Steve Madden Announces Second Quarter 2022 Results

LONG ISLAND CITY, N.Y., July 27, 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 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

Steve Madden