[Agreement Overview](index=1&type=section&id=Agreement%20Overview) This agreement amends and restates a prior credit agreement, outlining new credit facilities for Steven Madden, Ltd. and other borrowers, with Citizens Bank, N.A. as Administrative Agent [Parties and Purpose](index=1&type=section&id=Parties%20and%20Purpose) This Amended and Restated Credit Agreement outlines credit facilities for Steven Madden, Ltd. and other borrowers, amending a prior agreement and providing new loans - The agreement is an amendment and restatement of the Credit Agreement dated July 22, 2020[11](index=11&type=chunk) - The primary parties are Steven Madden, Ltd. (Lead Borrower), other designated Borrowers, a syndicate of Lenders, and Citizens Bank, N.A. (Administrative Agent)[1](index=1&type=chunk)[9](index=9&type=chunk) - The Borrowers intend to use the new facility to pay in full all principal and interest owed to Existing Lenders under the previous agreement[13](index=13&type=chunk) - The Lenders have agreed to provide new loans and issue Letters of Credit under the terms and conditions set forth in this new agreement[14](index=14&type=chunk) [ARTICLE 1: Definitions and Rules of Construction](index=7&type=section&id=ARTICLE%201%20DEFINITIONS%20AND%20RULES%20OF%20CONSTRUCTION) This article defines all capitalized terms and establishes rules for interpreting the agreement, covering financial concepts, legal entities, and operational terms [Definitions](index=7&type=section&id=Section%201.1%20Definitions) This section comprehensively defines all capitalized terms used in the credit agreement, establishing specific meanings for financial, legal, and operational terminology Applicable Margin and Commitment Fee Pricing Grid | Pricing Level | Total Net Leverage Ratio | ABR Margin | SOFR Margin and L/C Participation Fee | Alternative Currency Daily Rate Margin | Alternative Currency Term Rate Margin | Commitment Fee | | :------------ | :----------------------------------- | :--------- | :------------------------------------ | :------------------------------------- | :------------------------------------ | :------------- | | I | >= 2.50:1.00 | 1.50% | 2.50% | 2.50% | 2.50% | 0.35% | | II | >= 1.50:1.00 but < 2.50:1.00 | 1.25% | 2.25% | 2.25% | 2.25% | 0.30% | | III | >= 0.50:1.00 but < 1.50:1.00 | 1.00% | 2.00% | 2.00% | 2.00% | 0.25% | | IV | < 0.50:1.00 | 0.75% | 1.75% | 1.75% | 1.75% | 0.25% | - The initial Applicable Margin is set at Pricing Level **III** until the first full fiscal quarter after the Closing Date[44](index=44&type=chunk) - Consolidated EBITDA calculation includes add-backs for taxes, interest, D&A, and certain non-cash or infrequent charges. Add-backs for unusual items, transaction costs, and synergies are capped at the greater of **$87,500,000** or **25%** of Consolidated EBITDA (before such add-backs)[123](index=123&type=chunk)[124](index=124&type=chunk) - A "Change of Control" is triggered if any person or group acquires more than **35%** of the voting Equity Interests of the Lead Borrower, or if a majority of the board of directors is replaced by individuals not nominated or approved by the existing board[94](index=94&type=chunk) - Permitted Acquisitions are allowed provided that, among other conditions, no Default exists and the pro forma Total Net Leverage Ratio is less than or equal to **2.75:1.00**[317](index=317&type=chunk)[318](index=318&type=chunk) [Classification of Loans and Borrowings](index=68&type=section&id=Section%201.2%20Classification%20of%20Loans%20and%20Borrowings) Loans and borrowings are classified by both their Class (e.g., Revolving Loan, Term Loan) and their Type (e.g., SOFR Loan, ABR Loan) [Accounting Terms; GAAP](index=69&type=section&id=Section%201.4%20Accounting%20Terms%3B%20GAAP) This section mandates that accounting terms conform to GAAP, allows pro forma calculations for transactions, and excludes ASC 842 impact from financial computations - All accounting terms are to be construed in conformity with GAAP, except as otherwise prescribed in the agreement[451](index=451&type=chunk) - For determining compliance with covenants during a period with a Specified Transaction (like an acquisition), calculations shall be made on a Pro Forma Basis[452](index=452&type=chunk) - The agreement explicitly excludes the effects of the lease accounting standard ASC **842**, meaning operating leases will not be treated as capital leases for the purpose of financial calculations and covenants herein[453](index=453&type=chunk) [Exchange Rates; Currency Equivalent](index=71&type=section&id=Section%201.12%20Exchange%20Rates%3B%20Currency%20Equivalent) This section outlines procedures for handling multiple currencies, with the Administrative Agent determining Dollar Equivalents for Alternative Currencies at each Revaluation Date - The Administrative Agent or L/C Issuer determines the Dollar Equivalent for all amounts denominated in Alternative Currencies, which becomes effective on each Revaluation Date[461](index=461&type=chunk) - A breach of a Dollar-denominated threshold in covenants will not be triggered solely due to currency exchange rate fluctuations[464](index=464&type=chunk) [Limited Condition Acquisitions](index=74&type=section&id=Section%201.16%20Limited%20Condition%20Acquisitions) This section allows compliance with financial covenants and representations for acquisitions to be tested at the definitive agreement signing date (LCA Test Date) - For a Limited Condition Acquisition, the determination date for compliance with financial ratios, baskets, and other provisions can be set to the date the definitive agreement is signed (LCA Test Date)[474](index=474&type=chunk) - If the Borrower makes an LCA Election, subsequent fluctuations in financial ratios will not cause a breach of the tested conditions, provided the acquisition closes within **270 days** of the agreement date[474](index=474&type=chunk) - The condition that no Default or Event of Default exists is also tested at the LCA Test Date, except for major defaults like non-payment or bankruptcy, which are tested at the time of consummation[476](index=476&type=chunk) [ARTICLE 2: The Credits](index=75&type=section&id=ARTICLE%202%20THE%20CREDITS) This article details the credit facilities, including Revolving and Term Loans, borrowing procedures, prepayments, and joint liability of borrowers [Commitments](index=75&type=section&id=Section%202.1%20Commitments) This section outlines specific credit facilities, including Revolving and Term Loans, and allows for future Incremental Term Loans, defining total available capital Credit Facility Commitments | Facility | Initial Aggregate Amount | Notes | | :--- | :--- | :--- | | Revolving Commitment | $250,000,000 | Maximum drawable amount on Closing Date is $150,000,000. | | Term Loan Commitment | $300,000,000 | A single loan made on the Closing Date. | | Incremental Commitments | Up to $275,000,000 | Can be requested as additional Term Loans or Revolving Commitments. | [Borrowings, Conversions and Continuations of Loans](index=76&type=section&id=Section%202.2%20Borrowings%2C%20Conversions%20and%20Continuations%20of%20Loans) This section details operational procedures for accessing credit facilities, including notice requirements for borrowing, converting, or continuing loans, and sets minimum borrowing amounts - Borrowing notices must be submitted by specific deadlines: **11:00 a.m.** on the borrowing date for ABR Loans, and **three business days** prior for SOFR or other Alternative Currency loans[483](index=483&type=chunk) - If a borrower fails to specify an Interest Period for a SOFR or Alternative Currency Term Rate Loan, it defaults to a **one-month** period. If no loan type is specified, it defaults to an ABR Loan[484](index=484&type=chunk) [Swingline Loans](index=78&type=section&id=Section%202.3%20Swingline%20Loans) This section establishes a short-term Swingline Loan sub-facility, detailing borrowing and repayment procedures, and Revolving Lenders' refinancing obligations - A Swingline sub-facility is available with a sublimit of **$25,000,000**[394](index=394&type=chunk)[492](index=492&type=chunk) - The Swingline Lender can, at its discretion, require Revolving Lenders to refinance outstanding Swingline Loans by making ABR Revolving Loans[494](index=494&type=chunk) [Letters of Credit](index=80&type=section&id=Section%202.4%20Letters%20of%20Credit) This section governs the issuance, amendment, and honor of Letters of Credit, outlining L/C Issuer obligations, Revolving Lender participation, and reimbursement procedures - A Letter of Credit sub-facility is available with a sublimit equal to the lesser of **$50,000,000** and the total Revolving Commitments[265](index=265&type=chunk) - L/Cs cannot be issued if their expiry date would be after the Letter of Credit Expiration Date (**five business days** prior to the Revolving Facility maturity), unless they are fully cash collateralized or otherwise backstopped[505](index=505&type=chunk) - If the Borrowers fail to reimburse an L/C drawing, the unreimbursed amount is automatically converted into an ABR Revolving Loan[513](index=513&type=chunk) [Repayment of Loans; Evidence of Debt](index=87&type=section&id=Section%202.6%20Repayment%20of%20Loans%3B%20Evidence%20of%20Debt) This section specifies repayment terms for all loans, including Revolving Loans due at maturity and Term Loans with a detailed quarterly amortization schedule Term Loan Amortization Schedule | Payment Date | Principal Amount | | :--- | :--- | | Oct 1, 2025 - Jul 1, 2027 | $1,875,000 (Quarterly) | | Oct 1, 2027 - Jul 1, 2028 | $3,750,000 (Quarterly) | | Oct 1, 2028 - Jul 1, 2029 | $5,625,000 (Quarterly) | | Oct 1, 2029 - Apr 1, 2030 | $7,500,000 (Quarterly) | | Term Maturity Date | Remaining outstanding balance | - All Revolving Loans are due in full on the Revolving Maturity Date (the fifth anniversary of the Closing Date)[535](index=535&type=chunk) [Prepayments](index=89&type=section&id=Section%202.7%20Prepayments) This section outlines rules for optional and mandatory prepayments, requiring proceeds from certain events like asset sales to be applied first to Term Loans - Borrowers may voluntarily prepay any borrowing in whole or in part without premium or penalty, subject to notice requirements and potential breakage costs under Section **3.5**[542](index=542&type=chunk) - Mandatory prepayment is required with **100%** of Net Cash Proceeds from specific events, including dispositions or casualty events, but only after the aggregate proceeds from such events exceed **$40,000,000** since the Closing Date[544](index=544&type=chunk)[547](index=547&type=chunk) - Mandatory prepayments are applied first to the Term Loans on a pro rata basis against the remaining amortization payments[550](index=550&type=chunk) [Incremental Commitments](index=99&type=section&id=Section%202.11%20Incremental%20Commitments) This section allows the Borrower to increase credit facilities by requesting additional Term Loans or Revolving Commitments from lenders, subject to specific conditions - The Borrower may request up to **$275,000,000** in aggregate Incremental Commitments (additional Term Loans or Revolving Commitments)[582](index=582&type=chunk) - The terms of any Incremental Term Loans must not have a maturity date earlier than, or a weighted average life to maturity shorter than, the existing Term Loans[584](index=584&type=chunk) - If the Effective Yield on new Other Term Loans incurred within **18 months** of closing exceeds the yield on existing Term Loans by more than **50 basis points**, the margin on the existing Term Loans will be increased to match (the "MFN" or Most Favored Nation protection)[584](index=584&type=chunk) [Joint and Several Liability](index=101&type=section&id=Section%202.12%20Joint%20and%20Several%20Liability) This section establishes that each Borrower is jointly and severally liable for all loan obligations, allowing lenders to seek full repayment from any single Borrower - Each Borrower accepts joint and several liability as a co-debtor for all Loan Document Obligations[587](index=587&type=chunk)[588](index=588&type=chunk) - The obligations are full recourse and enforceable against each Borrower to the full extent of its properties and assets[591](index=591&type=chunk) [ARTICLE 3: Interest, Fees, and Yield Protection](index=104&type=section&id=ARTICLE%203%20INTEREST%2C%20FEES%2C%20YIELD%20PROTECTION%2C%20ETC.) This article governs financial costs, including interest calculation, various fees, and protective clauses for lenders regarding benchmark rates, increased costs, and taxes [Interest](index=104&type=section&id=Section%203.1%20Interest) This section defines interest rates for various loan types based on a base rate plus Applicable Margin, and specifies a higher Default Rate for overdue amounts - Interest on loans is calculated as a base rate (e.g., Alternate Base Rate, Term SOFR) plus the Applicable Margin, which varies based on the company's leverage[602](index=602&type=chunk) - Upon non-payment or during an Event of Default, overdue amounts will bear interest at a Default Rate, which is **2.00%** per annum above the otherwise applicable rate[151](index=151&type=chunk)[603](index=603&type=chunk)[604](index=604&type=chunk) [Fees](index=105&type=section&id=Section%203.2%20Fees) This section outlines various fees payable by Borrowers, including Commitment Fees, L/C Participation Fees, and L/C Fronting Fees, with additional details in Fee Letters - A Commitment Fee accrues on the unused amount of the Revolving Commitment at a rate determined by the Applicable Margin grid[610](index=610&type=chunk) - An L/C Participation Fee is paid to Revolving Lenders based on the Applicable Margin, and a separate L/C Fronting Fee of **0.125%** per annum is paid to the L/C Issuer[611](index=611&type=chunk) [Increased Costs; Illegality](index=107&type=section&id=Section%203.4%20Increased%20Costs%3B%20Illegality) This section protects lenders from increased costs due to regulatory changes, requiring Borrowers to compensate for new reserve or capital requirements, and addresses loan illegality - If a Change in Law increases the cost for a Lender to make or maintain a Loan (e.g., through new reserve or capital requirements), the Borrowers must pay additional amounts to compensate for such increased costs[617](index=617&type=chunk)[618](index=618&type=chunk) - A Change in Law is defined to include the Dodd-Frank Act and Basel **III** regulations, regardless of when they were enacted[93](index=93&type=chunk) - If it becomes illegal for a Lender to maintain certain types of loans (e.g., SOFR Loans), that Lender can require the conversion of such loans to ABR Loans or demand prepayment[621](index=621&type=chunk)[623](index=623&type=chunk) [Taxes](index=109&type=section&id=Section%203.6%20Taxes) This section allocates tax responsibilities, requiring Loan Parties to gross-up payments for withheld Indemnified Taxes and Lenders to provide tax exemption documentation - Payments by Loan Parties must be made without deduction for Taxes, except as required by law. If an Indemnified Tax is withheld, the Loan Party must pay an additional amount so the Recipient receives the full sum due[626](index=626&type=chunk) - Lenders must provide appropriate tax forms (e.g., W-9 for U.S. Persons, W-8BEN-E for foreign entities claiming treaty benefits) to establish exemptions from or reductions in U.S. withholding tax[631](index=631&type=chunk)[633](index=633&type=chunk)[634](index=634&type=chunk) - If a lender receives a refund for taxes for which it was indemnified, it must pay the amount of the refund back to the indemnifying party[637](index=637&type=chunk) [Benchmark Replacement Setting](index=117&type=section&id=Section%203.8%20Benchmark%20Replacement%20Setting) This section provides a framework for transitioning from a benchmark interest rate, establishing a successor rate waterfall and granting the Administrative Agent authority for conforming changes - If a Benchmark Transition Event occurs (e.g., the administrator of Term SOFR announces it will cease publication), a pre-defined Benchmark Replacement waterfall is triggered[659](index=659&type=chunk) - The first alternative in the replacement waterfall is Daily Simple SOFR[67](index=67&type=chunk) - The Administrative Agent can implement the Benchmark Replacement and make related Conforming Changes without further action or consent from other parties, subject to an objection right by the Required Lenders for certain replacements[659](index=659&type=chunk)[661](index=661&type=chunk) [ARTICLE 4: Conditions Precedent to Credit Extensions](index=120&type=section&id=ARTICLE%204%20CONDITIONS%20PRECEDENT%20TO%20CREDIT%20EXTENSIONS) This article outlines specific requirements for initial and subsequent loan funding, ensuring all legal, financial, and transactional prerequisites are met [Conditions to Initial Credit Extensions](index=120&type=section&id=Section%204.1%20Conditions%20to%20Initial%20Credit%20Extensions) This section lists one-time conditions for initial loan funding on the Closing Date, including executed loan documents, legal opinions, fee payments, and collateral requirements - The Closing Date Acquisition must be consummated substantially contemporaneously with the initial funding, in all material respects according to the terms of the Closing Date Acquisition Agreement[693](index=693&type=chunk) - The Administrative Agent must receive all executed Loan Documents, including the Credit Agreement, Guarantee Agreement, Security Agreement, and various UK and HK collateral documents[673](index=673&type=chunk)[679](index=679&type=chunk)[680](index=680&type=chunk) - The accuracy of Specified Representations (e.g., corporate power, solvency, anti-corruption) and Specified Acquisition Agreement Representations is a condition precedent[686](index=686&type=chunk) - A "Certain Funds Provision" allows for the perfection of certain collateral to be completed within **90 days** after the Closing Date if it cannot be perfected on the Closing Date despite commercially reasonable efforts[696](index=696&type=chunk) [Conditions to All Credit Extensions After the Closing Date](index=124&type=section&id=Section%204.2%20Conditions%20to%20All%20Credit%20Extensions%20After%20the%20Closing%20Date) This section specifies ongoing conditions for all credit extensions after the Closing Date, requiring true representations and warranties, and no existing Default or Event of Default - For each credit extension after the Closing Date, representations and warranties must be true and correct in all material respects[697](index=697&type=chunk) - No Default or Event of Default may exist at the time of, or would result from, the proposed credit extension[699](index=699&type=chunk) [UK Accession Date Requirements](index=125&type=section&id=Section%204.3%20UK%20Accession%20Date%20Requirements) This section sets a deadline for newly acquired UK entities to integrate into the credit facility's guarantee and security structure, requiring specific document delivery - By the UK Accession Date (**5 business days** post-closing), the UK Acceding Loan Parties must execute and deliver all required documents to become guarantors and provide collateral[702](index=702&type=chunk) - Required deliverables include director certificates, a Subsidiary Joinder Agreement, UK Collateral Documents, and legal opinions related to the UK entities[703](index=703&type=chunk)[704](index=704&type=chunk)[705](index=705&type=chunk)[706](index=706&type=chunk) [ARTICLE 5: Representations and Warranties](index=126&type=section&id=ARTICLE%205%20REPRESENTATIONS%20AND%20WARRANTIES) This article details factual statements by Borrowers regarding legal status, financial condition, and compliance, which lenders rely upon for credit extension [Corporate Status, Authority, and Financial Condition](index=126&type=section&id=Section%205.1%20-%205.5) Loan Parties represent their legal existence, authority to execute loan documents without violation, accurate financial statements, and absence of Material Adverse Effect since December 31, 2024 - Each Loan Party warrants it is duly incorporated and has the requisite power to execute and perform its obligations under the Loan Documents[711](index=711&type=chunk)[713](index=713&type=chunk) - The financial statements provided are warranted to fairly present the company's financial condition in all material respects in accordance with GAAP[717](index=717&type=chunk) - The company represents that since December **31**, **2024**, no event has occurred that has had or could reasonably be expected to have a Material Adverse Effect[718](index=718&type=chunk) [Litigation, Assets, and Compliance](index=128&type=section&id=Section%205.6%20-%205.13) This section covers operational and compliance representations, including no material litigation, environmental compliance, good title to assets, and adherence to tax and ERISA regulations - There are no pending or threatened actions, suits, or proceedings that could reasonably be expected to have a Material Adverse Effect[719](index=719&type=chunk) - Each Loan Party has good title to its material properties and owns or is entitled to use all intellectual property material to its business[723](index=723&type=chunk) - No ERISA Event has occurred that could reasonably be expected to result in a Material Adverse Effect[728](index=728&type=chunk) [Insurance, Regulations, and Other Representations](index=131&type=section&id=Section%205.14%20-%205.21) This section covers representations on adequate insurance, compliance with margin regulations, valid collateral liens, solvency, anti-corruption, sanctions laws, and information accuracy - The security interests granted under the Collateral Documents are represented to be legal, valid, and enforceable first-priority liens, subject to permitted encumbrances[739](index=739&type=chunk) - The Loan Parties and their subsidiaries are represented to be Solvent, both before and after the consummation of the Transactions[743](index=743&type=chunk) - The Loan Parties represent compliance with Anti-Corruption Laws (like the FCPA), Sanctions (from OFAC, UN, etc.), and Anti-Terrorism Laws (like the USA PATRIOT Act)[744](index=744&type=chunk)[745](index=745&type=chunk)[746](index=746&type=chunk) - All written information provided to the Credit Parties is warranted to not contain any untrue statement of a material fact or omit a material fact[749](index=749&type=chunk) [ARTICLE 6: Affirmative Covenants](index=135&type=section&id=ARTICLE%206%20AFFIRMATIVE%20COVENANTS) This article details ongoing borrower obligations to maintain financial health, transparency, and legal standing, including reporting, notices, and subsidiary integration [Financial Statements and Other Information](index=135&type=section&id=Section%206.1%20Financial%20Statements%20and%20Other%20Information) This covenant requires Borrowers to provide regular financial reporting, including audited annual and unaudited quarterly statements, each with a Compliance Certificate - Audited annual financial statements are due within **90 days** after each fiscal year-end[755](index=755&type=chunk) - Unaudited quarterly financial statements are due within **45 days** after each fiscal quarter-end[755](index=755&type=chunk) - A Compliance Certificate must be delivered with each set of financial statements, certifying compliance with financial covenants and disclosing any Defaults[756](index=756&type=chunk) [Notices of Material Events](index=137&type=section&id=Section%206.2%20Notices%20of%20Material%20Events) This section obligates Borrowers to promptly notify the Administrative Agent of material events, including Defaults, material lawsuits, and significant ERISA events - Prompt written notice is required upon the occurrence of any Default[759](index=759&type=chunk) - Notice is required for the filing of any action or proceeding that could reasonably be expected to have a Material Adverse Effect[759](index=759&type=chunk) - Notice is required for any ERISA Event that could result in liability exceeding the Threshold Amount (**$50,000,000**)[759](index=759&type=chunk)[407](index=407&type=chunk) [General Business Covenants](index=138&type=section&id=Section%206.3%20-%206.8) This section requires Borrowers to maintain legal existence, pay obligations, keep properties in order, allow inspections, comply with laws, and restrict loan proceeds use - The company must preserve its legal existence and material rights and franchises[762](index=762&type=chunk) - The company must pay its obligations, including taxes, before they become delinquent, unless being contested in good faith[764](index=764&type=chunk) - The Administrative Agent has the right to inspect properties and examine books and records at the Borrowers' expense (limited to **one** inspection per year unless an Event of Default exists)[766](index=766&type=chunk) - Loan proceeds are to be used for the Closing Date Acquisition, refinancing existing debt, transaction expenses, and general corporate purposes, and may not be used in violation of margin regulations or anti-corruption laws[768](index=768&type=chunk)[769](index=769&type=chunk) [Insurance](index=140&type=section&id=Section%206.10%20Insurance) This covenant requires Borrowers to maintain adequate insurance with reputable insurers, naming the Administrative Agent as an additional insured or loss payee, with prior cancellation notice - The company must maintain adequate insurance with financially sound and reputable companies, customary for its industry[772](index=772&type=chunk) - All general liability and property policies must include an endorsement naming the Administrative Agent as an additional insured or lender's loss payee[773](index=773&type=chunk) - Insurers must provide at least **30 days'** prior written notice (**10 days** for non-payment of premium) to the Administrative Agent before any policy is canceled[773](index=773&type=chunk) [Covenant to Guarantee and Provide Security](index=141&type=section&id=Section%206.12%20Covenant%20to%20Guarantee%20and%20Provide%20Security) This section ensures new Domestic or UK Subsidiaries (unless excluded) become guarantors within 30 days, executing joinder agreements and pledging assets as collateral - If a new Domestic or UK Subsidiary (that is not an Excluded Subsidiary) is formed or acquired, it must become a Subsidiary Guarantor within **30 days**[779](index=779&type=chunk) - The process requires the new subsidiary to execute a Subsidiary Joinder Agreement, pledge its assets and Equity Interests, and deliver legal opinions and certificates[779](index=779&type=chunk)[780](index=780&type=chunk) [ARTICLE 7: Negative Covenants](index=143&type=section&id=ARTICLE%207%20NEGATIVE%20COVENANTS) This article restricts borrower activities like incurring debt, granting liens, fundamental changes, investments, dispositions, and restricted payments, with specific exceptions [Indebtedness](index=143&type=section&id=Section%207.1%20Indebtedness) This covenant restricts new debt incurrence by Borrowers and subsidiaries, providing detailed exceptions for permitted categories like capital leases, purchase money debt, and intercompany debt - Incurrence of new Indebtedness is generally prohibited, except for specific permitted categories[788](index=788&type=chunk) - Permitted debt includes capital leases and purchase money obligations up to the greater of **$70,000,000** or **20%** of Consolidated EBITDA[788](index=788&type=chunk) - A general-purpose basket allows for additional Indebtedness up to the greater of **$20,000,000** or **5.5%** of Consolidated EBITDA[790](index=790&type=chunk) [Liens](index=146&type=section&id=Section%207.2%20Liens) This section prohibits Borrowers and subsidiaries from creating liens on assets, with exceptions for loan document liens, pre-existing liens, and other Permitted Encumbrances - Creating, incurring, or assuming any Lien on any property or asset is prohibited, except as specifically permitted[796](index=796&type=chunk) - Permitted Liens include those securing the Loan Document Obligations, Permitted Encumbrances, and liens securing permitted purchase money Indebtedness[796](index=796&type=chunk)[797](index=797&type=chunk) [Fundamental Changes; Business; Fiscal Year](index=148&type=section&id=Section%207.3%20Fundamental%20Changes%3B%20Business%3B%20Fiscal%20Year) This covenant restricts major corporate changes like mergers and asset sales, confines operations to Approved Lines of Business, and prohibits fiscal year changes without consent - Mergers and consolidations are restricted, but a Loan Party may merge with another Loan Party, and other mergers are permitted if they constitute a permitted Investment or Disposition[799](index=799&type=chunk) - The company and its subsidiaries are restricted to engaging in Approved Lines of Business[801](index=801&type=chunk) [Investments, Loans, Advances, Guarantees and Acquisitions](index=150&type=section&id=Section%207.4%20Investments%2C%20Loans%2C%20Advances%2C%20Guarantees%20and%20Acquisitions) This section limits investments, loans, advances, and acquisitions by Borrowers and subsidiaries, providing exceptions for cash equivalents, Permitted Acquisitions, and intercompany investments - Investments by Loan Parties in Non-Loan Party Subsidiaries are capped at the greater of **$70,000,000** or **20%** of Consolidated EBITDA[804](index=804&type=chunk) - Permitted Acquisitions are allowed as a specific type of investment[806](index=806&type=chunk) - A general investment basket is available for any other investment so long as, on a pro forma basis, no Default exists and the Total Net Leverage Ratio is less than or equal to **2.75:1.00**[808](index=808&type=chunk) [Dispositions](index=152&type=section&id=Section%207.5%20Dispositions) This covenant restricts asset dispositions, with permitted exceptions for sales of obsolete equipment, intellectual property licensing, and other asset sales under specific conditions - Dispositions of assets are generally restricted, with specific exceptions[811](index=811&type=chunk) - Asset sales are permitted for up to **$75,000,000** in proceeds per fiscal year, provided at least **75%** of the consideration is cash or equivalents and no Event of Default exists[812](index=812&type=chunk) [Restricted Payments](index=154&type=section&id=Section%207.8%20Restricted%20Payments) This section limits Restricted Payments like dividends and stock repurchases, providing exceptions for inter-company payments, employee repurchases, and other payments subject to liquidity and leverage tests - Restricted Payments (dividends, share repurchases) are generally prohibited, subject to specific exceptions[816](index=816&type=chunk) - A basket permits up to **$75,000,000** in Restricted Payments per fiscal year, provided no Event of Default exists and post-payment liquidity is at least **$150,000,000**[817](index=817&type=chunk) - Unlimited Restricted Payments are permitted if, after giving effect to the payment, no Default exists and the Total Net Leverage Ratio is less than or equal to **2.50:1.00**[817](index=817&type=chunk) [Financial Covenants](index=158&type=section&id=Section%207.12%20Financial%20Covenants) This section establishes two key financial maintenance covenants for Borrowers to comply with quarterly: a Maximum Total Net Leverage Ratio and a Minimum Consolidated Fixed Charge Coverage Ratio Financial Maintenance Covenants | Covenant | Requirement | Test Period | | :--- | :--- | :--- | | Maximum Total Net Leverage Ratio | <= 3.00:1.00 | End of each fiscal quarter | | Minimum Fixed Charge Coverage Ratio | >= 1.25:1.00 | End of each fiscal quarter | [ARTICLE 8: Events of Default](index=158&type=section&id=ARTICLE%208%20EVENTS%20OF%20DEFAULT) This article defines specific failures triggering lender remedies, such as debt acceleration, and outlines the priority for applying recovered funds [Events of Default](index=158&type=section&id=Section%208.1%20Events%20of%20Default) This section lists specific triggers for an Event of Default, including payment failures, covenant breaches, incorrect representations, cross-defaults, bankruptcy, and Change of Control - Failure to pay any principal when due is an immediate Event of Default[827](index=827&type=chunk) - Failure to pay interest or fees becomes an Event of Default after a **three-business-day** grace period[828](index=828&type=chunk) - A cross-default is triggered if any other Material Indebtedness (in excess of the **$50,000,000** Threshold Amount) is accelerated or becomes due prior to its scheduled maturity[832](index=832&type=chunk)[287](index=287&type=chunk) - Involuntary bankruptcy proceedings continuing for **60 days**, or any voluntary bankruptcy filing, constitutes an Event of Default[833](index=833&type=chunk)[835](index=835&type=chunk) - A Change of Control is an Event of Default[841](index=841&type=chunk) [Remedies Upon Event of Default](index=161&type=section&id=Section%208.2%20Remedies%20Upon%20Event%20of%20Default) This section outlines actions the Administrative Agent and Lenders can take upon an Event of Default, including commitment termination and loan acceleration, which are automatic in bankruptcy - Upon an Event of Default, the Administrative Agent, at the request of the Required Lenders, may terminate commitments and accelerate all outstanding loans[843](index=843&type=chunk) - In the case of a bankruptcy event (Section **8.1(h)** or **(i)**), the termination of commitments and acceleration of loans is automatic[843](index=843&type=chunk) [Application of Funds](index=162&type=section&id=Section%208.3%20Application%20of%20Funds) This section specifies the priority order (waterfall) for applying recovered funds after an Event of Default, starting with Agent fees and expenses, then interest, principal, and other obligations - After an Event of Default, recovered funds are applied in a specific priority order (waterfall)[845](index=845&type=chunk) - The payment waterfall priority is: **1)** Agent fees/expenses, **2)** L/C Issuer fees/expenses, **3)** Other Credit Party fees/expenses, **4)** Accrued interest, **5)** Principal and L/C collateralization, **6)** Secured Swap/Cash Management Obligations, **7)** Other Secured Obligations, and finally, any surplus to the Borrowers[845](index=845&type=chunk) [ARTICLE 9: The Administrative Agent](index=163&type=section&id=ARTICLE%209%20THE%20ADMINISTRATIVE%20AGENT) This article defines the Administrative Agent's role, rights, and responsibilities, including its authority, liability protections, resignation procedures, and security trustee appointments [Agent's Role, Rights, and Protections](index=163&type=section&id=Section%209.1%20-%209.5) These sections appoint Citizens Bank as Administrative Agent, authorizing its actions on behalf of Lenders, clarifying its rights, and providing exculpatory provisions against liability - Each Lender and L/C Issuer irrevocably appoints Citizens Bank as the Administrative Agent[848](index=848&type=chunk) - The Administrative Agent's duties are administrative in nature and it is not subject to any fiduciary duties[850](index=850&type=chunk) - The Agent is not liable for any action taken or not taken with the consent of the Required Lenders or in the absence of its own bad faith, gross negligence, or willful misconduct[852](index=852&type=chunk) [Resignation of Administrative Agent](index=165&type=section&id=Section%209.6%20Resignation%20of%20Administrative%20Agent) This section details the Administrative Agent's resignation or removal process, allowing Required Lenders to appoint a successor, subject to Lead Borrower consent unless a major default exists - The Administrative Agent may resign at any time by giving notice to the Lenders and Lead Borrower[858](index=858&type=chunk) - The Required Lenders have the right to appoint a successor, with the Lead Borrower's consent (unless a payment or bankruptcy-related Event of Default exists)[858](index=858&type=chunk)[859](index=859&type=chunk) [Collateral and Guarantee Matters](index=168&type=section&id=Section%209.10%20Collateral%20and%20Guarantee%20Matters) This section authorizes the Administrative Agent to act on behalf of Secured Parties regarding collateral and guarantees, including releasing liens on permitted asset sales and releasing guarantors - The Administrative Agent is authorized to release any Lien on property that is sold or disposed of in a transaction permitted by the Loan Documents[868](index=868&type=chunk) - The Agent is authorized to release any Guarantor from its obligations if that entity ceases to be a Subsidiary as a result of a permitted transaction[868](index=868&type=chunk) [Erroneous Payments](index=170&type=section&id=Section%209.13%20Erroneous%20Payments) This protective clause addresses erroneous payments by the Administrative Agent, requiring recipients to return funds promptly or face remedies like offset or deemed loan acquisition - If a Payment Recipient receives funds from the Administrative Agent determined to be an Erroneous Payment, it must return the funds promptly upon demand[875](index=875&type=chunk) - If an Erroneous Payment is not recovered, the Administrative Agent is deemed to have acquired a portion of the non-compliant Lender's loans equal to the unrecovered amount[879](index=879&type=chunk) - An Erroneous Payment does not satisfy any obligation of the Borrowers, and the Agent is subrogated to the rights of the recipient with respect to the erroneous amount[882](index=882&type=chunk) [Appointment of Administrative Agent as Security Trustee (UK)](index=172&type=section&id=Section%209.14%20Appointment%20of%20Administrative%20Agent%20as%20Security%20Trustee%20(UK)) This section appoints the Administrative Agent as security trustee for UK collateral under English law, outlining its powers and duties to hold security interests on trust for Secured Parties - The Credit Parties appoint the Administrative Agent to hold the security interests from UK Collateral Documents on trust for the Secured Parties[886](index=886&type=chunk) - The provisions of the UK Trustee Act **1925** and Trustee Act **2000** are modified or excluded to the extent they conflict with the terms of the Credit Agreement[899](index=899&type=chunk)[900](index=900&type=chunk) [Appointment of Administrative Agent as Security Trustee (HK)](index=174&type=section&id=Section%209.15%20Appointment%20of%20Administrative%20Agent%20as%20Security%20Trustee%20(HK)) This section appoints the Administrative Agent as security trustee for HK collateral under Hong Kong law, outlining its powers and duties to hold security interests on trust for Secured Parties - The Credit Parties appoint the Administrative Agent to hold the security interests from HK Collateral Documents on trust for the Secured Parties[902](index=902&type=chunk) - The provisions of the Hong Kong Trustee Ordinance are modified or excluded to the extent they conflict with the terms of the Credit Agreement[915](index=915&type=chunk)[916](index=916&type=chunk) [ARTICLE 10: Miscellaneous](index=176&type=section&id=ARTICLE%2010%20MISCELLANEOUS) This article contains standard legal provisions governing the agreement, including amendments, expenses, assignments, governing law, jurisdiction, confidentiality, and regulatory compliance [Waivers; Amendments](index=178&type=section&id=Section%2010.2%20Waivers%3B%20Amendments) This section establishes that amendments and waivers require written consent, with most changes needing Required Lenders' approval, but fundamental modifications requiring unanimous affected lender consent - Amendments generally require the written consent of the Borrowers and the Required Lenders[930](index=930&type=chunk) - Unanimous consent of each affected Lender is required for certain key changes, including reducing principal, interest rates, or fees, or postponing payment dates[930](index=930&type=chunk) - The agreement includes a provision for "Extension Offers," allowing the Borrowers to extend the maturity of loans and commitments for Lenders who agree to the extension, creating separate classes of debt[934](index=934&type=chunk) [Expenses; Indemnity; Damage Waiver](index=184&type=section&id=Section%2010.3%20Expenses%3B%20Indemnity%3B%20Damage%20Waiver) This section requires Loan Parties to reimburse Agent and Lenders for costs and indemnify Credit Parties against losses, with a waiver of consequential or punitive damages - The Loan Parties must pay all reasonable, documented out-of-pocket costs incurred by the Administrative Agent and Lead Arrangers in connection with the credit facility[944](index=944&type=chunk) - The Loan Parties must indemnify each Credit Party and its affiliates (Indemnitees) against any and all losses, claims, damages, and liabilities arising from the credit facility[945](index=945&type=chunk) - The indemnity does not apply to losses resulting from the Indemnitee's own bad faith, gross negligence, willful misconduct, or material breach of the loan documents[945](index=945&type=chunk) [Successors and Assigns](index=186&type=section&id=Section%2010.4%20Successors%20and%20Assigns) This section governs the assignment of loans and commitments by Lenders to eligible financial institutions, subject to conditions and consents, and restricts assignments to Disqualified Institutions - Any Lender may assign its rights and obligations to an Eligible Assignee, subject to minimum amounts (**$5,000,000** for Term or Revolving facilities) and required consents[951](index=951&type=chunk) - The consent of the Lead Borrower is required for an assignment unless an Event of Default has occurred or the assignment is to another Lender, an Affiliate of a Lender, or an Approved Fund[954](index=954&type=chunk) - Assignments to Disqualified Institutions are restricted. If an assignment is made to a Disqualified Institution without consent, the Borrower has the right to terminate its commitment and/or require it to assign away its loans at the lesser of par or the acquisition price[966](index=966&type=chunk)[967](index=967&type=chunk) - The Administrative Agent maintains a Register of all Lenders and their commitments, acting as the agent of the Borrower for this purpose[961](index=961&type=chunk) [Governing Law; Jurisdiction; Consent to Service of Process](index=193&type=section&id=Section%2010.9%20Governing%20Law%3B%20Jurisdiction%3B%20Consent%20to%20Service%20of%20Process) This section establishes New York law as governing, with parties submitting to exclusive jurisdiction of New York County courts for disputes, and includes a waiver of jury trial - The Credit Agreement and other Loan Documents are governed by the laws of the State of New York[980](index=980&type=chunk) - All parties submit to the exclusive jurisdiction of the courts of the State of New York sitting in New York County and the U.S. District Court for the Southern District of New York[981](index=981&type=chunk) [Waiver of Jury Trial](index=194&type=section&id=Section%2010.10%20WAIVER%20OF%20JURY%20TRIAL) All parties irrevocably waive their right to a trial by jury in any legal proceeding related to the credit agreement or its contemplated transactions - Each party to the agreement irrevocably waives its right to a trial by jury for any legal proceeding arising out of or relating to the Loan Documents[986](index=986&type=chunk) [Confidentiality; Treatment of Certain Information](index=195&type=section&id=Section%2010.14%20Confidentiality%3B%20Treatment%20of%20Certain%20Information) This section imposes confidentiality on Credit Parties for non-public information from Loan Parties, with exceptions for disclosure to affiliates, regulators, or potential assignees - Each Credit Party agrees to maintain the confidentiality of non-public information received from the Loan Parties[991](index=991&type=chunk) - Disclosure is permitted to affiliates, regulators, as required by law, or to potential assignees under a confidentiality agreement[991](index=991&type=chunk) [Acknowledgement and Consent to Bail-In of Affected Financial Institutions](index=197&type=section&id=Section%2010.17%20Acknowledgement%20and%20Consent%20to%20Bail-In%20of%20Affected%20Financial%20Institutions) This regulatory provision requires parties to acknowledge and consent to potential Bail-In Actions by resolution authorities on liabilities of Affected Financial Institutions - Each party acknowledges that any liability of an Affected Financial Institution (certain European banks) may be subject to write-down and conversion powers by a resolution authority (a "Bail-In Action")[1000](index=1000&type=chunk) - All parties consent to be bound by the effects of any Bail-In Action, which could include a reduction, cancellation, or conversion of the affected institution's liabilities[1001](index=1001&type=chunk) [Amendment and Restatement](index=201&type=section&id=Section%2010.21%20Amendment%20and%20Restatement) This section clarifies that the new agreement amends and restates the Existing Credit Agreement, superseding it without novation, ensuring original obligations continue under new terms - This Credit Agreement amends and restates the Existing Credit Agreement, superseding it in its entirety[1013](index=1013&type=chunk) - The agreement is not a novation; the original obligations continue under the modified terms of this new agreement[1013](index=1013&type=chunk) [Schedules and Exhibits](index=5&type=section&id=Schedules%20and%20Exhibits) This section lists all supplementary schedules and exhibits, providing detailed information and template forms referenced throughout the main credit agreement [Schedules](index=5&type=section&id=Schedules) This section lists attached schedules containing specific, detailed information referenced throughout the agreement, including lender commitments, existing debt, and notice information [Exhibits](index=5&type=section&id=Exhibits) This section lists attached exhibits, which are template forms for various notices, certificates, and agreements used during the credit facility's life

Core Insights - The company announced the completion of the acquisition of Kurt Geiger, which is expected to enhance growth and align with strategic initiatives [4][11] - The first quarter of 2025 showed a slight revenue increase of 0.2% year-over-year, with total revenue reaching $553.5 million [8] - The company is facing near-term challenges due to new tariffs impacting imported goods, but remains optimistic about long-term growth opportunities [3][12] Financial Performance - Revenue for the wholesale business was $439.3 million, a 0.2% increase compared to the first quarter of 2024, with gross profit margin improving to 35.7% from 35.1% [5] - Direct-to-consumer revenue decreased by 0.2% to $112.1 million, with gross profit margin declining to 60.1% from 61.9% due to increased promotional activity [6] - Net income attributable to Steven Madden, Ltd. was $40.4 million, or $0.57 per diluted share, compared to $43.9 million, or $0.60 per diluted share, in the same period of 2024 [8][20] Balance Sheet and Cash Flow - As of March 31, 2025, cash and cash equivalents totaled $147.2 million, while inventory increased to $238.6 million from $202.0 million a year earlier [7][22] - The company ended the quarter with a total asset value of $1.427 billion, reflecting a slight increase from $1.411 billion at the end of 2024 [22] - The company did not repurchase any shares in the open market during the first quarter but spent $7.8 million on share repurchases through net settlements of employee stock awards [9] Acquisition Details - The acquisition of Kurt Geiger was completed for an enterprise value of approximately £289 million, funded through a new credit agreement and cash on hand [11] - Kurt Geiger reported revenue of £400 million for the twelve months ended February 1, 2025, indicating a strong market presence [11] Future Outlook - The company has withdrawn its 2025 financial guidance due to macroeconomic uncertainties related to new tariffs and is not providing guidance at this time [12]

Company Overview - Steven Madden, Ltd. is a leading designer and marketer of fashion-forward footwear, accessories, and apparel [4] - The company markets products under its own brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo®, and ATM® [4] - Additionally, Steven Madden licenses products for the Anne Klein® brand and designs private label products for various retailers [4] Upcoming Earnings Release - The company plans to release its first quarter 2025 earnings results on May 7, 2025 [1] - A conference call will be hosted by management at 8:30 a.m. Eastern Time to review the results [1] Conference Call Details - The conference call will be webcast live on the company's investor relations website [2] - Participants can register for the call to receive dial-in information and a unique PIN [3] - It is recommended to join the call 10 minutes prior to the start time [3]

Group 1: Steven Madden Earnings Report - Steven Madden's stock declined over 34% following their Q4 earnings report on February 26, leading analysts to reduce EPS estimates by nearly 8% [1] - The Zacks Consensus EPS estimate for 2025 dropped from $2.53 to $2.33, following a prior 14% cut from $2.95 [1] - Despite robust revenue estimates, with a projected 18% growth to $2.7 billion for 2025, the earnings outlook indicates a potential annual decline of -12.7% [1] Group 2: Tariff Impact on Footwear Industry - The Trump administration's final tariff plan includes 46% tariffs on goods from Vietnam, affecting footwear manufacturers like Nike and Deckers [2] - A significant sell-off in apparel stocks is anticipated, although potential bargains may arise if new tariff agreements are negotiated [2] Group 3: Earnings Decline Advisory - It is advised to avoid companies experiencing earnings declines, with the Zacks Rank serving as a useful indicator [3]

Financial Performance - Total revenue for 2024 was $2,282,927, an increase of 15.2% compared to 2023[146] - Net income attributable to Steven Madden, Ltd. was $169,390 in 2024, down from $171,554 in 2023[146] - Diluted earnings per share in 2024 was $2.35 on 71,963 diluted weighted average shares outstanding, compared to $2.30 on 74,565 shares in 2023[146] - Gross profit in 2024 was $936,932, or 41.0% of total revenue, down from $832,414, or 42.0% in 2023, due to the acquisition of Almost Famous and a greater mix of private label footwear[155] - Operating expenses in 2024 were $698,936, or 30.6% of total revenue, compared to $612,672, or 30.9% in 2023, primarily due to expense leverage on a higher revenue base[156] - Income from operations in 2024 was $224,939, or 9.9% of total revenue, compared to $213,222, or 10.8% in 2023[157] - The effective tax rate for 2024 was 23.7%, up from 21.1% in 2023, primarily due to a lower tax benefit related to equity-based awards[157] Revenue Segmentation - Total revenue for 2024 increased by 15.2% to $2,282,927 compared to $1,981,582 in 2023, driven by growth in the Wholesale Accessories/Apparel, Direct-to-Consumer, and Wholesale Footwear segments[154] - Revenue from the Wholesale Footwear segment for 2024 was $1,059,440, or 46.4% of total revenue, a slight increase of 1.0% from $1,048,448 in 2023[158] - Revenue from the Wholesale Accessories/Apparel segment increased by 59.1% to $662,673, or 29.0% of total revenue, primarily due to the acquisition of Almost Famous[162] - Revenue from the Direct-to-Consumer segment for 2024 was $550,153, or 24.1% of total revenue, an increase of 8.6% from $506,494 in 2023[166] Store Operations - As of December 31, 2024, the company had 291 brick-and-mortar retail stores, an increase from 255 stores in 2023[147] - The company opened 54 new brick-and-mortar stores in 2024, primarily in international markets[147] - The company opened 54 brick-and-mortar stores and closed 18 in 2024, resulting in a total of 291 stores compared to 255 at the end of 2023[166] Cash and Investments - Cash, cash equivalents, and short-term investments totaled $203,408 as of December 31, 2024, with no debt[148] - Cash provided by operating activities was $198,096 in 2024, down from $229,237 in the prior year, primarily due to unfavorable changes in inventories and receivables[178] - Cash used in investing activities totaled $39,493 in 2024, mainly for capital expenditures of $25,911 and acquisitions of $13,976[179] - Cash used in financing activities was $167,906 in 2024, primarily for share repurchases and dividends paid totaling $61,039[180] - As of December 31, 2024, working capital was $480,974, with cash and cash equivalents of $189,924 and no cash borrowing[174] Dividends and Shareholder Returns - A quarterly cash dividend of $0.21 per share was approved, with total cash dividends paid for the twelve months ended December 31, 2024, amounting to $61,039[145] - The company declared a quarterly cash dividend of $0.21 per share in February, May, July, and November 2024, totaling $15,416, $15,292, $15,172, and $15,159 respectively[185][186][187][188] Acquisitions and Joint Ventures - The company formed a joint venture with Luxury Ventures Pte. Ltd., acquiring a 51.0% interest in SM Distribution Singapore Pte. Ltd. for $1,020[134] - The company acquired the ATM Collection for approximately $9,783, enhancing its presence in the high-end fashion market[133] - The GREATS business was sold during the third quarter of 2024, leading to the write-off of remaining intangible assets[205] - The acquisition of Kurt Geiger is subject to closing conditions, and any delays could adversely affect the company's business and stock price[97] Impairments and Fair Value - The estimated fair value of the GREATS trademark was written down from $6,150 to $4,450, resulting in a pre-tax non-cash impairment charge of $1,700[204] - The Almost Famous trademark was impaired with an impairment charge of $8,635, representing the remaining carrying amount of the asset[206] - A hypothetical 5% increase to inventory reserves as of December 31, 2024, would have decreased gross profit by approximately $500[198] - The annual impairment tests concluded that the fair values of reporting units exceeded their carrying values, with no impairment charges recorded during the years presented[203] - The company reassessed the carrying amount of its Almost Famous trademark for impairment, resulting in an impairment charge due to lower estimated future cash flows[206] Risks and Challenges - The company is exposed to foreign exchange rate fluctuations, which may materially affect business and financial condition[89] - Economic conditions may negatively impact consumer confidence and discretionary spending, which could affect the company's financial condition and liquidity[98] - Ongoing litigation and legal proceedings could divert management resources and adversely impact operating results[99] - The company is subject to complex tax laws and audits, which could result in additional tax liabilities and affect operating results[100] - Changes in tax laws could increase tax liabilities and adversely affect after-tax profitability[101] - Foreign tax authorities may introduce new tax laws or adjust existing regulations, impacting tax liabilities and after-tax income[102] - Failure to maintain effective internal control over financial reporting could undermine investor confidence and negatively impact stock price[103] Corporate Expenses - Corporate operating expenses increased to $96,738 in 2024 from $91,743 in 2023, reflecting higher costs related to corporate functions[171] - Operating expenses in 2024 were $314,003, or 57.1% of Direct-to-Consumer revenue, up from $279,827, or 55.2% in 2023, due to higher marketing and occupancy costs[168] - Royalty income from the Licensing segment for 2024 was $10,661, maintaining 0.5% of total revenue, with operating expenses of $1,600[170]

Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future price action. Instead, our articles focus on operational aspects, understanding the long-term earnings power of companies, the competitive dynamics of the industries where they participate, and buying companies that we would like to hold independently of how the price moves in the future. Most QC calls will be holds, and that is by design. Only a very sm ...

Steven Madden, Ltd. (SHOO) reported fourth-quarter 2024 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. Total revenues increased, while earnings decreased from the year-ago period’s actuals.Management attributed the strong performance in 2024 to robust gains in international markets, expansion in non-footwear categories and strength in direct-to-consumer (“DTC”) channels, along with a return to revenue growth in the U.S. wholesale footwear business.Looking ahead to 2025, the co ...

Financial Data and Key Metrics Changes - For Q4 2024, consolidated revenue was $582.3 million, a 12% increase compared to Q4 2023 [17] - Full-year revenue for 2024 increased 15.2% to $2.3 billion compared to $2 billion in 2023 [22] - Diluted EPS for 2024 was $2.67, up from $2.45 in 2023 [22] - Consolidated gross margin was 40.4%, down from 41.7% in Q4 2023 [19] - Net income for Q4 2024 was $39.3 million, or $0.55 per diluted share, compared to $45 million, or $0.61 per diluted share in Q4 2023 [21] Business Line Data and Key Metrics Changes - Accessories and apparel revenue increased 35.4% in Q4 2024, driven by strong growth across categories [18] - DTC revenue in 2024 was $550 million, a 9% increase versus 2023 [10] - Wholesale revenue was $402.9 million, up 13.6% compared to Q4 2023 [17] - The handbag business crossed the $300 million mark in revenue for the first time, increasing 31% compared to the prior year [8] Market Data and Key Metrics Changes - International revenue grew 12% in 2024, with EMEA region revenue increasing 18% [4][5] - Revenue in the Americas ex-US grew 9%, including mid-single-digit gains in Canada and Mexico [5] - The company transitioned from a distributor model to an ownership model in key markets, including new joint ventures in Latin America and Singapore [6] Company Strategy and Development Direction - The company aims to expand in international markets, accessories categories, and direct-to-consumer channels [14] - The acquisition of Kurt Geiger is expected to add a new growth engine, with a focus on expanding its brand portfolio and leveraging existing infrastructure [13][14] - The company plans to mitigate tariff impacts by diversifying production out of China and selectively raising prices [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the outlook for 2025 due to near-term headwinds, including new tariffs and inventory pressures in the handbag business [12] - The company anticipates revenue growth of 17% to 19% in 2025, including contributions from Kurt Geiger [25] - Management noted a slow start to 2025, particularly in DTC sales, attributed to weather and consumer confidence issues [43][45] Other Important Information - The company returned nearly $160 million to shareholders through dividends and share repurchases in 2024 [11] - The effective tax rate for Q4 2024 was 21.4%, up from 14.3% in Q4 2023 [21] - The company ended 2024 with $203.4 million in cash and no debt [23] Q&A Session Summary Question: Can you talk about gross margin pressure and plans to mitigate it? - Management acknowledged tariff pressures and outlined strategies including diversifying production and selective price increases [30][32] Question: Can you provide insights on DTC performance in January versus February? - Management reported a slow start to the year, particularly in selling spring products, with weak store traffic attributed to weather [43][45] Question: Why is now the right time for the Kurt Geiger acquisition? - Management highlighted Kurt Geiger's strong growth potential and alignment with strategic initiatives [47][48] Question: What is the expected impact of tariffs on the business? - Management included impacts from both China and Mexico tariffs in their guidance, with plans to adjust sourcing strategies accordingly [128] Question: How is the inventory health and what is the outlook for boots? - Management expressed confidence in inventory composition, noting a successful boot season and ongoing focus on spring styles [104][106] Question: What are the plans for future M&A activity? - Management indicated a focus on integrating Kurt Geiger, with no immediate plans for additional acquisitions [72]

Core Insights - Steven Madden reported revenue of $582.32 million for the quarter ended December 2024, marking a year-over-year increase of 12.1% [1] - The earnings per share (EPS) for the same period was $0.55, down from $0.61 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $548.56 million by 6.15%, while the EPS surpassed the consensus estimate of $0.54 by 1.85% [1] Revenue Breakdown - Total revenue (net sales) was $578.82 million, exceeding the four-analyst average estimate of $546.24 million, with a year-over-year change of +12% [4] - Total wholesale revenue reached $402.90 million, surpassing the estimated $370.96 million by three analysts, reflecting a year-over-year increase of +13.6% [4] - Direct-to-consumer revenue was reported at $176 million, slightly above the average estimate of $173.69 million, representing an 8.4% year-over-year change [4] Stock Performance - Over the past month, shares of Steven Madden have returned -8.7%, compared to a -2.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - For the fourth quarter of 2024, consolidated revenue was $582.3 million, a 12% increase compared to Q4 2023 [19] - Full year revenue for 2024 increased 15.2% to $2.3 billion compared to $2.0 billion in 2023 [22] - Diluted EPS for Q4 2024 was $0.55, down from $0.61 in Q4 2023, while full year diluted EPS increased to $2.67 from $2.45 in 2023 [22][23] - Consolidated gross margin was 40.4% in Q4 2024, down from 41.7% in Q4 2023 [21] Business Line Data and Key Metrics Changes - Wholesale revenue for Q4 2024 was $402.9 million, up 13.6% year-over-year, with footwear revenue increasing by 1% to $227.4 million [19] - Accessories and apparel revenue surged 35.4% to $175.4 million in Q4 2024, driven by strong growth across categories [19] - Direct-to-Consumer (DTC) revenue was $176 million, an 8.4% increase compared to Q4 2023, with Steve Madden DTC revenue up 6% and Dolce Vita DTC revenue growing 36% [12][20] Market Data and Key Metrics Changes - International revenue grew 12% in 2024, with EMEA region revenue increasing 18% [9] - Revenue in the Americas excluding the U.S. grew 9%, supported by a new joint venture in Latin America [9] Company Strategy and Development Direction - The company aims to expand its international presence and diversify production away from China, targeting a reduction in goods sourced from China to the low 40% range by November 2025 [14][28] - The acquisition of Kurt Geiger is expected to enhance growth in international markets and accessories categories, aligning with the company's strategic initiatives [15][44] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the outlook for 2025 due to new tariffs and inventory pressures in the handbag business [14] - The company anticipates revenue growth of 17% to 19% in 2025, including contributions from Kurt Geiger, but expects low single-digit growth excluding the acquisition [24] Other Important Information - The company returned nearly $160 million to shareholders through dividends and share repurchases [14] - Inventory at the end of 2024 was $257.6 million, up 12.5% year-over-year, attributed to longer transit times [23][96] Q&A Session Summary Question: Can you talk about gross margin pressure and plans to mitigate it? - Management acknowledged tariff pressures and outlined strategies including diversifying production and selective price increases [26][28] Question: How is the DTC business performing in January versus February? - Management noted a slow start to the year, particularly in spring product sales, attributed to weather and consumer confidence [38][40] Question: Why is now the right time for the Kurt Geiger acquisition? - The acquisition is seen as an opportunity to leverage Kurt Geiger's growth potential and align with strategic initiatives [43][44] Question: What are the expectations for organic growth in 2025? - Management expects low single-digit growth in wholesale and high single-digit growth in DTC, with specific pressures noted in the handbag segment [54][55] Question: How is inventory health and performance of boots? - Inventory is considered healthy, with a strong boot season reported, but management is focused on transitioning consumers to spring styles [94][98]