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Steven Madden(SHOO) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2022, the company achieved record financial performance with consolidated revenue of $2.1 billion, a 13.7% increase compared to 2021 [68] - The fourth quarter consolidated revenue was $470.6 million, an 18.6% decrease compared to the prior year [4] - Net income for the fourth quarter was $33.7 million or $0.44 per diluted share, down from $70.4 million or $0.87 per diluted share in 2021 [43] - Operating income for the fourth quarter totaled $42.2 million or 9% of revenue, down from $86.9 million or 15% of revenue last year [43] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) revenue for 2022 was $521.7 million, a 6.9% increase compared to 2021, driven by growth in both brick-and-mortar and e-commerce [68] - Wholesale revenue was $1.6 billion, up 16.4% compared to the prior year, with wholesale footwear revenue increasing by 16.9% to $1.2 billion [68] - In the fourth quarter, wholesale revenue was $308.8 million, down 24.8% compared to the prior year [48] - DTC gross margin was 64% compared to 63.5% last year, driven by a reduction in rate expense [43] Market Data and Key Metrics Changes - International revenue grew 56% compared to 2021, representing 16% of total revenue, up approximately 500 basis points from pre-COVID 2019 [67] - The EMEA region is identified as the area with the most significant growth opportunities, despite macro headwinds [30] Company Strategy and Development Direction - The company aims to strengthen its U.S. wholesale footwear business, which remains the core of its operations [3] - A key strategic initiative is to expand the business outside of footwear, with accessories and apparel revenue exceeding $400 million in 2022, a 13% increase over 2021 [67] - The company is transitioning from a distributor model to an ownership model in key international markets, exemplified by the joint venture in the Middle East [67] Management's Comments on Operating Environment and Future Outlook - The management noted that the operating environment became increasingly challenging as consumers began to pull back on discretionary spending [3] - The outlook for overall consumer spending is uncertain, with expectations of continued challenges in the near term [47] - The company expects revenue for 2023 to decrease by 6.5% to 8% compared to 2022, with diluted EPS projected to be in the range of $2.40 to $2.50 [69] Other Important Information - The company ended the year with $289.8 million in cash and no debt, with inventory levels down to $228.8 million from $255.2 million the previous year [69] - The company returned $214.9 million to shareholders in 2022 through share repurchases and dividends [69] Q&A Session Summary Question: What is the revenue guidance for wholesale and DTC for 2023? - The company expects wholesale to be down roughly 12% to 13% and DTC to be up high single digits versus 2022 [49] Question: What are the trends in point-of-sale for wholesale partners year-to-date in 2023? - The management indicated that there has been a modest increase in e-commerce while brick-and-mortar has slowed down [31] Question: How does the company view the health of the consumer? - The management noted a modest slowdown in consumer demand, but the pullback from wholesale customers has been more dramatic [36] Question: What are the expectations for international growth in 2023? - The company believes international business can achieve double-digit growth in 2023, with the EMEA region being a significant focus [30] Question: How does the company plan to address inventory levels with wholesale customers? - The management expressed hope that improved sell-through rates would encourage wholesale customers to increase their inventory levels [50]