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/h2xzs5s k 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
