Steven Madden(SHOO) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2021 was $397.9 million, a 178.6% increase compared to 2020 and an 11.5% decrease versus 2019 [20] - Net income attributable to Steve Madden Limited for the quarter was $39.7 million or $0.48 per diluted share, up from a net loss of $14.7 million in the prior year [26] - Operating income for the quarter totaled $51 million or 12.8% of revenue, up from last year's operating loss of $21 million [26] Business Line Data and Key Metrics Changes - Retail revenue increased 63% compared to Q2 2019, with e-commerce revenue growing 105% compared to 2020 and 282.2% versus 2019 [10][21] - Wholesale revenue was $262.1 million, up 162.2% compared to the prior year but down 27.9% compared to 2019 [20] - Retail gross margin was 65.4%, compared to 67.4% last year and 59.7% in 2019, showing strong margin improvement due to reduced promotional activity [25] Market Data and Key Metrics Changes - The global brick-and-mortar comparable store sales were up 8% in the quarter compared to 2019 [11] - Europe saw over 100% growth in Q2 compared to Q2 2019, driven by digital channels [70] - Canada experienced a slower recovery from COVID-19, but recent weeks showed improved results [71] Company Strategy and Development Direction - The company is focusing on advancing diversity, equity, and inclusion initiatives, including partnerships with the Fearless Fund and Howard University [15] - There is a strong emphasis on e-commerce, with over 50% of Retail segment revenue coming from digital channels [40] - The company plans to continue with lower promotional activity while managing inventory levels effectively [87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive sustainable revenue and earnings growth despite ongoing supply chain disruptions [18] - The company anticipates strong sequential improvement in wholesale business in the back half of the year, with Q4 expected to return to growth compared to 2019 [14] - Management acknowledged challenges in the supply chain but has taken steps to mitigate these issues, including relocating some production to Mexico and Brazil [34] Other Important Information - The company ended the quarter with $302.7 million in cash and no debt, indicating a strong financial foundation [27] - A quarterly cash dividend of $0.15 per share was approved, payable on September 27, 2021 [28] - The company repurchased approximately 876,000 shares for $37.2 million during the quarter [28] Q&A Session Summary Question: What are the comp drivers behind the 8% open-only comp compared to Q2 2019? - Management noted improved traffic, conversion, and a significant increase in average unit retail (AUR) due to reduced promotional activity [32] Question: What is the supply chain outlook and any timing of delivery issues? - Management highlighted significant global supply chain challenges, including port congestion and COVID outbreaks at factories, impacting lead times [33] Question: How is e-commerce strength influencing product assortments? - Management confirmed that e-commerce has become a majority of the Retail segment revenue and will continue to be a focus for growth [40] Question: What is the outlook for wholesale inventory planning for the back half? - Management expects the gap between wholesale and Retail performance to narrow in the back half, with improved inventory planning [50] Question: How are gross margins expected to trend in the third quarter? - Management anticipates gross margins to be lower than Q2 due to a higher percentage of wholesale sales, but still expects margins to start with a 4 in the back half [54] Question: How is the private label business performing? - Management reported good performance in the private label segment, with sell-throughs remaining strong despite some challenges [92] Question: What is the status of the Dolce Vita brand? - Management indicated strong performance for Dolce Vita, with significant demand, although supply chain disruptions have limited potential sales [73]