Steve Madden Announces Fourth Quarter and Full Year 2022 Results

~ Provides 2023 Outlook ~

LONG ISLAND CITY, N.Y., Feb. 23, 2023 (GLOBE NEWSWIRE) -- Steve Madden (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children, today announced financial results for the fourth quarter and full year ended December 31, 2022 and provided its 2023 outlook.

Amounts referred to as “Adjusted” are non-GAAP measures that exclude the items defined as “Non-GAAP Adjustments” in the “Non-GAAP Reconciliation” section.

Full Year 2022 Results

  • Revenue increased 13.7% to $2,122.0 million compared to $1,866.1 million in 2021.
  • Gross profit as a percentage of revenue increased to 41.2% compared to 41.1% in 2021.
  • Operating expenses as a percentage of revenue were 27.9%, flat to 2021. Adjusted operating expenses as a percentage of revenue were 27.9% compared to 27.1% in 2021.
  • Income from operations was $281.6 million, or 13.3% of revenue, compared to $243.6 million, or 13.1% of revenue, in 2021. Adjusted income from operations was $282.6 million, or 13.3% of revenue, compared to $261.9 million, or 14.0% of revenue, in 2021.
  • Net income attributable to Steven Madden, Ltd. was $216.1 million, or $2.77 per diluted share, compared to $190.7 million, or $2.34 per diluted share, in 2021. Adjusted net income attributable to Steven Madden, Ltd. was $218.3 million, or $2.80 per diluted share, compared to $203.7 million, or $2.50 per diluted share, in 2021.

Fourth Quarter 2022 Results

  • Revenue decreased 18.6% to $470.6 million compared to $578.5 million in the same period of 2021.
  • Gross profit as a percentage of revenue increased to 42.2% compared to 41.2% in the same period of 2021.
  • Operating expenses as a percentage of revenue were 33.8% compared to 27.0% in the same period of 2021. Adjusted operating expenses as a percentage of revenue were 33.2% compared to 26.2% in the fourth quarter of 2021.
  • Income from operations was $39.8 million, or 8.4% of revenue, compared to $79.4 million, or 13.7% of revenue, in the same period of 2021. Adjusted income from operations was $42.2 million, or 9.0% of revenue, compared to $86.9 million, or 15.0% of revenue, in the fourth quarter of 2021.
  • Net income attributable to Steven Madden, Ltd. was $31.8 million, or $0.42 per diluted share, compared to $66.0 million, or $0.81 per diluted share, in the same period of 2021. Adjusted net income attributable to Steven Madden, Ltd. was $33.7 million, or $0.44 per diluted share, compared to $70.4 million, or $0.87 per diluted share, in the fourth quarter of 2021.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are pleased to have delivered earnings results in line with our expectations for the fourth quarter and full year 2022 despite an increasingly challenging backdrop. 2022 was a record year for the Company, with double-digit percentage growth in both revenue and earnings, reflecting the power of our brands, the strength of our business model and the successful execution of our strategic initiatives.

“Looking ahead, we are cautious on the near-term outlook due to the challenging operating environment and conservative initial Spring orders from our wholesale customers as they prioritize inventory control. That said, we have a proven ability to navigate difficult market conditions with our agile business model, which combines our test-and-react strategy and industry-leading speed-to-market capability. Looking out further, we are confident that our unique competitive advantages and the continued execution of our strategy will enable us to drive sustainable growth and value creation over the long term.”

Fourth Quarter 2022 Channel Results

Revenue for the wholesale business was $308.8 million, a 24.8% decrease compared to the fourth quarter of 2021, when wholesale revenue experienced outsized growth of 30.8% versus pre-COVID fourth quarter of 2019. Wholesale footwear revenue decreased 25.5% compared to the fourth quarter of 2021, when wholesale footwear revenue increased 29.9% versus pre-COVID fourth quarter of 2019. Wholesale accessories/apparel revenue decreased 22.8% compared to the fourth quarter of 2021, when wholesale accessories/apparel revenue increased 33.3% versus pre-COVID fourth quarter of 2019. Gross profit as a percentage of wholesale revenue declined to 30.5% compared to 31.8% in the fourth quarter of 2021 as a result of increased closeouts compared to the prior year period, when closeout activity was unusually low.

Direct-to-consumer revenue was $159.3 million, a 3.2% decrease compared to the fourth quarter of 2021 driven by a decline in the brick-and-mortar business, partially offset by a modest increase in the e-commerce business. Gross profit as a percentage of direct-to-consumer revenue increased to 64.0% compared to 63.5% in the fourth quarter of 2021 driven by a reduction in air freight expense.

The Company ended the quarter with 232 Company-operated brick-and-mortar retail stores and six e-commerce websites, as well as 20 Company-operated concessions in international markets.

Balance Sheet and Cash Flow Highlights

As of December 31, 2022, cash, cash equivalents and short-term investments totaled $289.8 million.

During the fourth quarter and full year of 2022, the Company repurchased approximately $36.8 million and $148.9 million, respectively, of the Company's common stock, which includes shares acquired through the net settlement of employee stock awards.

Quarterly Cash Dividend

The Company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend is payable on March 24, 2023 to stockholders of record as of the close of business on March 10, 2023.

2023 Outlook

For 2023, the Company expects revenue will decrease 6.5% to 8.0% compared to 2022. The Company expects diluted EPS will be in the range of $2.40 to $2.50.

Conference Call Information

Interested stockholders are invited to listen to the conference call scheduled for today, February 23, 2023 at 8:30 a.m. Eastern Time, which will include a discussion of the Company's fourth quarter and fiscal year end 2022 earnings results and fiscal year 2023 outlook. The call will be webcast live on the Company’s website at https://investor.stevemadden.com. A webcast replay of the conference call will be available on the Company's website or via the following webcast link https://edge.media-server.com/mmc/p/9ax7kfno beginning today at approximately 10:00 a.m. Eastern Time.

About Steve Madden

Steve Madden designs, sources and markets fashion-forward footwear, accessories and apparel for women, men and children. In addition to marketing products under its own brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Blondo®, and GREATS®, Steve Madden licenses footwear and handbag categories for the Anne Klein® brand. Steve Madden also designs and sources products under private label brand names for various retailers. Steve Madden’s wholesale distribution includes department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers and independent stores. Steve Madden also directly operates brick-and-mortar retail stores and e-commerce websites. Steve Madden also licenses certain of its brands to third parties for the marketing and sale of certain products in the apparel, accessory and home categories. For local store information and the latest boots, booties, dress shoes, fashion sneakers, sandals, slippers and more, please visit www.stevemadden.comwww.dolcevita.com and our other branded websites.

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, among others, statements regarding revenue and earnings guidance, plans, strategies, objectives, expectations and intentions. Forward-looking statements can be identified by words such as: “may”, “will”, “expect”, “believe”, “should”, “anticipate”, “project”, “predict”, “plan”, “intend”, “estimate”, or “confident” and similar expressions or the negative of these expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent the Company’s current beliefs, expectations, and assumptions regarding anticipated events and trends affecting its business and industry based on information available as of the time such statements are made. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which may be outside of the Company’s control. The Company’s actual results and financial condition may differ materially from those indicated in these forward-looking statements. As such, investors should not rely upon them. Important risk factors include:

  • the Company’s ability to navigate shifting macro-economic environments including inflation and the potential for recessionary conditions;
  • the Company’s ability to accurately anticipate fashion trends and promptly respond to consumer demand;
  • the Company’s ability to compete effectively in a highly competitive market;
  • the Company’s ability to adapt its business model to rapid changes in the retail industry;
  • supply chain disruptions to product delivery systems and logistics, and the Company’s ability to properly manage inventory;
  • the Company’s reliance on independent manufacturers to produce and deliver products in a timely manner, especially when faced with adversities such as work stoppages, transportation delays, public health emergencies, social unrest, changes in local economic conditions, and political upheavals as well as meet the Company’s quality standards;
  • the Company’s dependence on the retention and hiring of key personnel;
  • the Company’s ability to successfully implement growth strategies;
  • changes in trade policies and tariffs imposed by the United States government and the governments of other nations in which the Company manufactures and sells products;
  • the Company’s ability to adequately protect its trademarks and other intellectual property rights;
  • the Company’s ability to maintain adequate liquidity when negatively impacted by unforeseen events such as an epidemic or a pandemic, which may cause disruption to the Company’s business operations for an indeterminable period of time;
  • legal, regulatory, political and economic risks that may affect the Company’s sales in international markets;
  • changes in U.S. and foreign tax laws that could have an adverse effect on the Company’s financial results;
  • additional tax liabilities resulting from audits by various taxing authorities;
  • cybersecurity risks and costs of defending against, mitigating, and responding to data security threats and breaches impacting the Company;
  • the Company’s ability to achieve operating results that are consistent with prior financial guidance; and
  • other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

The Company does not undertake, and disclaims, any obligation to publicly update any forward-looking statement, including, without limitation, any guidance regarding revenue or earnings, whether as a result of new information, future developments, or otherwise.



STEVEN MADDEN, LTD. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA

(In thousands, except per share amounts)

  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
  (Unaudited) (Unaudited) (Unaudited)  
Net sales $468,152  $575,137  $2,111,296  $1,853,902 
Commission and licensing fee income  2,491   3,344   10,713   12,240 
Total revenue  470,643   578,481   2,122,009   1,866,142 
Cost of sales  271,946   340,141   1,248,173   1,098,645 
Gross profit  198,697   238,340   873,836   767,497 
Operating expenses  158,940   155,960   592,192   519,848 
Impairment of intangibles     2,620      2,620 
Impairment of lease right-of-use assets and fixed assets     343      1,432 
Income from operations  39,757   79,417   281,644   243,597 
Interest and other income / (expense), net  570   (513)  676   (1,529)
Income before provision for income taxes  40,327   78,904   282,320   242,068 
Provision for income taxes  8,375   12,781   65,103   49,609 
Net income  31,952   66,123   217,217   192,459 
Less: net income attributable to noncontrolling interest  161   136   1,156   1,781 
Net income attributable to Steven Madden, Ltd. $31,791  $65,987  $216,061  $190,678 
         
Basic income per share $0.43  $0.85  $2.84  $2.43 
         
Diluted income per share $0.42  $0.81  $2.77  $2.34 
         
Basic weighted average common shares outstanding  74,710   77,718   76,021   78,442 
         
Diluted weighted average common shares outstanding  76,575   81,207   78,069   81,628 
         
Cash dividends declared per common share $0.21  $0.15  $0.84  $0.60 


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

  As of
  December 31, 2022 December 31, 2021
  (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents $274,713  $219,499 
Short-term investments  15,085   44,037 
Accounts receivable, net of allowances  37,937   26,546 
Factor accounts receivable  248,228   364,982 
Inventories  228,752   255,213 
Prepaid expenses and other current assets  22,989   20,845 
Income tax receivable and prepaid income taxes  15,853   13,538 
Total current assets  843,557   944,660 
Note receivable – related party  401   794 
Property and equipment, net  40,664   35,790 
Operating lease right-of-use asset  90,264   85,449 
Deferred tax assets  1,755   4,581 
Deposits and other  12,070   4,180 
Goodwill – net  168,085   167,995 
Intangibles – net  101,192   112,093 
Total Assets $1,257,988  $1,355,542 
LIABILITIES    
Current liabilities:    
Accounts payable $130,542  $136,766 
Accrued expenses  138,523   243,163 
Operating leases - current portion  29,499   30,759 
Income taxes payable  9,403   4,522 
Contingent payment liability – current portion  1,153   5,109 
Accrued incentive compensation  11,788   14,871 
Total current liabilities  320,908   435,190 
Contingent payment liability     6,960 
Operating leases – long-term portion  79,128   80,072 
Deferred tax liabilities  3,923   3,378 
Other liabilities  10,166   9,404 
Total Liabilities  414,125   535,004 
STOCKHOLDERS’ EQUITY    
Total Steven Madden, Ltd. stockholders’ equity  831,553   812,098 
Noncontrolling interest  12,310   8,440 
Total stockholders’ equity  843,863   820,538 
Total Liabilities and Stockholders’ Equity $1,257,988  $1,355,542 


STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

  Twelve Months Ended
  December 31, 2022 December 31, 2021
  (Unaudited)  
Cash flows from operating activities:    
Net income $217,217  $192,459 
Adjustments to reconcile net income to net cash provided by operating activities    
Stock-based compensation  24,396   22,278 
Depreciation and amortization  20,576   15,208 
Loss on disposal of fixed assets  11   526 
Impairment of intangibles     2,620 
Impairment of lease right-of-use asset and fixed assets     1,432 
Deferred taxes  3,601   1,280 
Accrued interest on note receivable – related party  (16)  (23)
Note receivable – related party  409   409 
Change in valuation of contingent liability  (5,807)  11,862 
Gain on sale of trademark     (8,000)
Other operating activities  (2,716)   
Recovery of receivables, related to the Payless ShoeSource bankruptcy     (919)
Changes, net of acquisitions, in:    
Accounts receivable  (9,683)  (583)
Factor accounts receivable  116,141   (112,311)
Inventories  29,071   (153,793)
Prepaid expenses, income tax receivables, prepaid taxes, and other assets  (4,205)  (1,899)
Accounts payable and accrued expenses  (108,788)  185,741 
Accrued incentive compensation  (3,083)  10,998 
Leases and other liabilities  (8,902)  (7,822)
Payment of contingent consideration  (339)   
Net cash provided by operating activities  267,883   159,463 
     
Cash flows from investing activities:    
Capital expenditures  (16,351)  (6,608)
Purchases of short-term investments  (45,130)  (68,471)
Maturity/sale of marketable securities and short-term investments  73,998   63,867 
(Purchase)/sale of a trademark  (2,000)  8,000 
Other investing activities  (5,000)   
Net cash provided by/(used in) investing activities  5,517   (3,212)
     
Cash flows from financing activities:    
Proceeds from exercise of stock options  602   9,732 
Investment of noncontrolling interest  2,500    
Acquisition of incremental ownership of joint ventures     (18,942)
Distributions to noncontrolling interest earnings  (294)  (3,121)
Sale of minority interest of a subsidiary  1,017    
Common stock purchased for treasury  (148,878)  (123,161)
Cash dividends paid on common stock  (66,005)  (49,161)
Payment of contingent consideration  (4,770)   
Net cash used in financing activities  (215,828)  (184,653)
Effect of exchange rate changes on cash and cash equivalents  (2,358)  37 
Net increase/(decrease) in cash, cash equivalents  55,214   (28,365)
Cash and cash equivalents – beginning of year  219,499   247,864 
Cash and cash equivalents – end of year $274,713  $219,499 


STEVEN MADDEN, LTD. AND SUBSIDIARIES

NON-GAAP RECONCILIATION

(In thousands, except per share amounts)

(Unaudited)

The Company uses non-GAAP financial information to evaluate its operating performance and to represent the manner in which the Company conducts and views its business. Additionally, the Company believes the information assists investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that are not indicative of its core business. The non-GAAP financial information is provided in addition to, and not as an alternative to, the Company’s reported results prepared in accordance with GAAP. The following reconciles the Company’s reported results and outlook in accordance with GAAP with the non-GAAP information that the Company also presents. Additional information regarding Non-GAAP Adjustments is presented below.

Table 1 - Reconciliation of GAAP operating expenses to Adjusted operating expenses
  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP operating expenses $158,940  $155,960  $592,192  $519,848 
Non-GAAP Adjustments  (2,476)  (4,499)  (924)  (14,216)
Adjusted operating expenses $156,464  $151,461  $591,268  $505,632 


Table 2 - Reconciliation of GAAP income from operations to Adjusted income from operations
  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP income from operations $39,757  $79,417  $281,644  $243,597 
Non-GAAP Adjustments  2,476   7,462   924   18,267 
Adjusted income from operations $42,233  $86,879  $282,568  $261,864 


Table 3 - Reconciliation of GAAP interest and other income / (expense), net to Adjusted interest and other income / (expense), net
  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP interest and other income / (expense), net $570  $(513) $676  $(1,529)
Non-GAAP Adjustments           500 
Adjusted interest and other income / (expense), net $570  $(513) $676  $(1,029)


Table 4 - Reconciliation of GAAP provision for income taxes to Adjusted provision for income taxes
  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP provision for income taxes $8,375  $12,781  $65,103  $49,609 
Non-GAAP Adjustments  579   3,015   (1,308)  5,726 
Adjusted provision for income taxes $8,954  $15,796  $63,795  $55,335 


Table 5 - Reconciliation of GAAP net income attributable to noncontrolling interest to Adjusted net income attributable to noncontrolling interest
  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP net income attributable to noncontrolling interest $161  $136  $1,156  $1,781 
Non-GAAP Adjustments     13      37 
Adjusted net income attributable to noncontrolling interest $161  $149  $1,156  $1,818 


Table 6 - Reconciliation of GAAP net income attributable to Steve Madden, Ltd. to Adjusted net income attributable to Steve Madden, Ltd.
  Three Months Ended Twelve Months Ended
  December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP net income attributable to Steven Madden, Ltd. $31,791  $65,987  $216,061  $190,678 
Non-GAAP Adjustments  1,897   4,433   2,232   13,004 
Adjusted net income attributable to Steven Madden, Ltd. $33,688  $70,420  $218,293  $203,682 
         
GAAP diluted income per share $0.42  $0.81  $2.77  $2.34 
Adjusted diluted income per share $0.44  $0.87  $2.80  $2.50 

 

Non-GAAP Adjustments include the items below.

For the fourth quarter 2022:

  • $1.8 million pre-tax ($1.3 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.
  • $0.7 million pre-tax ($0.6 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.

For the fourth quarter 2021:

  • $4.0 million pre-tax ($3.1 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.
  • $2.6 million pre-tax ($2.0 million after-tax) expense in connection with the impairment of a trademark.
  • $0.4 million pre-tax ($0.2 million after-tax) expense in connection with a sublease and related exit costs, included in operating expenses.
  • $0.3 million pre-tax ($0.3 million after-tax) expense in connection with the impairment of fixed assets and lease right-of-use assets.
  • $0.1 million pre-tax ($0.1 million after-tax) expense in connection with restructuring and related charges, included in operating expenses.
  • $1.3 million tax benefit in connection with the release of a liability for an uncertain tax position.

For the full year 2022:

  • $7.1 million pre-tax ($5.4 million after-tax) expense in connection with the accelerated amortization of a trademark, included in operating expenses.
  • $5.8 million pre-tax ($4.4 million after-tax) benefit in connection with the change in valuation of contingent consideration, included in operating expenses.
  • $0.3 million pre-tax ($0.2 million after-tax) benefit in connection with the exit of a lease, included in operating expenses.
  • $1.5 million tax expense in connection with a deferred tax adjustment.

For the full year 2021:

  • $11.9 million pre-tax ($9.1 million after-tax) expense in connection with the change in valuation of contingent considerations, included in operating expenses.
  • $9.9 million pre-tax ($7.4 million after-tax) expense in connection with rent restructuring of various leases, included in operating expenses.
  • $8.0 million pre-tax ($6.1 million after-tax) benefit in connection with the sale of a trademark, included in operating expenses.
  • $2.6 million pre-tax ($2.0 million after-tax) expense in connection with the impairment of a trademark.
  • $1.5 million pre-tax ($1.2 million after-tax) expense in connection with restructuring and related charges, included in operating expenses.
  • $1.4 million pre-tax ($0.9 million after-tax) expense in connection with the impairment of fixed assets and lease right-of-use assets.
  • $0.9 million pre-tax ($0.7 million after-tax) benefit in connection with a recovery from the Payless ShoeSource bankruptcy, included in operating expenses.
  • $0.5 million pre-tax ($0.4 million after-tax) expense in connection with the write-off of an investment, included in interest and other income / (expense), net.
  • $1.3 million tax benefit in connection with the release of a liability for an uncertain tax position.

Contact

Steven Madden, Ltd.
VP of Corporate Development & Investor Relations
Danielle McCoy
718-308-2611
InvestorRelations@stevemadden.com


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