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 first quarter ended March 31, 2018.
Amounts referred to as “Adjusted” exclude the items that are
described under the heading “Non-GAAP Adjustments.”
For the First Quarter 2018:
-
Net sales increased 6.2% to $389.0 million compared to $366.4 million
in the same period of 2017.
-
Gross margin was 36.2%. Gross margin in the first quarter of 2017 was
36.2%. Adjusted gross margin in the first quarter of 2017 was 36.6%.
-
Operating expenses as a percentage of sales were 27.7% compared to
28.9% of sales in the same period of 2017. Adjusted operating expenses
as a percentage of sales were 26.9% compared to 26.8% in the same
period of 2017.
-
Operating income totaled $36.6 million, or 9.4% of net sales, compared
to $30.8 million, or 8.4% of net sales, in the same period of 2017.
Adjusted operating income was $39.6 million, or 10.2% of net sales,
compared to Adjusted operating income of $39.5 million, or 10.8% of
net sales, in the same period of 2017.
-
Net income was $28.7 million, or $0.50 per diluted share, compared to
$20.2 million, or $0.35 per diluted share, in the prior year's first
quarter. Adjusted net income was $31.0 million, or $0.54 per diluted
share, compared to $27.5 million, or $0.47 per diluted share, in the
prior year's first quarter.
Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We
are off to a good start in 2018, with first quarter results that
exceeded our expectations. Our on-trend product assortments and
speed-to-market capability continue to set us apart from the
competition. We are particularly pleased with the strong growth we saw
in international markets in the first quarter, as the investments we
have made in our flagship Steve Madden brand and our international
infrastructure bear fruit. As we look ahead, we are confident that,
based on the power of our brands and the strength of our business model,
we are well-positioned to drive sales and earnings growth in 2018 and
beyond.”
First Quarter 2018 Segment Results
Net sales for the wholesale business increased 5.8% to $331.2 million in
the first quarter of 2018, with strong gains in both the wholesale
footwear and wholesale accessories businesses. Gross margin in the
wholesale business was 32.6%. Gross margin in the wholesale business in
last year’s first quarter was 32.4%. Adjusted gross margin in the
wholesale business in last year’s first quarter was 32.8%. The modest
decline in wholesale gross margin compared to the prior year’s first
quarter Adjusted gross margin was the result of strong growth in the
Company’s private label business, which carries a lower gross margin.
Retail net sales in the first quarter increased 8.6% to $57.9 million
compared to $53.3 million in the first quarter of the prior year. Same
store sales decreased 1.2% in the quarter as the result of a decline in
the boot category. Retail gross margin decreased to 56.7% in the first
quarter of 2018 as compared to 58.7% in the first quarter of the prior
year due primarily to deep discounting of slow-selling inventory in the
boot category.
During the first quarter, the Company opened two stores and closed five
stores in the United States. The Company also opened one store in Mexico
and one store in China. The Company ended the quarter with 207
company-operated retail locations, including six Internet stores. In
addition, during the first quarter, the Company opened two concessions
in China and ended the quarter with 40 company-operated concessions in
international markets.
The Company’s effective tax rate for the first quarter of 2018 was 21.4%
compared to 34.8% in the first quarter of 2017. On an Adjusted basis,
the effective tax rate in the first quarter of 2018 was 21.7% compared
to 30.7% in the prior year period. 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 first quarter of 2018, the Company repurchased 566,516 shares
of the Company’s common stock for approximately $25.7 million, which
includes shares acquired through the net settlement of employee stock
awards.
As of March 31, 2018, cash, cash equivalents, and current and
non-current marketable securities totaled $200.6 million.
Regular Dividend
The Company’s Board of Directors declared a quarterly cash dividend of
$0.20 per share. The dividend will be paid on June 29, 2018, to
shareholders of record at the close of business on June 12, 2018.
Company Outlook
For fiscal year 2018, the Company continues to expect net sales will
increase 5% to 7% over net sales in 2017. The Company expects diluted
EPS for fiscal year 2018 will be in the range of $2.55 to $2.62. The
Company expects Adjusted diluted EPS for fiscal year 2018 will be in the
range of $2.60 to $2.67.
Non-GAAP Adjustments
Amounts referred to as “Adjusted” exclude the items below.
For the first quarter 2018:
-
$2.8 million pre-tax ($2.1 million after-tax) expense in connection
with a provision for legal charges, included in operating expenses.
-
$0.3 million pre-tax ($0.2 million after-tax) expense in connection
with the integration of the Schwartz & Benjamin acquisition and the
related restructuring, included in operating expenses.
For the first quarter 2017:
-
$1.2 million pre-tax ($0.8 million after-tax) in non-cash expense
associated with the purchase accounting fair value adjustment of
inventory acquired in the Schwartz & Benjamin acquisition, included in
cost of sales.
-
$7.5 million pre-tax ($6.5 million after-tax) in estimated bad debt
expense associated with the Payless ShoeSource bankruptcy, 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.
-
$1.3 million pre-tax ($1.0 million after-tax) expense in connection
with the integration of the Schwartz & Benjamin acquisition and the
related restructuring, included in operating expenses.
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 first quarter
earnings conference call scheduled for today, April 20, 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. Additionally, a replay of the call can be
accessed by dialing 1-844-512-2921 (U.S.) and 1-412-317-6671
(international), passcode 2570358, and will be available until May 20,
2018.
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®,
Anne Klein® and Avec Les Filles®. 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 207 retail stores (including Steve Madden's six
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, 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 STATEMENTS OF
OPERATIONS DATA |
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
| | | |
Three Months Ended
|
| | | | March 31, 2018 |
|
| March 31, 2017 |
| | | | | | |
|
Net sales
| | | |
$
|
389,014
| | |
$
|
366,387
|
Cost of sales
| | | |
|
248,281
| | |
|
233,669
|
Gross profit
| | | | |
140,733
| | | |
132,718
|
Commission and licensing fee income, net
| | | | |
3,659
| | | |
3,927
|
Operating expenses
| | | |
|
107,835
| | |
|
105,865
|
Income from operations
| | | | |
36,557
| | | |
30,780
|
Interest and other income, net
| | | |
|
597
| | |
|
684
|
Income before provision for income taxes
| | | | |
37,154
| | | |
31,464
|
Provision for income taxes
| | | |
|
7,956
| | |
|
10,942
|
Net income
| | | | |
29,198
| | | |
20,522
|
Net income attributable to noncontrolling interest
| | | |
|
525
| | |
|
364
|
Net income attributable to Steven Madden, Ltd.
| | | |
$
|
28,673
| | |
$
|
20,158
|
| | | | | | |
|
| | | | | | |
|
Basic income per share
| | | |
$
|
0.52
| | |
$
|
0.36
|
Diluted income per share
| | | |
$
|
0.50
| | |
$
|
0.35
|
| | | | | | |
|
Basic weighted average common shares
| | | | | | | |
outstanding
| | | | |
54,728
| | | |
55,828
|
Diluted weighted average common shares
| | | | | | | |
outstanding
| | | | |
57,287
| | | |
58,203
|
| | | | | | | | |
|
|
STEVEN MADDEN, LTD. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
|
(In thousands)
|
|
|
|
|
|
As of
|
| | | | March 31, 2018 |
|
| December 31, 2017 |
|
| March 31, 2017 |
| | | |
(Unaudited)
| | | | | |
(Unaudited)
|
Cash and cash equivalents
| | | |
$
|
125,383
| | |
$
|
181,214
| | |
$
|
94,261
|
Marketable securities (current & non current)
| | | | |
75,176
| | | |
93,550
| | | |
98,980
|
Accounts receivables, net
| | | | |
296,546
| | | |
240,909
| | | |
232,466
|
Inventories
| | | | |
94,367
| | | |
110,324
| | | |
96,973
|
Other current assets
| | | | |
47,975
| | | |
49,044
| | | |
33,095
|
Property and equipment, net
| | | | |
69,599
| | | |
71,498
| | | |
74,747
|
Goodwill and intangibles, net
| | | | |
298,539
| | | |
299,842
| | | |
304,327
|
Other assets
| | | |
|
10,802
| | |
|
10,780
| | |
|
9,121
|
Total assets
| | | |
$
|
1,018,387
| | |
$
|
1,057,161
| | |
$
|
943,970
|
| | | | | | | | | |
|
Accounts payable
| | | |
$
|
65,296
| | |
$
|
66,955
| | |
$
|
70,896
|
Contingent payment liability (current & non current)
| | | | |
3,000
| | | |
10,000
| | | |
31,830
|
Other current liabilities
| | | | |
103,477
| | | |
132,657
| | | |
65,720
|
Other long term liabilities
| | | | |
38,392
| | | |
38,617
| | | |
36,702
|
Total Steven Madden, Ltd. stockholders' equity
| | | | |
801,586
| | | |
802,821
| | | |
737,187
|
Noncontrolling interest
| | | |
|
6,636
| | |
|
6,111
| | |
|
1,635
|
Total liabilities and stockholders' equity
| | | |
$
|
1,018,387
| | |
$
|
1,057,161
| | |
$
|
943,970
|
| | | | | | | | | | | | |
|
|
STEVEN MADDEN, LTD. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED CASH FLOW DATA |
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
| | | | March 31, 2018 |
|
| March 31, 2017 |
| | | | | | |
|
| | | | | | |
|
Net cash (used in) provided by operating activities
| | | |
$
|
(27,217)
| | |
$
|
8,513
|
| | | | | | |
|
Investing Activities | | | | | | | |
Purchases of property and equipment
| | | | |
(2,946)
| | | |
(3,293)
|
Sales of marketable securities, net
| | | | |
16,888
| | | |
11,292
|
Acquisition, net of cash acquired
| | | |
|
-
| | |
|
(17,396)
|
Net cash provided by (used in) investing activities
| | | | |
13,942
| | | |
(9,397)
|
| | | | | | |
|
Financing Activities | | | | | | | |
Common stock share repurchases for treasury
| | | | |
(25,677)
| | | |
(33,161)
|
Payment of contingent liability
| | | | |
(7,000)
| | | |
-
|
Proceeds from exercise of stock options
| | | | |
1,519
| | | |
1,812
|
Cash dividends paid
| | | |
|
(11,758)
| | |
|
-
|
Net cash used in financing activities
| | | | |
(42,916)
| | | |
(31,349)
|
| | | | | | |
|
Effect of exchange rate changes on cash and cash equivalents
| | | | |
360
| | | |
379
|
| | | | | | |
|
Net decrease in cash and cash equivalents
| | | | |
(55,831)
| | | |
(31,854)
|
| | | | | | |
|
Cash and cash equivalents - beginning of period
| | | | |
181,214
| | | |
126,115
|
| | | |
| | |
|
Cash and cash equivalents - end of period
| | | |
$
|
125,383
| | |
$
|
94,261
|
| | | | | | |
|
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 gross
profit to Adjusted gross profit |
|
|
|
|
Three Months Ended
|
| | | | March 31, 2017 |
Consolidated | | | | |
GAAP gross profit
| | | |
$
|
132,718
|
| | | |
|
Non-cash expense associated with the purchase accounting fair value
| | | | |
adjustment of inventory acquired in the Schwartz & Benjamin
acquisition
| | | |
|
1,240
|
| | | |
|
Adjusted gross profit
| | | |
$
|
133,958
|
| | | |
|
Wholesale | | | | |
GAAP gross profit
| | | |
$
|
101,560
|
| | | |
|
Non-cash expense associated with the purchase accounting fair value
adjustment
| | | | |
of inventory acquired in the Schwartz & Benjamin acquisition
| | | |
|
1,240
|
| | | |
|
Adjusted gross profit
|
|
|
|
$
|
102,800
|
|
Table 2 - Reconciliation of GAAP operating
expenses to Adjusted operating expenses |
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
| | | | March 31, 2018 | | | March 31, 2017 |
| | | | | | |
|
GAAP operating expenses
| | | |
$
|
107,835
| | |
$
|
105,865
|
| | | | | | |
|
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
| | | | |
(250)
| | | |
-
|
| | | | | | |
|
Bad debt expense associated with the Payless ShoeSource bankruptcy
| | | |
|
-
| | |
|
(7,500)
|
| | | | | | |
|
Adjusted operating expenses
|
|
|
|
$
|
104,748
|
|
|
$
|
98,365
|
|
Table 3 - Reconciliation of GAAP operating
income to Adjusted operating income |
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
| | | | March 31, 2018 | | | March 31, 2017 |
| | | | | | |
|
GAAP operating income
| | | |
$
|
36,557
| | |
$
|
30,780
|
| | | | | | |
|
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
| | | | |
250
| | | |
-
|
| | | | | | |
|
Non-cash expense associated with the purchase accounting fair value
| | | | | | | |
adjustment of inventory acquired in the Schwartz & Benjamin
acquisition
| | | | |
-
| | | |
1,240
|
| | | | | | |
|
Bad debt expense associated with the Payless ShoeSource bankruptcy
| | | |
|
-
| | |
|
7,500
|
| | | | | | |
|
Adjusted operating income
|
|
|
|
$
|
39,644
|
|
|
$
|
39,520
|
|
Table 4 - Reconciliation of GAAP provision
for income taxes to Adjusted provision for income taxes |
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
| | | | March 31, 2018 | | | March 31, 2017 |
| | | | | | |
|
GAAP provision for income taxes
| | | |
$
|
7,956
| | |
$
|
10,942
|
| | | | | | |
|
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
| | | | |
62
| | | |
-
|
| | | | | | |
|
Tax effect of non-cash expense associated with the purchase
accounting fair
| | | | | | | |
value adjustment of inventory acquired in the Schwartz & Benjamin
acquisition
| | | | |
-
| | | |
425
|
| | | | | | |
|
Tax effect of bad debt expense associated with the Payless ShoeSource
| | | | | | | |
bankruptcy
| | | |
|
-
| | |
|
964
|
| | | | | | |
|
Adjusted provision for income taxes
|
|
|
|
$
|
8,720
|
|
|
$
|
12,331
|
|
Table 5 - Reconciliation of GAAP net income
to Adjusted net income |
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
| | | | March 31, 2018 | | | March 31, 2017 |
| | | | | | |
|
GAAP net income attributable to Steven Madden, Ltd.
| | | |
$
|
28,673
| | |
$
|
20,158
|
| | | | | | |
|
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
| | | | |
188
| | | |
-
|
| | | | | | |
|
After-tax impact of non-cash expense associated with the purchase
| | | | | | | |
accounting fair value adjustment of inventory acquired in the
Schwartz &
| | | | | | | |
Benjamin acquisition
| | | | |
-
| | | |
815
|
| | | | | | |
|
After-tax impact of bad debt expense associated with the Payless
| | | | | | | |
ShoeSource bankruptcy
| | | | |
-
| | | |
6,536
|
| | | |
| | |
|
Adjusted net income attributable to Steven Madden, Ltd.
| | | |
$
|
30,996
| | |
$
|
27,509
|
| | | | | | |
|
GAAP diluted income per share
| | | |
$
|
0.50
| | |
$
|
0.35
|
Adjusted diluted income per share
|
|
|
|
$
|
0.54
|
|
|
$
|
0.47
|
| | | | | | | | |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180420005071/en/
Contacts:
Steven Madden, Ltd.
Danielle McCoy, 718-308-2611
Director of
Corporate Development & Investor Relations
daniellemccoy@stevemadden.com
or
Investor
Relations
ICR, Inc.
Jean Fontana/Megan Crudele, 203-682-8200
www.icrinc.com
Source: Steve Madden, Ltd.
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