27 Apr Steve Madden Shows Modest Q1 Sales Gain
Steve Madden reported first-quarter sales increased 1.7 percent to $329.4 million compared to $323.9 million in the same period of 2015.
Gross margin expanded 90 basis points to 35.3 percent as compared to 34.4 percent in the same period last year.
Operating expenses as a percentage of sales were 26.9 percent compared to 25.4 percent of sales in the same period of 2015.
Operating income totaled $29.9 million, or 9.1 percent of net sales, compared with operating income of $29.8 million, or 9.2 percent of net sales, in the same period of 2015. Operating income in the first quarter of 2015 included a $3.0 million net benefit related to early lease termination of the company’s 5th Avenue store location. Operating income in the first quarter of 2015 also included a $3.0 million loss related to the partial impairment of the company’s Wild Pair trademark. As the aforementioned items offset, operating income for the first quarter of 2015 excluding these items was $29.8 million.
Net income was $20.0 million, or $0.33 per diluted share, compared to $19.8 million, or $0.32 per diluted share, in the prior year’s first quarter. Net income for the first quarter of 2015 included the aforementioned items. As these items offset, net income excluding these items was $19.8 million, or $0.32 per diluted share.
Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We were pleased with our first quarter results, which were in line with our expectations. Our retail segment was again a standout, with a comparable store sales increase of 10.7 percent on top of an 11.6 percent increase in last year’s first quarter. Our wholesale footwear business also grew in the quarter, led by strong gains in our Steve Madden Women’s and Dolce Vita divisions. As expected, these increases were partially offset by a decline in our wholesale accessories segment. While we remain cautious with respect to our outlook for the year due to the uncertain retail environment, we are heartened by the strength of our current product assortments and the renewed momentum in our core business.”
First Quarter 2016 Segment Results
Net sales for the wholesale business were $275.8 million in the first quarter of 2016 compared to $276.2 million in the first quarter of 2015. Gross margin in the wholesale business increased to 31.2 percent compared to 30.8 percent in last year’s first quarter due to improvement in the wholesale footwear segment.
Retail net sales in the first quarter were $53.6 million compared to $47.7 million in the first quarter of the prior year. Same store sales increased 10.7 percent for the first quarter. Retail gross margin increased to 56.2 percent in the first quarter of 2016 compared to 54.8 percent in the first quarter of 2015 as a result of reduced promotional activity.
During the first quarter, the company opened 1 full price store in Mexico and 1 outlet location in the United States. The company ended the quarter with 171 company-operated retail locations, including 4 Internet stores.
The effective tax rate for the first quarter of 2016 was 32.0 percent compared to 34.3 percent in the first quarter of the prior year.
Balance Sheet and Cash Flow
During the first quarter of 2016, the company repurchased 391,685 shares of the company’s common stock for approximately $14.0 million.
As of March 31, 2016, cash, cash equivalents, and current and non-current marketable securities totaled $192.9 million.
For fiscal year 2016, the company continues to expect that net sales will increase 2 percent to 4 percent over net sales in 2015. Diluted EPS for fiscal year 2016 is expected to be in the range of $1.93 to $2.03.
Steve Madden designs, sources and markets fashion-forward footwear and accessories for women, men and children. In addition to marketing products under its own brands including Steve Madden®, Dolce Vita®, Betsey Johnson®, Report®, Big Buddha®, Brian Atwood®, Cejon®, Blondo® and Mad Love®, Steve Madden is the licensee of various brands, including Superga® for footwear in North America.