
 Three Months Ended Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
GAAP income from operations$65,239 $47,718 $163,135  $75,762
Non-GAAP Adjustments 1,713  3,241  (1,753)  10,805
Adjusted income from operations$66,952 $50,959 $161,382  $86,567


Table 3 - Reconciliation of GAAP interest and other expense, net to Adjusted interest and other expense, net
 Three Months Ended Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
GAAP interest and other expense, net$(1,291) $(777) $(1,234) $(814)
Non-GAAP Adjustments    500      500 
Adjusted interest and other expense, net$(1,291) $(277) $(1,234) $(314)


Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes
 Three Months Ended Six Months Ended
 June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
GAAP provision for income taxes$15,033 $9,600 $38,393  $15,276
Non-GAAP Adjustments 399  898  (1,934)  2,708
Adjusted provision for income taxes$15,432 $10,498 $36,459  $17,984


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, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
GAAP net income attributable to noncontrolling interest$455 $489 $535 $1,623
Non-GAAP Adjustments       24
Adjusted net income attributable to noncontrolling interest$455 $489 $535 $1,647


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, 2022 June 30, 2021 June 30, 2022 June 30, 2021
        
GAAP net income attributable to Steven Madden, Ltd.$48,460 $36,852 $122,973 $58,049
Non-GAAP Adjustments 1,313  2,850  180  8,571
Adjusted net income attributable to Steven Madden, Ltd.$49,773 $39,702 $123,153 $66,620
        
GAAP diluted net income per share$0.62 $0.45 $1.55 $0.71
        
Adjusted diluted net income per share$0.63 $0.48 $1.56 $0.81
        
Adjusted diluted weighted average shares outstanding 78,714  82,061  79,190  81,981


Table 7 - Reconciliation of GAAP diluted net income per share to Adjusted diluted net income per share in fiscal 2022 outlook
 Fiscal 2022 Outlook
 Low End High End
    
GAAP diluted net income per share$2.87 $2.97
Non-GAAP Adjustments 0.03  0.03
Adjusted diluted net income per share$2.90 $3.00

Non-GAAP Adjustments include the items below.

For the second quarter of 2022:

  • $1.8 million pre-tax ($1.4 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.
  • $0.1 million pre-tax ($0.04 million after-tax) benefit in connection with the change in valuation of contingent considerations, included in operating expenses.

For the second quarter of 2021:

  • $8.0 million pre-tax ($6.1 million after-tax) benefit associated with the sale of a trademark, included in operating expenses.
  • $7.4 million pre-tax ($5.6 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.
  • $2.9 million pre-tax ($2.2 million after-tax) expense in connection with payments related to rent restructuring of various leases, included in operating expenses.
  • $0.5 million pre-tax ($0.4 million after-tax) expense in connection with restructuring and related charges, included in operating expenses.
  • $0.5 million pre-tax ($0.4 million after-tax) expense associated with the impairment of fixed assets and lease right-of-use assets.
  • $0.5 million pre-tax ($0.4 million after-tax) expense in connection with the write-off of an investment, included in interest and other (expense) / income, net.

For the fiscal year 2022 outlook:

  • $7.1 million pre-tax ($5.4 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.
  • $5.0 million pre-tax ($3.8 million after-tax) benefit in connection with the change in valuation of contingent considerations, 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.

Contact

Steven Madden, Ltd.
VP of Corporate Development & Investor Relations
Danielle McCoy
718-308-2611
InvestorRelations@stevemadden.com


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