26 Feb Steve Madden Announces Q4 and Full Year 2013 Results
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.
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.