Core Insights - Steven Madden, Ltd. has established a strong foundation for success through strategic initiatives focused on diversification, digital growth, and international expansion [1] - The company has demonstrated solid financial performance in Q2 2024, indicating its ability to navigate challenges and seize growth opportunities [1] Financial Performance - The stock has outperformed the Zacks Shoes and Retail Apparel industry, with shares rising 21.4% compared to the industry's 27% decline over the past year [2] - The Zacks Consensus Estimate for 2024 sales is $2.22 billion, reflecting a year-over-year growth of 12.3%, while EPS is estimated at $2.62, indicating a growth of 6.9% [3] - For 2025, sales are projected at $2.33 billion, with an expected growth of 4.7%, and EPS is estimated at $2.93, implying an 11.7% growth [3] Business Segments - The wholesale business saw revenues increase by 22.5% year over year to $385.3 million in Q2, with wholesale accessories and apparel revenues surging by 86% [4] - Excluding the Almost Famous acquisition, wholesale revenues grew by 8.2%, with accessories and apparel revenues increasing by 29.8% [4] - The direct-to-consumer (DTC) segment also showed resilience, with revenues rising 6.4% year over year to $136.4 million, driven by strong product assortments and disciplined inventory management [5] International Expansion - Steven Madden is aggressively expanding its international footprint, with international revenues growing 13% year over year in Q2, particularly strong in the EMEA region [6] - The company anticipates EMEA revenues to grow more than 20% in 2024 [6] Future Outlook - For 2024, the company expects an 11-13% increase in revenues from 2023, with adjusted earnings projected between $2.55 and $2.65 per share, up from $2.30 in 2023 [6] - The recovery in the U.S. wholesale footwear business is seen as a positive sign for inventory normalization and improved relationships with key retail partners [6] Strategic Positioning - Steven Madden's strong performance in both wholesale and DTC businesses, along with successful acquisitions like Almost Famous, highlights its adaptability in a competitive market [7] - The company is well-positioned to capitalize on growth opportunities and enhance its market presence both domestically and internationally [7]

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $523.6 million, a 17.6% increase compared to Q2 2023, with adjusted diluted EPS rising 23% [4][12] - Consolidated gross margin was 41.5%, down from 42.6% in the same period last year, while direct-to-consumer gross margin increased to 64.3%, up 60 basis points year-over-year [14][15] - Operating income for the quarter was $54.5 million, or 10.4% of revenue, up from $44.5 million or 10% of revenue in the prior year [15] Business Line Data and Key Metrics Changes - Accessories and apparel revenue rose 74%, or 27% excluding the newly acquired Almost Famous business, with handbag revenue increasing more than 30% [7][12] - Direct-to-consumer revenue grew 6%, including a 4% increase on a comparable basis, with brick-and-mortar comp growth at 7% and digital at 1% [8][13] - Wholesale revenue was $385.3 million, up 22.5% compared to Q2 2023, with wholesale accessories and apparel revenue up 86% [12] Market Data and Key Metrics Changes - International revenue grew 13% in Q2, with the EMEA region expected to see over 20% growth in 2024 [5][6] - The Americas region saw a rebound in Canada and continued strong momentum in Mexico, with expectations for double-digit revenue growth [6] Company Strategy and Development Direction - The company aims to expand its international business, grow outside of footwear, and strengthen its direct-to-consumer channels [5][9] - The strategy includes diversifying revenue sources, reducing reliance on U.S. wholesale footwear, which is expected to account for less than 40% of overall business in 2024 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting financial goals for 2024 despite a challenging operating environment, with expectations for revenue growth of 11% to 13% [10][16] - The company is prepared to adapt to potential tariff increases by diversifying sourcing away from China [38][39] Other Important Information - The company has no debt and ended the quarter with $192.2 million in cash and equivalents [16] - A quarterly cash dividend of $0.21 per share was approved, payable on September 23, 2024 [16] Q&A Session Summary Question: Changes to revenue growth guidance composition - Management confirmed no changes to the revenue growth guidance composition, maintaining expectations for low-to-mid singles in wholesale and high singles in direct-to-consumer [18] Question: Organic growth rate in accessories and apparel - Management indicated a slowdown in growth for accessories and apparel in the back half of the year due to tougher comparisons [19] Question: Breakdown of direct-to-consumer revenue growth - Management clarified that brick-and-mortar comp growth was 7%, while digital was 1%, with overall DTC revenue growth at 6.4% [22][23] Question: Inventory levels in the wholesale channel - Management noted that inventory levels in the channel are reasonably controlled, with cautious sales forecasts from major wholesale customers [28] Question: Freight costs and impact on margins - Management stated that freight costs are expected to impact gross margins by about 40 basis points, with a heavier impact anticipated in the fall [32] Question: Performance of Almost Famous acquisition - Management reported that Almost Famous is tracking well, with revenue and profitability exceeding initial expectations [46] Question: Growth drivers in EMEA - Management highlighted strong growth in Continental Europe and the Middle East, with fashion sneakers and handbags being key products [48] Question: Boot business outlook for Q4 - Management expressed caution regarding the boot category, with conservative planning from wholesale customers [52] Question: Anticipated improvement in branded footwear - Management expects the branded wholesale footwear business to improve in the back half of the year, particularly in Q4 [56]

Core Viewpoint - Steven Madden, Ltd. (SHOO) reported better-than-expected second-quarter 2024 results, with revenues and earnings surpassing estimates and increasing year over year [1][4]. Financial Performance - Adjusted quarterly earnings were 57 cents per share, beating the Zacks Consensus Estimate of 51 cents, and increased 21.3% from 47 cents in the prior-year period [4]. - Total revenues rose 17.6% year over year to $523.6 million, with net revenues of $521.7 million increasing 17.8%, surpassing the consensus estimate of $507 million [4]. - Adjusted gross profit increased 14.4% year over year to $217.3 million, while the adjusted gross margin contracted 110 basis points to 41.5% [5]. - Adjusted operating expenses rose 12% year over year to $162.8 million, but as a percentage of revenues, they declined 150 basis points to 31.1% [6]. Segment Performance - Wholesale business revenues improved 22.5% year over year to $385.3 million, with wholesale accessories/apparel revenues growing 86% [7]. - Direct-to-consumer (DTC) revenues increased 6.4% year over year to $136.4 million [8]. Cash and Shareholder Returns - The company ended the quarter with cash and cash equivalents of $180.5 million and stockholders' equity of $808.3 million [9]. - SHOO repurchased $38.2 million of its common stock and declared a quarterly cash dividend of 21 cents per share [10]. Outlook - For 2024, the company anticipates an 11-13% increase in revenues from 2023, with adjusted earnings projected at $2.55-$2.65 per share, compared to $2.30 per share in 2023 [11].

Company Performance - Steven Madden reported quarterly earnings of $0.57 per share, exceeding the Zacks Consensus Estimate of $0.51 per share, and up from $0.47 per share a year ago [3] - The company has surpassed consensus EPS estimates in all of the last four quarters [4] - The latest quarterly report showed an earnings surprise of 11.76%, with a previous quarter surprise of 16.07% [8] Revenue Insights - For the quarter ended June 2024, Steven Madden posted revenues of $523.55 million, surpassing the Zacks Consensus Estimate by 3.30%, compared to $442.84 million in the same quarter last year [15] - The upcoming quarterly earnings are expected to be $1.21 per share, reflecting a year-over-year change of +23.5% [7] - The current consensus EPS estimate for the next quarter is $0.92 on revenues of $608.14 million, and for the current fiscal year, it is $2.62 on revenues of $2.22 billion [11] Industry Context - The Shoes and Retail Apparel industry, where Steven Madden operates, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook [6] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [13]

Revenue and Growth - Revenue for the second quarter of 2024 increased 17.6% to $523.6 million, compared to $445.3 million in the same period of 2023[9] - Direct-to-consumer revenue was $136.4 million, a 6.4% increase compared to the second quarter of 2023[11] - The company expects revenue to increase by 11% to 13% for fiscal 2024 compared to 2023[14] - Total revenue for the three months ended June 30, 2024, was $523,553, up from $445,302 in the same period of 2023, reflecting a 17.6% growth[34] - The company’s net sales for the six months ended June 30, 2024, reached $1,072,276, compared to $904,574 for the same period in 2023, reflecting an 18.5% increase[34] Profitability - Gross profit as a percentage of revenue was 41.5%, down from 42.6% in the same period of 2023[9] - Net income attributable to Steven Madden, Ltd. was $35.4 million, or $0.49 per diluted share, compared to $34.5 million, or $0.46 per diluted share, in the same period of 2023[9] - Adjusted net income attributable to Steven Madden, Ltd. was $41.2 million, or $0.57 per diluted share, compared to $34.9 million, or $0.47 per diluted share, in the same period of 2023[9] - GAAP net income attributable to Steven Madden, Ltd. for the three months ended June 30, 2024, was $35,376, compared to $34,529 for the same period in 2023, representing a 2.5% increase[27] - Adjusted net income attributable to Steven Madden, Ltd. for the six months ended June 30, 2024, was $88,241, compared to $72,541 for the same period in 2023, showing a 21.5% increase[27] - GAAP diluted net income per share for the three months ended June 30, 2024, was $0.49, compared to $0.46 for the same period in 2023, a 6.5% increase[27] - Adjusted diluted net income per share for the six months ended June 30, 2024, was $1.22, up from $0.96 for the same period in 2023, representing a 27.1% increase[27] - The company expects GAAP diluted net income per share for 2024 to be between $2.43 and $2.53[27] Expenses and Costs - Operating expenses as a percentage of revenue were 31.3%, down from 32.7% in the same period of 2023[9] - GAAP operating expenses for the three months ended June 30, 2024, were $163,709, an increase from $145,830 in the same period of 2023, which is a 12.2% rise[24] - The company spent $38.2 million on repurchases of its common stock during the second quarter[12] Assets and Liabilities - Cash, cash equivalents, and short-term investments totaled $192.2 million as of June 30, 2024[5] - Total current assets increased to $860,108 thousand as of June 30, 2024, compared to $827,899 thousand a year ago, reflecting a growth of 3.9%[36] - Cash and cash equivalents decreased to $180,457 thousand from $258,056 thousand year-over-year, representing a decline of 30.1%[36] - Total liabilities rose to $542,708 thousand, up from $428,528 thousand a year ago, indicating an increase of 26.7%[36] - Accounts payable increased significantly to $189,772 thousand, compared to $130,417 thousand in the same period last year, marking a rise of 45.5%[36] - Total stockholders' equity decreased to $832,356 thousand from $841,717 thousand year-over-year, a decline of 1.4%[36] Tax and Valuation - The company reported a GAAP provision for income taxes of $11,276 thousand for the three months ended June 30, 2024, compared to $10,923 thousand for the same period in 2023, an increase of 3.2%[41] - Adjusted provision for income taxes was $13,075 thousand for the three months ended June 30, 2024, up from $11,039 thousand in the prior year, reflecting a growth of 18.5%[41] Other Financial Metrics - Goodwill increased to $183,374 thousand as of June 30, 2024, compared to $168,967 thousand a year ago, showing an increase of 8.5%[36] - Operating lease right-of-use asset rose to $143,480 thousand from $116,871 thousand year-over-year, an increase of 22.8%[36] - The company incurred $6.6 million pre-tax expense related to the change in valuation of a contingent consideration from the acquisition of Almost Famous[44]

Core Insights - Steven Madden, Ltd. (SHOO) is set to announce its second-quarter 2024 earnings on July 31, with investors anticipating insights into performance and strategic direction [1] - The Zacks Consensus Estimate for earnings per share is stable at 51 cents, indicating an 8.5% increase year over year [2] Revenue Growth Factors - Direct-to-consumer (DTC) channels, especially digital sales, are expected to drive revenue growth, with a projected 8.1% increase year over year in DTC revenues [4] - The consensus estimate for second-quarter revenues is $506.8 million, reflecting a 14.5% increase from the previous year [5] - The recovery in the U.S. wholesale footwear business is anticipated to contribute to revenue growth, with a forecasted 16% increase year over year in wholesale revenues [9] Strategic Initiatives - The company is focusing on expanding its international market presence, particularly in the EMEA region, which is a significant growth driver [7] - Diversification into accessories and apparel is proving to be a strong revenue driver, with robust growth in handbag and apparel segments [8] - Optimization of supply-chain operations and inventory turnover is a priority, enabling the company to meet customer demand efficiently [10] Earnings Performance - Steven Madden has a trailing four-quarter earnings surprise of 6%, with a notable 16.1% beat in the last reported quarter [6]

Company Overview - Steve Madden designs, sources, and markets fashion-forward footwear, accessories, and apparel under its own brands such as Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo®, and GREATS® [2] - The company also licenses products for the Anne Klein® brand and designs private label products for various retailers [2] - Steve Madden's distribution channels include department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, and independent stores [2] - The company operates brick-and-mortar retail stores and e-commerce websites, and licenses certain brands to third parties for marketing and sales in apparel, accessory, and home categories [2] Upcoming Earnings Announcement - Steve Madden, Ltd. plans to release its second quarter 2024 earnings results on July 31, 2024 [3] - Management will host a conference call to review the results at 8:30 a.m. Eastern Time [3]

Core Viewpoint - Steven Madden, Ltd. is set to release its second quarter 2024 earnings results on July 31, 2024, with a conference call scheduled for 8:30 a.m. Eastern Time to discuss the results [1]. Company Overview - Steven Madden, Ltd. is a prominent designer and marketer of fashion-forward footwear, accessories, and apparel, operating under various brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo®, and GREATS® [6]. - The company also licenses products for the Anne Klein® brand and designs private label products for various retailers [6]. - Its distribution network includes department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, and independent stores, alongside direct operations of retail stores and e-commerce websites [6].

PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and detailed notes for the period ended March 31, 2024, covering key financial positions, performance, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets decreased slightly to **$1.304 billion**, driven by reduced cash, while liabilities also declined and equity remained stable Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $807,294 | $854,832 | | Cash and cash equivalents | $131,501 | $204,640 | | Inventories | $201,960 | $228,990 | | **Total Assets** | **$1,304,153** | **$1,347,943** | | **Total Current Liabilities** | $332,512 | $377,624 | | **Total Liabilities** | **$460,546** | **$499,911** | | **Total Stockholders' Equity** | **$843,607** | **$848,032** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q1 2024, total revenue increased to **$552.4 million**, with net income rising to **$43.9 million** and diluted EPS reaching **$0.60** year-over-year Q1 2024 vs Q1 2023 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenue | $552,381 | $463,834 | | Gross Profit | $224,815 | $195,092 | | Income from Operations | $56,746 | $46,511 | | Net Income Attributable to Steven Madden, Ltd. | $43,934 | $36,730 | | Diluted EPS | $0.60 | $0.48 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$15.7 million** in Q1 2024, with **$52.5 million** used in financing activities, leading to a **$73.1 million** net decrease in cash Cash Flow Summary for Three Months Ended March 31 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,705) | $(13,275) | | Net cash used in investing activities | $(4,618) | $(2,426) | | Net cash used in financing activities | $(52,531) | $(49,740) | | **Net decrease in cash and cash equivalents** | **$(73,139)** | **$(64,734)** | [Notes to Condensed Consolidated Financial Statements - Unaudited](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20-%20Unaudited) The notes detail key events and accounting treatments, including a **$4.3 million** hosiery business acquisition, a **$1.7 million** trademark impairment, and **$32.6 million** in share repurchases, alongside segment revenue breakdown - On March 1, 2024, the company acquired the Steve Madden and Betsey Johnson hosiery business from Gina Group LLC for a cash consideration of **$4.26 million**. The acquisition included inventories, reacquired rights, and goodwill[29](index=29&type=chunk) - In Q1 2024, the company recorded a pre-tax non-cash impairment charge of **$1.7 million** related to the GREATS® trademark, writing its value down to **$4.45 million**, following a **$6.52 million** impairment charge in Q4 2023[66](index=66&type=chunk) - During Q1 2024, the company repurchased **773,000 shares** of its common stock for approximately **$32.6 million**, at a weighted average price of **$42.25 per share**, with **$142.8 million** remaining available for future repurchases as of March 31, 2024[46](index=46&type=chunk) Revenue by Segment (in thousands) | Segment | Q1 2024 Revenue | Q1 2023 Revenue | | :--- | :--- | :--- | | Wholesale Footwear | $295,660 | $282,321 | | Wholesale Accessories/Apparel | $142,576 | $79,816 | | Direct-to-Consumer | $112,331 | $99,600 | | Licensing | $1,814 | $2,097 | | **Total Revenue** | **$552,381** | **$463,834** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2024 financial results, highlighting a **19.1%** revenue increase to **$552.4 million** driven by wholesale and direct-to-consumer growth, improved operating income, and a review of liquidity [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Consolidated revenue for Q1 2024 increased **19.1%** year-over-year, primarily driven by a **78.6%** surge in Wholesale Accessories/Apparel, despite a slight decrease in gross margin - Wholesale Accessories/Apparel revenue increased **78.6%** YoY, driven by incremental revenue from the acquisition of Almost Famous and strength in Steve Madden handbags[106](index=106&type=chunk) - Wholesale Footwear revenue grew **4.7%** YoY, primarily driven by sales growth in the private label business[105](index=105&type=chunk) - Direct-to-Consumer revenue increased **12.8%** YoY, with growth in both brick-and-mortar and e-commerce channels, and gross margin in this segment improved due to reduced promotional activity[107](index=107&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$143.1 million** in cash and no debt, confident in meeting future operating needs and announcing a **$0.21** per share quarterly dividend - As of March 31, 2024, the company had **$143.1 million** in cash, cash equivalents, and short-term investments, with no debt outstanding[111](index=111&type=chunk)[113](index=113&type=chunk) - Cash used in financing activities in Q1 2024 was **$52.5 million**, consisting mainly of **$37.3 million** for share repurchases and **$15.4 million** for dividend payments[117](index=117&type=chunk) - On April 30, 2024, the Board of Directors approved a quarterly cash dividend of **$0.21 per share**, payable on June 21, 2024[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies minimal interest rate risk due to no variable-rate borrowings, manages foreign currency risk with forward contracts, and acknowledges inflation as a potential headwind - Interest rate risk is considered **immaterial** as of March 31, 2024, because the company had no cash borrowings under its variable-rate Credit Facility[128](index=128&type=chunk) - To mitigate foreign currency risk, the company had entered into forward foreign exchange contracts with notional amounts totaling **$78.5 million** as of March 31, 2024[131](index=131&type=chunk) - The company acknowledges that inflation poses a risk by potentially reducing consumer spending and increasing labor, overhead, and logistics costs[124](index=124&type=chunk)[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls were effective as of March 31, 2024, with the assessment of internal controls excluding the recently acquired Almost Famous business - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2024[135](index=135&type=chunk) - The assessment of internal controls over financial reporting did not include the internal controls of Almost Famous, acquired in October 2023, which represented **8.4%** of consolidated total assets and **7.4%** of consolidated total revenue for the quarter[137](index=137&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management believes any resulting liabilities will not materially impact financial condition or results of operations - In the opinion of management, liabilities resulting from various pending legal proceedings are **not expected to have a material impact** on the company's financial condition or results of operations[140](index=140&type=chunk) [Item 1A. Risk Factors](index=36&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There have been **no material changes** from the risk factors previously disclosed in the company's 2023 Form 10-K[142](index=142&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, the company repurchased **883,000** shares of common stock, with **773,000** shares acquired under the publicly announced program at an average price of **$42.31** per share Share Repurchases for Q1 2024 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2024 | 22,000 | $41.59 | 0 | | Feb 2024 | 16,000 | $43.17 | 0 | | Mar 2024 | 845,000 | $42.31 | 773,000 | | **Total** | **883,000** | **$42.31** | **773,000** | [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2024, none of its directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - During the three months ended March 31, 2024, **no directors or officers adopted, modified, or terminated any contract, instruction, or written plan** for the purchase or sale of the company's securities intended to satisfy the conditions of Rule 10b5-1(c)[145](index=145&type=chunk)

Steven Madden, Ltd. (NASDAQ:SHOO) Q1 2024 Earnings Conference Call May 1, 2024 8:30 AM ET Company Participants Danielle McCoy - VP of Corporate Development & Investor Relations Edward Rosenfeld - Chairman & Chief Executive Officer Zine Mazouzi - Chief Financial Officer Conference Call Participants Paul Lejuez - Citi Sam Poser - Williams Trading Jay Sole - UBS Janine Stichter - BTIG Aubrey Tianello - BNP Paribas Corey Tarlowe - Jefferies Laura Champine - Loop Dana Telsey - Telsey Advisory Group Operator Good ...