Steve Madden Announces Fourth Quarter and Full Year 2013 Results

  Steve Madden Announces Fourth Quarter and Full Year 2013 Results

Business Wire

LONG ISLAND CITY, N.Y. -- February 25, 2014

Steve Madden (Nasdaq:SHOO), a leading designer and marketer of fashion
footwear and accessories for women, men and children, today announced
financial results for the fourth quarter and full year ended December 31,
2013.

For the Fourth Quarter 2013:

  *Net sales increased 8.7% to $342.9 million compared to $315.5 million in
    the same period of 2012.
  *Retail comparable store sales decreased 6.7%.
  *Gross margin declined to 37.8% as compared to 39.3% in the same period
    last year due primarily to a sales mix shift to the lower-margin private
    label business and increased promotional activity in the retail segment.
  *Operating expenses as a percentage of sales were 23.2% compared to 24.8%
    of sales in the same period of 2012 due to strong cost control and
    operating expense leverage on growing sales.
  *Operating income totaled $53.6 million, or 15.6% of net sales, compared
    with operating income of $49.8 million, or 15.8% of net sales, in the same
    period of 2012. Operating income in the fourth quarter of 2013 included a
    $1.0 million benefit related to recovery from the prior year’s text
    message litigation settlement. Operating income in the fourth quarter 2012
    included a $1.0 million benefit related to a greater-than anticipated
    recovery in the bankruptcy process of a note receivable from the Company’s
    former licensee for Betsey Johnson retail and apparel. Excluding these
    items, operating income for the fourth quarter of 2013 was $52.6 million,
    or 15.4% of net sales, compared with operating income of $48.7 million, or
    15.4% of net sales, in the same period of 2012.
  *Net income increased 8.2% to $35.7 million, or $0.54 per diluted share,
    compared to $33.0 million, or $0.49 per diluted share in the prior year's
    fourth quarter, adjusted for the three-for-two stock split effective
    October 2, 2013. Net income for the fourth quarter of 2013 and the fourth
    quarter of 2012 included the aforementioned benefits. On an after-tax
    basis, the benefits positively impacted fourth quarter 2013 and 2012 by
    $0.6 million, or $0.01 per diluted share. Excluding these benefits, net
    income increased 8.4% to $35.1 million, or $0.53 per diluted share,
    compared to $32.3 million, or $0.48 per diluted share in the prior year’s
    fourth quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are
pleased to have delivered solid sales and earnings growth in the fourth
quarter despite a challenging retail environment. While our retail segment
performance was below expectation, we recorded another strong quarter in our
wholesale business. Most importantly, our flagship Steve Madden brand
continues to be a leader in the fashion footwear space, and the long term
growth prospects for our Company remain strong. While we are cautious on the
near term outlook for our retail segment due to continued softness in traffic
and sales trends, we are confident that we can maintain solid momentum in our
wholesale business, and we expect to deliver another year of strong
performance in 2014.”

Fourth Quarter 2013 Segment Results

Net sales from the wholesale business grew 10.6% to $273.4 million in the
fourth quarter compared to $247.2 million in the fourth quarter of 2012, with
particular strength in the private label business in addition to solid gains
in Steve Madden Women’s and Madden Girl footwear as well as strong increases
in Steve Madden handbags and FREEBIRD by Steven footwear. Gross margin in the
wholesale business was 31.8% compared to 32.6% in last year’s fourth quarter,
due primarily to a sales mix shift toward the lower-margin private label
business.

Retail net sales rose 1.7% to $69.5 million compared to $68.3 million in the
fourth quarter of the prior year. The increase in net sales resulting from the
net opening of 12 new stores since the end of the fourth quarter last year was
mostly offset by a same store sales decrease of 6.7% for the fourth quarter of
2013. Increased promotional activity resulted in retail gross margin of 61.4%
in the fourth quarter of 2013 compared to 63.7% in the fourth quarter of 2012.

During the fourth quarter, the Company opened two Steve Madden full-price
stores, one Steve Madden outlet store and one FREEBIRD by Steven e-commerce
store. The Company ended the year with 121 company-operated retail locations,
including 17 outlets and four Internet stores, compared to 109
company-operated retail locations, including 11 outlets and three Internet
stores as of December 31, 2012.

For the Full Year Ended December 31, 2013:

For the full year ended December 31, 2013, net sales increased 7.1% to $1.3
billion from $1.2 billion in the comparable period last year.

Net income was $132.0 million, or $1.98 per diluted share, for the year ended
December 31, 2013. Net income was $119.6 million, or $1.81 per diluted share,
for the year ended December 31, 2012. Net income in 2013 included a $1.0
million benefit related to recovery from the prior year’s text message
litigation settlement. Net income in 2012 included a $2.5 million charge for
settlement of a class action lawsuit related to unauthorized text messaging
and a $0.8 million net charge for impairment of a note receivable from the
Company’s former licensee for Betsey Johnson retail and apparel, in addition
to a $5.1 million impairment charge and a $0.9 million charge for bad debt,
both related to the bankruptcy of Bakers Footwear Group. Taken together, on an
after-tax basis, these items negatively impacted net income by $5.7 million,
or $0.09 per diluted share. Additionally, net income in 2012 included a $6.0
million, or $0.09 per diluted share, tax benefit related to the reinvestment,
indefinitely, of a portion of earnings from the Company’s foreign operations
in such foreign operations. Excluding all these items, net income for fiscal
2013 was $131.4 million, or $1.97 per diluted share and net income for fiscal
2012 was $119.4 million, or $1.80 per diluted share.

Balance Sheet and Cash Flow

During the quarter, the Company repurchased 0.9 million shares of the
Company’s common stock for $32.7 million. For the full year ended December 31,
2013, the Company repurchased 3.0 million shares of the Company’s common stock
for $102.2 million.

As of December 31, 2013, cash, cash equivalents, and current and non-current
marketable securities totaled $292.1 million.

Company Outlook

For fiscal year 2014, the Company expects that net sales will increase 5 – 7%
over net sales in 2013. Diluted EPS for fiscal year 2014 is expected to be in
the range of $2.05 – $2.15.

Conference Call Information

As previously announced, interested stockholders are invited to listen to the
fourth quarter earnings conference call scheduled for today, Tuesday February
25, 2014, at 8:30 a.m. Eastern Time. The call will be broadcast live over the
Internet and can be accessed by logging onto http://www.stevemadden.com. An
online archive of the broadcast will be available within one hour of the
conclusion of the call and will be accessible for a period of 30 days
following the call. Additionally, a replay of the call can be accessed by
dialing 1-877-870-5176 (U.S.) and 1-858-384-5517 (international), passcode
1200326, and will be available until March 25, 2014.

About Steve Madden

Steve Madden designs, sources and markets fashion-forward footwear and
accessories for women, men and children. In addition to marketing products
under its owned brands including Steve Madden®, Steven by Steve Madden®,
Madden Girl®, Freebird by Steven®, Stevies®, Betsey Johnson®, Betseyville®,
Report Signature®, Report®, Big Buddha®, Wild Pair®, Cejon® and Mad Love®, the
Company is the licensee of various brands, including Olsenboye® for footwear,
handbags and belts and Superga® and l.e.i.® for footwear. The Company also
designs and sources products under private label brand names for various
retailers. The Company's wholesale distribution includes department stores,
specialty stores, luxury retailers, national chains and mass merchants. The
Company also operates 121 retail stores (including the Company's four Internet
stores). The Company licenses certain of its brands to third parties for the
marketing and sale of certain products, including for ready-to-wear,
outerwear, intimate apparel, eyewear, hosiery, jewelry, fragrance, luggage and
bedding and bath products.

Safe Harbor

This press release and oral statements made from time to time by
representatives of the Company contain certain “forward looking statements” as
that term is defined in the federal securities laws. The events described in
forward looking statements may not occur. Generally these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of the Company's plans or strategies, projected or anticipated
benefits from acquisitions to be made by the Company, or projections involving
anticipated revenues, earnings or other aspects of the Company's operating
results. The words "may," "will," "expect," "believe," "anticipate,"
"project," "plan," "intend," "estimate," and "continue," and their opposites
and similar expressions are intended to identify forward looking statements.
The Company cautions you that these statements concern current expectations
about the Company’s future results and condition and are not guarantees of
future performance or events and are subject to a number of uncertainties,
risks and other influences, many of which are beyond the Company's control,
that may influence the accuracy of the statements and the projections upon
which the statements are based. Factors which may affect the Company's results
include, but are not limited to, the risks and uncertainties discussed in the
Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with the Securities and Exchange Commission.
Any one or more of these uncertainties, risks and other influences could
materially affect the Company's results of operations and financial condition
and whether forward looking statements made by the Company ultimately prove to
be accurate and, as such, the Company's actual results, performance and
achievements could differ materially from those expressed or implied in these
forward looking statements. The Company undertakes no obligation to publicly
update or revise any forward looking statements, whether as a result of new
information, future events or otherwise.

                                                              
STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA

(In thousands, except per share amounts)
                                                                     
                   Three Months Ended              Year Ended
                   December      December        December 31,      December 31,
                   31, 2013        31, 2012        2013              2012
                                                                     
Net sales          $ 342,882       $ 315,527       $ 1,314,223       $ 1,227,072
Cost of sales       213,384       191,387       831,847         771,370   
Gross profit         129,498         124,140         482,376           455,702
Commission and
licensing fee        2,630           2,795           15,632            15,395
income, net
Operating            79,488          78,207          295,223           283,689
expenses
Impairment
charges and         (983    )      (1,022  )      (983      )      8,432     
provision for
litigation
Income from          53,623          49,750          203,768           178,976
operations
Interest and
other income,       1,969         940           5,183           5,211     
net
Income before
provision for        55,592          50,690          208,951           184,187
income taxes
Provision for       19,424        17,754        75,666          64,623    
income taxes
Net income           36,168          32,936          133,285           119,564
Net income
(loss)
attributable        509           (27     )      1,278           (62       )
to
noncontrolling
interest
Net income
attributable       $ 35,659       $ 32,963       $ 132,007        $ 119,626   
to Steven
Madden, Ltd.
                                                                     
                                                                     
Basic income       $ 0.55          $ 0.51          $ 2.04            $ 1.85
per share *
Diluted income     $ 0.54          $ 0.49          $ 1.98            $ 1.81
per share *
                                                                     
Basic weighted
average common       63,565          64,898          64,583            64,529
shares
outstanding*
Diluted
weighted
average common       66,168          66,924          66,836            66,255
shares
outstanding*
                                                                     
*prior year share and per share amounts have been adjusted to reflect the
three-for-two stock split effective October 2, 2013


                                                        
STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)
                                                             
                                       As of
                                       December 31, 2013     December 31, 2012
                                                             
Cash and cash equivalents              $     180,275         $   168,777
Marketable securities (current &             111,858             97,487
non current)
Accounts receivables, net                    185,423             167,701
Inventories                                  73,696              63,683
Other current assets                         36,660              24,808
Property and equipment, net                  56,606              45,285
Goodwill and intangibles, net                225,695             227,327
Other assets                                10,028             8,971     
Total assets                           $     880,241         $   804,039   
                                                             
Accounts payable                       $     99,126          $   83,427
Contingent payment liability                 34,795              41,960
(current & non current)
Other current liabilities                    44,682              39,500
Other long term liabilities                  22,798              12,752
Total Steven Madden, Ltd.                    678,517             626,580
stockholders' equity
Noncontrolling interest                     323                (180      )
Total liabilities and                  $     880,241         $   804,039   
stockholders' equity
                                                                           

                                                        
STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)
                                                             
                                       Year Ended
                                       December 31, 2013     December 31, 2012
                                                             
                                                             
Net cash provided by operating         $   155,453           $   143,341
activities
                                                             
Investing Activities
Purchases of property and                  (20,746    )          (20,102   )
equipment
Purchases / sales of marketable            (19,635    )          (17,375   )
securities, net
Purchase of notes receivable               -                     (1,562    )
Acquisition, net of cash acquired         -                   (29,367   )
Net cash used in investing                 (40,381    )          (68,406   )
activities
                                                             
Financing Activities
Common stock share repurchases for         (102,172   )          -
treasury
Payment of contingent liability            (11,481    )          (22,867   )
Proceeds from exercise of stock            5,802                 9,271
options
Tax benefit from the exercise of          4,277               4,608     
stock options
Net cash provided by financing             (103,574   )          (8,988    )
activities
                                                             
Net decrease in cash and cash              11,498                65,947
equivalents
                                                             
Cash and cash equivalents -                168,777               102,830
beginning of year
                                                            
Cash and cash equivalents - end of     $   180,275          $   168,777   
year

Contact:

ICR, Inc.
Investor Relations
Jean Fontana/Megan Crudele
203-682-8200
www.icrinc.com
 
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