27 Feb Steve Madden’s Revenues Flat in Q4
Steve Madden reported sales were virtually flat in the fourth quarter. Excluding a year-ago non-recurring benefit, earnings were down slightly in the period.
Fourth Quarter 2014
- Net sales were $342.6 million compared to $342.9 million in the same period of 2013.
- Gross margin was 34.3 percent as compared to 37.8 percent in the same period last year.
- Operating expenses as a percentage of sales were 25.6 percent compared to 23.2 percent of sales in the same period of 2013.
- Operating income totaled $32.0 million, or 9.3 percent of net sales, compared with operating income of $53.6 million, or 15.6 percent of net sales, in the same period of 2013. 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. Excluding this benefit, operating income for the fourth quarter of 2013 was $52.6 million, or 15.4 percent of net sales.
- Net income was $21.0 million, or $0.34 per diluted share, compared to $35.7 million, or $0.54 per diluted share, in the prior year’s fourth quarter. Net income for the fourth quarter of 2013 included the aforementioned benefit. On an after-tax basis, the benefit positively impacted fourth quarter 2013 by $0.6 million, or $0.01 per diluted share. Excluding this benefit, net income for the fourth quarter of 2013 was $35.1 million, or $0.53 per diluted share.
Edward Rosenfeld, chairman and chief executive officer, commented, “Fourth quarter 2014 was a tough quarter capping a difficult year for the company. Throughout 2014, we were impacted by a lack of significant fashion footwear trends on which to capitalize. In the fourth quarter, we faced additional challenges including production delays on goods from Mexico and slowdowns at the West Coast ports. While 2014 was a difficult year, we are excited about the steps we took during 2014 and early in 2015 to position the company for future growth. In 2014, we implemented a new e-commerce platform, acquired two powerful footwear brands in Dolce Vita and Brian Atwood, and moved to an ownership model in two important international markets with the acquisition of our Mexican licensee and the formation of a joint venture in South Africa. In January 2015, we announced our acquisition of Blondo, which adds an authentic waterproof boot brand to our portfolio. We believe that these initiatives will significantly enhance the company’s long-term growth prospects.”
Fourth Quarter 2014 Segment Results
Net sales for the wholesale business were $270.9 million in the fourth quarter compared to $273.4 million in the fourth quarter of 2013. Excluding the results of Dolce Vita, wholesale net sales decreased 6.3 percent compared to the prior year period. Gross margin in the wholesale business decreased to 27.0 percent compared to 31.8 percent in last year’s fourth quarter, due primarily to increased markdown allowances, the impact from Dolce Vita and higher air freight costs incurred due to the West Coast port slowdown.
Retail net sales in the fourth quarter were $71.7 million compared to $69.5 million in the fourth quarter of the prior year. The increase in net sales was driven by the net opening of 14 new stores since the end of the fourth quarter last year, partially offset by a same store sales decrease of 2.3 percent. Retail gross margin increased to 61.7 percent in the fourth quarter of 2014 compared to 61.4 percent in the fourth quarter of 2013, as a result of decreased promotional activity.
During the fourth quarter, the company opened two full price stores and four outlet stores, and acquired 21 retail stores with the acquisition of the company’s Mexican licensee. The company ended the year with 160 company-operated retail locations, including 32 outlets, four Internet stores and four joint venture locations in South Africa.
The effective tax rate for the fourth quarter of 35.0 percent compares to 34.9 percent in the fourth quarter of the prior year.
Full Year Ended December 31, 2014
For the full year ended December 31, 2014, net sales increased 1.6 percent to $1.33 billion from $1.31 billion in the comparable period last year.
Net income was $111.9 million, or $1.76 per diluted share, for the year ended December 31, 2014. Net income was $132.0 million, or $1.98 per diluted share, for the year ended December 31, 2013. Net income in 2013 included a $1.0 million benefit related to recovery from the prior year’s text message litigation settlement. Excluding this benefit, net income for fiscal 2013 was $131.4 million, or $1.97 per diluted share.
Balance Sheet and Cash Flow
During the fourth quarter of 2014, the company repurchased approximately 1.3 million shares of the company’s common stock for $40.5 million.
As of December 31, 2014, cash, cash equivalents, and current and non-current marketable securities totaled $203.1 million.
For fiscal year 2015, the company expects that net sales will increase 7 percent to 9 percent over net sales in 2014. Diluted EPS for fiscal year 2015 is expected to be in the range of $1.85 to $1.95.
In addition to marketing products under its own brands including Steve Madden, Dolce Vita, Betsey Johnson, Big Buddha, Report, Brian Atwood, Cejon, Blondo, Wild Pair and Mad Love. Steve Madden is the licensee of various brands, including Superga for footwear.