Steve Madden Announces Fourth Quarter and Full Year 2022 Results
~ Provides 2023 Outlook ~
Amounts referred to as “Adjusted” are non-GAAP measures that exclude the items defined as “Non-GAAP Adjustments” in the “Non-GAAP Reconciliation” section.
Full Year 2022 Results
- Revenue increased 13.7% to
$2,122.0 million compared to$1,866.1 million in 2021. - Gross profit as a percentage of revenue increased to 41.2% compared to 41.1% in 2021.
- Operating expenses as a percentage of revenue were 27.9%, flat to 2021. Adjusted operating expenses as a percentage of revenue were 27.9% compared to 27.1% in 2021.
- Income from operations was
$281.6 million , or 13.3% of revenue, compared to$243.6 million , or 13.1% of revenue, in 2021. Adjusted income from operations was$282.6 million , or 13.3% of revenue, compared to$261.9 million , or 14.0% of revenue, in 2021. - Net income attributable to
Steven Madden, Ltd. was$216.1 million , or$2.77 per diluted share, compared to$190.7 million , or$2.34 per diluted share, in 2021. Adjusted net income attributable toSteven Madden, Ltd. was$218.3 million , or$2.80 per diluted share, compared to$203.7 million , or$2.50 per diluted share, in 2021.
Fourth Quarter 2022 Results
- Revenue decreased 18.6% to
$470.6 million compared to$578.5 million in the same period of 2021. - Gross profit as a percentage of revenue increased to 42.2% compared to 41.2% in the same period of 2021.
- Operating expenses as a percentage of revenue were 33.8% compared to 27.0% in the same period of 2021. Adjusted operating expenses as a percentage of revenue were 33.2% compared to 26.2% in the fourth quarter of 2021.
- Income from operations was
$39.8 million , or 8.4% of revenue, compared to$79.4 million , or 13.7% of revenue, in the same period of 2021. Adjusted income from operations was$42.2 million , or 9.0% of revenue, compared to$86.9 million , or 15.0% of revenue, in the fourth quarter of 2021. - Net income attributable to
Steven Madden, Ltd. was$31.8 million , or$0.42 per diluted share, compared to$66.0 million , or$0.81 per diluted share, in the same period of 2021. Adjusted net income attributable toSteven Madden, Ltd. was$33.7 million , or$0.44 per diluted share, compared to$70.4 million , or$0.87 per diluted share, in the fourth quarter of 2021.
“Looking ahead, we are cautious on the near-term outlook due to the challenging operating environment and conservative initial Spring orders from our wholesale customers as they prioritize inventory control. That said, we have a proven ability to navigate difficult market conditions with our agile business model, which combines our test-and-react strategy and industry-leading speed-to-market capability. Looking out further, we are confident that our unique competitive advantages and the continued execution of our strategy will enable us to drive sustainable growth and value creation over the long term.”
Fourth Quarter 2022 Channel Results
Revenue for the wholesale business was
Direct-to-consumer revenue was
The Company ended the quarter with 232 Company-operated 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
During the fourth quarter and full year of 2022, the Company repurchased approximately
Quarterly Cash Dividend
The Company's Board of Directors approved a quarterly cash dividend of
2023 Outlook
For 2023, the Company expects revenue will decrease 6.5% to 8.0% compared to 2022. The Company expects diluted EPS will be in the range of
Conference Call Information
Interested stockholders are invited to listen to the conference call scheduled for today,
About
Safe Harbor Statement Under the
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the
- 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;
- 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.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA (In thousands, except per share amounts) |
||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Net sales | $ | 468,152 | $ | 575,137 | $ | 2,111,296 | $ | 1,853,902 | ||||||||
| Commission and licensing fee income | 2,491 | 3,344 | 10,713 | 12,240 | ||||||||||||
| Total revenue | 470,643 | 578,481 | 2,122,009 | 1,866,142 | ||||||||||||
| Cost of sales | 271,946 | 340,141 | 1,248,173 | 1,098,645 | ||||||||||||
| Gross profit | 198,697 | 238,340 | 873,836 | 767,497 | ||||||||||||
| Operating expenses | 158,940 | 155,960 | 592,192 | 519,848 | ||||||||||||
| Impairment of intangibles | — | 2,620 | — | 2,620 | ||||||||||||
| Impairment of lease right-of-use assets and fixed assets | — | 343 | — | 1,432 | ||||||||||||
| Income from operations | 39,757 | 79,417 | 281,644 | 243,597 | ||||||||||||
| Interest and other income / (expense), net | 570 | (513 | ) | 676 | (1,529 | ) | ||||||||||
| Income before provision for income taxes | 40,327 | 78,904 | 282,320 | 242,068 | ||||||||||||
| Provision for income taxes | 8,375 | 12,781 | 65,103 | 49,609 | ||||||||||||
| Net income | 31,952 | 66,123 | 217,217 | 192,459 | ||||||||||||
| Less: net income attributable to noncontrolling interest | 161 | 136 | 1,156 | 1,781 | ||||||||||||
| Net income attributable to |
$ | 31,791 | $ | 65,987 | $ | 216,061 | $ | 190,678 | ||||||||
| Basic income per share | $ | 0.43 | $ | 0.85 | $ | 2.84 | $ | 2.43 | ||||||||
| Diluted income per share | $ | 0.42 | $ | 0.81 | $ | 2.77 | $ | 2.34 | ||||||||
| Basic weighted average common shares outstanding | 74,710 | 77,718 | 76,021 | 78,442 | ||||||||||||
| Diluted weighted average common shares outstanding | 76,575 | 81,207 | 78,069 | 81,628 | ||||||||||||
| Cash dividends declared per common share | $ | 0.21 | $ | 0.15 | $ | 0.84 | $ | 0.60 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands) |
||||||||
| As of | ||||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 274,713 | $ | 219,499 | ||||
| Short-term investments | 15,085 | 44,037 | ||||||
| Accounts receivable, net of allowances | 37,937 | 26,546 | ||||||
| Factor accounts receivable | 248,228 | 364,982 | ||||||
| Inventories | 228,752 | 255,213 | ||||||
| Prepaid expenses and other current assets | 22,989 | 20,845 | ||||||
| Income tax receivable and prepaid income taxes | 15,853 | 13,538 | ||||||
| Total current assets | 843,557 | 944,660 | ||||||
| Note receivable – related party | 401 | 794 | ||||||
| Property and equipment, net | 40,664 | 35,790 | ||||||
| Operating lease right-of-use asset | 90,264 | 85,449 | ||||||
| Deferred tax assets | 1,755 | 4,581 | ||||||
| Deposits and other | 12,070 | 4,180 | ||||||
| 168,085 | 167,995 | |||||||
| Intangibles – net | 101,192 | 112,093 | ||||||
| Total Assets | $ | 1,257,988 | $ | 1,355,542 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 130,542 | $ | 136,766 | ||||
| Accrued expenses | 138,523 | 243,163 | ||||||
| Operating leases - current portion | 29,499 | 30,759 | ||||||
| Income taxes payable | 9,403 | 4,522 | ||||||
| Contingent payment liability – current portion | 1,153 | 5,109 | ||||||
| Accrued incentive compensation | 11,788 | 14,871 | ||||||
| Total current liabilities | 320,908 | 435,190 | ||||||
| Contingent payment liability | — | 6,960 | ||||||
| Operating leases – long-term portion | 79,128 | 80,072 | ||||||
| Deferred tax liabilities | 3,923 | 3,378 | ||||||
| Other liabilities | 10,166 | 9,404 | ||||||
| Total Liabilities | 414,125 | 535,004 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| 831,553 | 812,098 | |||||||
| Noncontrolling interest | 12,310 | 8,440 | ||||||
| Total stockholders’ equity | 843,863 | 820,538 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,257,988 | $ | 1,355,542 | ||||
CONDENSED CONSOLIDATED CASH FLOW DATA (In thousands) |
||||||||
| Twelve Months Ended | ||||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 217,217 | $ | 192,459 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Stock-based compensation | 24,396 | 22,278 | ||||||
| Depreciation and amortization | 20,576 | 15,208 | ||||||
| Loss on disposal of fixed assets | 11 | 526 | ||||||
| Impairment of intangibles | — | 2,620 | ||||||
| Impairment of lease right-of-use asset and fixed assets | — | 1,432 | ||||||
| Deferred taxes | 3,601 | 1,280 | ||||||
| Accrued interest on note receivable – related party | (16 | ) | (23 | ) | ||||
| Note receivable – related party | 409 | 409 | ||||||
| Change in valuation of contingent liability | (5,807 | ) | 11,862 | |||||
| Gain on sale of trademark | — | (8,000 | ) | |||||
| Other operating activities | (2,716 | ) | — | |||||
| Recovery of receivables, related to the Payless ShoeSource bankruptcy | — | (919 | ) | |||||
| Changes, net of acquisitions, in: | ||||||||
| Accounts receivable | (9,683 | ) | (583 | ) | ||||
| Factor accounts receivable | 116,141 | (112,311 | ) | |||||
| Inventories | 29,071 | (153,793 | ) | |||||
| Prepaid expenses, income tax receivables, prepaid taxes, and other assets | (4,205 | ) | (1,899 | ) | ||||
| Accounts payable and accrued expenses | (108,788 | ) | 185,741 | |||||
| Accrued incentive compensation | (3,083 | ) | 10,998 | |||||
| Leases and other liabilities | (8,902 | ) | (7,822 | ) | ||||
| Payment of contingent consideration | (339 | ) | — | |||||
| Net cash provided by operating activities | 267,883 | 159,463 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (16,351 | ) | (6,608 | ) | ||||
| Purchases of short-term investments | (45,130 | ) | (68,471 | ) | ||||
| Maturity/sale of marketable securities and short-term investments | 73,998 | 63,867 | ||||||
| (Purchase)/sale of a trademark | (2,000 | ) | 8,000 | |||||
| Other investing activities | (5,000 | ) | — | |||||
| Net cash provided by/(used in) investing activities | 5,517 | (3,212 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | 602 | 9,732 | ||||||
| Investment of noncontrolling interest | 2,500 | — | ||||||
| Acquisition of incremental ownership of joint ventures | — | (18,942 | ) | |||||
| Distributions to noncontrolling interest earnings | (294 | ) | (3,121 | ) | ||||
| Sale of minority interest of a subsidiary | 1,017 | — | ||||||
| Common stock purchased for treasury | (148,878 | ) | (123,161 | ) | ||||
| Cash dividends paid on common stock | (66,005 | ) | (49,161 | ) | ||||
| Payment of contingent consideration | (4,770 | ) | — | |||||
| Net cash used in financing activities | (215,828 | ) | (184,653 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (2,358 | ) | 37 | |||||
| Net increase/(decrease) in cash, cash equivalents | 55,214 | (28,365 | ) | |||||
| Cash and cash equivalents – beginning of year | 219,499 | 247,864 | ||||||
| Cash and cash equivalents – end of year | $ | 274,713 | $ | 219,499 | ||||
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 | Twelve Months Ended | |||||||||||||||
| GAAP operating expenses | $ | 158,940 | $ | 155,960 | $ | 592,192 | $ | 519,848 | ||||||||
| Non-GAAP Adjustments | (2,476 | ) | (4,499 | ) | (924 | ) | (14,216 | ) | ||||||||
| Adjusted operating expenses | $ | 156,464 | $ | 151,461 | $ | 591,268 | $ | 505,632 | ||||||||
| Table 2 - Reconciliation of GAAP income from operations to Adjusted income from operations | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| GAAP income from operations | $ | 39,757 | $ | 79,417 | $ | 281,644 | $ | 243,597 | ||||||||
| Non-GAAP Adjustments | 2,476 | 7,462 | 924 | 18,267 | ||||||||||||
| Adjusted income from operations | $ | 42,233 | $ | 86,879 | $ | 282,568 | $ | 261,864 | ||||||||
| Table 3 - Reconciliation of GAAP interest and other income / (expense), net to Adjusted interest and other income / (expense), net | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| GAAP interest and other income / (expense), net | $ | 570 | $ | (513 | ) | $ | 676 | $ | (1,529 | ) | ||||||
| Non-GAAP Adjustments | — | — | — | 500 | ||||||||||||
| Adjusted interest and other income / (expense), net | $ | 570 | $ | (513 | ) | $ | 676 | $ | (1,029 | ) | ||||||
| Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| GAAP provision for income taxes | $ | 8,375 | $ | 12,781 | $ | 65,103 | $ | 49,609 | ||||||||
| Non-GAAP Adjustments | 579 | 3,015 | (1,308 | ) | 5,726 | |||||||||||
| Adjusted provision for income taxes | $ | 8,954 | $ | 15,796 | $ | 63,795 | $ | 55,335 | ||||||||
| Table 5 - Reconciliation of GAAP net income attributable to noncontrolling interest to Adjusted net income attributable to noncontrolling interest | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| GAAP net income attributable to noncontrolling interest | $ | 161 | $ | 136 | $ | 1,156 | $ | 1,781 | ||||||||
| Non-GAAP Adjustments | — | 13 | — | 37 | ||||||||||||
| Adjusted net income attributable to noncontrolling interest | $ | 161 | $ | 149 | $ | 1,156 | $ | 1,818 | ||||||||
| Table 6 - Reconciliation of GAAP net income attributable to |
||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| GAAP net income attributable to |
$ | 31,791 | $ | 65,987 | $ | 216,061 | $ | 190,678 | ||||||||
| Non-GAAP Adjustments | 1,897 | 4,433 | 2,232 | 13,004 | ||||||||||||
| Adjusted net income attributable to |
$ | 33,688 | $ | 70,420 | $ | 218,293 | $ | 203,682 | ||||||||
| GAAP diluted income per share | $ | 0.42 | $ | 0.81 | $ | 2.77 | $ | 2.34 | ||||||||
| Adjusted diluted income per share | $ | 0.44 | $ | 0.87 | $ | 2.80 | $ | 2.50 | ||||||||
Non-GAAP Adjustments include the items below.
For the fourth quarter 2022:
$1.8 million pre-tax ($1.3 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.$0.7 million pre-tax ($0.6 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.
For the fourth quarter 2021:
$4.0 million pre-tax ($3.1 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.$2.6 million pre-tax ($2.0 million after-tax) expense in connection with the impairment of a trademark.$0.4 million pre-tax ($0.2 million after-tax) expense in connection with a sublease and related exit costs, included in operating expenses.$0.3 million pre-tax ($0.3 million after-tax) expense in connection with the impairment of fixed assets and lease right-of-use assets.$0.1 million pre-tax ($0.1 million after-tax) expense in connection with restructuring and related charges, included in operating expenses.$1.3 million tax benefit in connection with the release of a liability for an uncertain tax position.
For the full year 2022:
$7.1 million pre-tax ($5.4 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.$5.8 million pre-tax ($4.4 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.
For the full year 2021:
$11.9 million pre-tax ($9.1 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.$9.9 million pre-tax ($7.4 million after-tax) expense in connection with rent restructuring of various leases, included in operating expenses.$8.0 million pre-tax ($6.1 million after-tax) benefit in connection with the sale of a trademark, included in operating expenses.$2.6 million pre-tax ($2.0 million after-tax) expense in connection with the impairment of a trademark.$1.5 million pre-tax ($1.2 million after-tax) expense in connection with restructuring and related charges, included in operating expenses.$1.4 million pre-tax ($0.9 million after-tax) expense in connection with the impairment of fixed assets and lease right-of-use assets.$0.9 million pre-tax ($0.7 million after-tax) benefit in connection with a recovery from the Payless ShoeSource bankruptcy, included in operating expenses.$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 income / (expense), net.$1.3 million tax benefit in connection with the release of a liability for an uncertain tax position.
Contact
VP of Corporate Development & Investor Relations
718-308-2611
InvestorRelations@stevemadden.com
