04 Nov Steve Madden’s Q3 Tops Expectations
Steve Madden reported a modest increase in earnings on a 1.2 percent revenue gain, exceeding internal expectations.
For the third quarter 2016:
- Net sales decreased 1.2 percent to $408.4 million compared to $413.5 million in the same period of 2015.
- Gross margin expanded 180 basis points to 37.8 percent as compared to 36.0 percent in the same period last year.
- Operating expenses as a percentage of sales were 23.5 percent compared to 21.6 percent of sales in the same period of 2015.
- Operating income totaled $63.8 million, or 15.6 percent of net sales, compared with operating income of $66.3 million, or 16.0 percent of net sales, in the same period of 2015.
- Net income was $43.8 million, or 74 cents per diluted share, compared to $42.9 million, or 70 centsper diluted share, in the prior year’s third quarter.
Edward Rosenfeld, chairman and chief executive officer, commented, “We were pleased with our third-quarter results, which exceeded our expectations on both the top and bottom lines. Our core Steve Madden Women’s footwear business achieved outstanding growth during the quarter, as did our Dolce Vita line. In addition, we delivered strong gross margin expansion, as our on-trend merchandise assortment and disciplined inventory management resulted in higher initial mark-ups and reduced close-outs and markdown allowances. While the overall retail environment continues to be challenging and our wholesale partners remain cautious, our third quarter results enable us to narrow our guidance range for fiscal 2016 diluted EPS to the upper half of our previous range.”
Third Quarter 2016 Segment Results
Net sales for the wholesale business were $346.6 million in the third quarter of 2016 compared to $357.0 million in the third quarter of 2015. Net sales for the wholesale business in the third quarter of 2015 included $14.9 million related to the one-time Madden Girl cold-weather capsule collection that was not repeated in 2016. Gross margin in the wholesale business increased to 33.9 percent compared to 32.1 percent in last year’s third quarter driven by improvement in the wholesale footwear segment, particularly the Steve Madden Women’s division.
Retail net sales in the third quarter were $61.8 million compared to $56.4 million in the third quarter of the prior year. Same store sales increased 1.3 percent for the third quarter. Retail gross margin decreased to 59.9 percent in the third quarter of 2016 compared to 60.4 percent in the third quarter of 2015 due to the negative impact of a stronger U.S. dollar on the company’s international business.
During the third quarter, the company opened four full price stores and three outlet locations, and closed one full price store. The company ended the quarter with 186 company-operated retail locations, including four internet stores.
The effective tax rate for the third quarter of 2016 was 32.3 percent compared to 34.1 percent in the third quarter of the prior year.
Balance Sheet And Cash Flow
During the third quarter of 2016, the company repurchased 736,730 shares of the company’s common stock for approximately $25.3 million, which includes shares acquired through the net settlement of employee stock awards.
As of September 30, 2016, cash, cash equivalents and current and non-current marketable securities totaled $183.5 million.
Company Outlook
For fiscal year 2016, the company continues to expect that net sales will increase 0 percent to 1 percent over net sales in 2015. Diluted EPS for fiscal year 2016 is now expected to be in the range of $1.98 to $2.03.
The company distributes 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.