Steve Madden Announces Third Quarter 2022 Results

~ Provides Update to Fiscal 2022 Outlook ~

LONG ISLAND CITY, N.Y., Nov. 02, 2022 (GLOBE NEWSWIRE) -- Steven Madden, Ltd. (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children, today announced financial results for the third quarter ended September 30, 2022.

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

Third Quarter 2022 Review

  • Revenue increased 5.3% to $556.6 million compared to $528.7 million in the same period of 2021.
  • Gross profit as a percentage of revenue was 41.2% compared to 41.6% in the same period of 2021.
  • Operating expenses as a percentage of revenue was 27.1% compared to 24.9% in the same period of 2021. Adjusted operating expenses as a percentage of revenue was 27.0% in the third quarter of 2022.
  • Income from operations totaled $78.8 million, or 14.1% of revenue, compared to $88.4 million, or 16.7% of revenue, in the same period of 2021. Adjusted income from operations totaled $79.0 million, or 14.2% of revenue, in the third quarter of 2022.
  • Net income attributable to Steven Madden, Ltd. was $61.3 million, or $0.79 per diluted share, compared to $66.6 million, or $0.82 per diluted share, in the same period of 2021. Adjusted net income attributable to Steven Madden, Ltd. was $61.5 million, or $0.79 per diluted share, in the third quarter of 2022.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We delivered solid results in the third quarter despite the challenging environment, with revenue increasing 5% and earnings in line with expectations. Consumer demand for our brands and products remains healthy, and our direct-to-consumer business continues to trend in line with previous expectations. That said, many of our wholesale customers have pulled back on orders in the near term as they prioritize inventory control, and we have adjusted our fiscal 2022 outlook accordingly.

“While we expect the macroeconomic backdrop to remain unpredictable in the coming quarters, we believe we are well-positioned due to our strong brands, agile business model and proven ability to navigate difficult market conditions. Looking out further, we are confident that our unique competitive advantages will enable us to drive sustainable growth and value creation over the long term.”

Third Quarter 2022 Channel Results

Revenue for the wholesale business was $434.6 million, an 8.1% increase compared to the third quarter of 2021. Wholesale footwear revenue increased 8.7% and wholesale accessories/apparel revenue rose 6.2%, each driven by strong growth in the branded business partially offset by a decline in private label. Gross profit as a percentage of wholesale revenue increased to 35.3% compared to 33.6% in the third quarter of 2021 due to a mix shift to the higher-margin branded business.

Direct-to-consumer revenue was $118.5 million, a 3.7% decrease compared to the third quarter of 2021 driven by a decline in the e-commerce business; brick-and-mortar revenue was approximately flat to the third quarter of 2021. Gross profit as a percentage of direct-to-consumer revenue was 61.2% compared to 65.9% in the third quarter of 2021 due to increased promotional activity.

The Company ended the quarter with 216 brick-and-mortar retail stores and six e-commerce websites, as well as 20 company-operated concessions in international markets.

Balance Sheet and Cash Flow Highlights

As of September 30, 2022, cash, cash equivalents and short-term investments totaled $148.2 million.

During the third quarter of 2022, the Company repurchased approximately $35.1 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 December 30, 2022 to stockholders of record as of the close of business on December 16, 2022.

Updating Fiscal 2022 Outlook

The Company is updating its fiscal 2022 guidance. For fiscal 2022, the Company now expects revenue will increase 12.5% to 13.5% over fiscal 2021. The Company now expects diluted EPS will be in the range of $2.77 to $2.79. The Company now expects Adjusted diluted EPS will be in the range of $2.77 to $2.82.

Conference Call Information

Interested stockholders are invited to listen to the conference call scheduled for today, November 2, 2022, at 8:30 a.m. Eastern Time, which will include a discussion of the Company's third quarter 2022 earnings results and updated 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/h2xzs5sk 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 licenses certain of its brands to third parties for the marketing and sale of certain products, including outerwear, eyewear, sunglasses, hosiery, jewelry, watches, fragrance, luggage, bedding and bath products as well as other select product categories. For local store information and the latest boots, booties, dress shoes, fashion sneakers, sandals, slippers and more, please visit www.stevemadden.com, www.dolcevita.com and the Company's 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:

  • the Company’s ability to navigate shifting macro-economic environments including 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 meet the Company’s quality standards;
  • 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;
  • 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 Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
Net sales $553,120 $525,067  $1,643,144 $1,278,765 
Commission and licensing fee income  3,523  3,675   8,222  8,896 
Total revenue  556,643  528,742   1,651,366  1,287,661 
Cost of sales  327,167  308,744   976,227  758,504 
Gross profit  229,476  219,998   675,139  529,157 
Operating expenses  150,724  131,580   433,252  363,888 
Impairment of fixed assets and lease right-of-use assets         1,089 
Income from operations  78,752  88,418   241,887  164,180 
Interest and other income/(expense) – net  1,340  (202)  106  (1,016)
Income before provision for income taxes  80,092  88,216   241,993  163,164 
Provision for income taxes  18,335  21,551   56,728  36,827 
Net income  61,757  66,665   185,265  126,337 
Less: net income attributable to noncontrolling interest  460  22   995  1,645 
Net income attributable to Steven Madden, Ltd. $61,297 $66,643  $184,270 $124,692 
         
Basic net income per share $0.81 $0.85  $2.41 $1.58 
         
Diluted net income per share $0.79 $0.82  $2.35 $1.53 
         
Basic weighted average common shares outstanding  75,598  78,129   76,463  78,686 
         
Diluted weighted average common shares outstanding  77,396  81,307   78,579  81,754 
         
Cash dividends declared per common share $0.21 $0.15  $0.63 $0.45 
               

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

    As of  
  September 30, 2022 December 31, 2021 September 30, 2021
  (Unaudited)   (Unaudited)
ASSETS      
Current assets:      
Cash and cash equivalents $139,194 $219,499 $219,523
Short-term investments  9,051  44,037  40,390
Accounts receivable, net of allowances  48,601  26,546  36,524
Factor accounts receivable  341,141  364,982  347,748
Inventories  244,315  255,213  201,198
Prepaid expenses and other current assets  25,531  20,845  19,182
Income tax receivable and prepaid income taxes  9,416  13,538  16,536
Total current assets  817,249  944,660  881,101
Note receivable – related party  499  794  891
Property and equipment, net  36,861  35,790  36,843
Operating lease right-of-use asset  90,407  85,449  90,832
Deposits and other  3,655  4,180  4,332
Deferred taxes  6,945  4,581  4,964
Goodwill – net  167,652  167,995  167,957
Intangibles – net  102,967  112,093  113,140
Total Assets $1,226,235 $1,355,542 $1,300,060
LIABILITIES      
Current liabilities:      
Accounts payable $99,173 $136,766 $121,838
Accrued expenses  119,650  243,163  210,985
Operating leases – current portion  30,234  30,759  32,063
Income taxes payable  19,161  4,522  7,194
Contingent payment liability – current portion  440  5,109  3,660
Accrued incentive compensation  11,423  14,871  12,834
Total current liabilities  280,081  435,190  388,574
Contingent payment liability – long term portion    6,960  4,381
Operating leases – long-term portion  79,906  80,072  85,358
Deferred tax liabilities  3,378  3,378  2,563
Other liabilities  10,930  9,404  12,004
Total Liabilities  374,295  535,004  492,880
       
STOCKHOLDERS’ EQUITY      
Total Steven Madden, Ltd. stockholders’ equity  842,303  812,098  798,830
Noncontrolling interest  9,637  8,440  8,350
Total stockholders’ equity  851,940  820,538  807,180
Total Liabilities and Stockholders’ Equity $1,226,235 $1,355,542 $1,300,060
 

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited) 

  Nine Months Ended
  September 30, 2022 September 30, 2021
Cash flows from operating activities:    
Net income $185,265  $126,337 
Adjustments to reconcile net income to net cash provided by operating activities:    
Stock-based compensation  18,298   16,696 
Depreciation and amortization  15,425   11,611 
Loss on disposal of fixed assets  312   449 
Impairment of lease right-of-use asset and fixed assets     1,089 
Deferred taxes  (2,364)  452 
Accrued interest on note receivable - related party  (12)  (18)
Notes receivable - related party  307   307 
Change in valuation of contingent payment liabilities  (6,520)  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  (25,623)  (10,561)
Factor accounts receivable  23,841   (95,077)
Inventories  6,842   (99,778)
Prepaid expenses, income tax receivables, prepaid taxes, and other assets  120   (2,638)
Accounts payable and accrued expenses  (140,144)  143,111 
Accrued incentive compensation  (3,448)  8,961 
Leases and other liabilities  (5,213)  (3,672)
Payment of contingent consideration  (339)   
     
Net cash provided by operating activities  66,747   96,184 
     
Cash flows from investing activities:    
Capital expenditures  (10,115)  (4,599)
(Purchase)/sale of a trademark  (2,000)  8,000 
Purchases of short-term investments  (38,951)  (43,376)
Maturity/sale of short-term investments  73,726   42,383 
     
Net cash provided by investing activities  22,660   2,408 
     
Cash flows from financing activities:    
Proceeds from exercise of stock options  415   7,232 
Distribution of noncontrolling interest earnings     (2,859)
Acquisition of noncontrolling interest     (19,127)
Common stock purchased for treasury  (112,105)  (74,685)
Cash dividends paid on common stock  (49,774)  (36,990)
Payment of contingent consideration  (4,770)   
Net cash used in financing activities  (166,234)  (126,429)
Effect of exchange rate changes on cash and cash equivalents  (3,478)  (504)
Net decrease in cash and cash equivalents  (80,305)  (28,341)
Cash and cash equivalents – beginning of period  219,499   247,864 
     
Cash and cash equivalents – end of period $139,194  $219,523 
 

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 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. The following reconciles the Company’s reported results and outlook in accordance with GAAP with the non-GAAP information that the Company also presents. Additional information regarding Non-GAAP Adjustments is presented below.   

Table 1 - Reconciliation of GAAP operating expenses to Adjusted operating expenses    
  Three Months Ended Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
GAAP operating expenses $150,724  $131,580 $433,252 $363,888 
Non-GAAP Adjustments  (203)    1,551  (9,716)
Adjusted operating expenses $150,521  $131,580 $434,803 $354,172 


Table 2 - Reconciliation of GAAP income from operations to Adjusted income from operations
  Three Months Ended Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
GAAP income from operations $78,752 $88,418 $241,887  $164,180
Non-GAAP Adjustments  203    (1,551)  10,805
Adjusted income from operations $78,955 $88,418 $240,336  $174,985


Table 3 - Reconciliation of GAAP interest and other income / (expense), net to Adjusted interest and other income / (expense), net
  Three Months Ended Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
GAAP interest and other income / (expense), net $1,340 $(202) $106 $(1,016)
Non-GAAP Adjustments         500 
Adjusted interest and other income / (expense), net $1,340 $(202) $106 $(516)


Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes
  Three Months Ended Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
GAAP provision for income taxes $18,335 $21,551 $56,728  $36,827
Non-GAAP Adjustments  47    (1,887)  2,708
Adjusted provision for income taxes $18,382 $21,551 $54,841  $39,535


Table 5 - Reconciliation of GAAP net income attributable to noncontrolling interest to Adjusted net income attributable to noncontrolling interest
  Three Months Ended Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
GAAP net income attributable to noncontrolling interest $460 $22 $995 $1,645
Non-GAAP Adjustments        24
Adjusted net income attributable to noncontrolling interest $460 $22 $995 $1,669


Table 6 - Reconciliation of GAAP net income attributable to Steven Madden, Ltd. to Adjusted net income attributable to Steven Madden, Ltd.
  Three Months Ended Nine Months Ended
  September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
         
GAAP net income attributable to Steven Madden, Ltd. $61,297 $66,643 $184,270 $124,692
Non-GAAP Adjustments  155    335  8,571
Adjusted net income attributable to Steven Madden, Ltd. $61,452 $66,643 $184,605 $133,263
         
GAAP diluted net income per share $0.79 $0.82 $2.35 $1.53
         
Adjusted diluted net income per share $0.79 $0.82 $2.35 $1.63
         
Adjusted diluted weighted average shares outstanding  77,396  81,307  78,579  81,754


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 $2.74 $2.79
Non-GAAP Adjustments  0.03  0.03
Adjusted diluted net income per share $2.77 $2.82

Non-GAAP Adjustments include the items below.

For the third 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.
  • $1.6 million pre-tax ($1.2 million after-tax) benefit in connection with the change in valuation of contingent consideration, included in operating expenses.

For the third quarter of 2021:

  • There were no non-GAAP adjustments.

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.
  • $6.5 million pre-tax ($5.0 million after-tax) benefit in connection with the change in valuation of contingent consideration, 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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