Company Contact: Richard Olicker
President, Chief Operating Officer
Arvind Dharia
Chief Financial Officer
Steven Madden, Ltd.
(718) 446-1800
Investor Relations: Cara O'Brien/Lila Sharifian
Press: Stephanie Sampiere
Financial Dynamics
(212) 850-5600
FOR IMMEDIATE RELEASE
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STEVEN MADDEN, LTD. ANNOUNCES THIRD QUARTER AND NINE MONTH RESULTS
~Third Quarter and Nine Month Net Income Increase 12.8% and 14.6%, Respectively~
~Company Achieves Third Quarter Diluted EPS of $0.50, In Line With Expectations~
LONG ISLAND CITY, N.Y. - October 28, 2003 - Steven Madden, Ltd. (NASDAQ: SHOO),
a leading designer, wholesaler and marketer of fashion footwear for women, men
and children, today announced financial results for the third quarter and nine
months ended September 30, 2003.
For the first nine months of 2003, sales increased 2.2% to $253.1 million
compared with $247.7 million for the same period last year. Operating income
rose 12.4% to $29.6 million, or 11.7% of sales, compared with $26.3 million, or
10.6% of sales, last year. Net income climbed 14.6% to $17.9 million, or $1.27
per share on a diluted basis, versus net income of $15.6 million, or $1.14 per
share on a diluted basis, in the comparable period in 2002.
For the third quarter, sales were $88.7 million compared with $93.0 million in
the same period last year. Operating income grew 11.5% to $11.7 million, or
13.2% of sales, from $10.5 million, or 11.3% of sales, in the prior year period.
Net income increased 12.8% to $7.1 million, or $0.50 per share on a diluted
basis, versus $6.3 million, or $0.46 per share on a diluted basis, in last
year's third quarter.
Commenting on the Company's third quarter results, Jamieson Karson, Chief
Executive Officer, stated, "While sales continue to be pressured by sustained
weakness in the economy and a very competitive environment, we once again proved
that we have broad-based strength in our business and are adept at navigating
through challenging conditions. Moreover, by efficiently managing our business,
we demonstrated positive overall performance and achieved very strong bottom
line results."
Arvind Dharia, Chief Financial Officer, added, "Our ability to significantly
expand margins and control expenses remains an integral part of our success. To
this end, in the third quarter we achieved a 110 basis point increase in gross
margin, reaching 40.1%, and a 190 basis point rise in operating margin. On the
cost side, SG&A margin improved 20 basis points, even as we invest in and grow
the business. Additionally, we further strengthened our balance sheet, ending
the quarter with $78.6 million in cash, cash equivalents and investment
securities, no short- or long-term debt, and stockholder's equity of $153.4
million."
Retail revenues for the third quarter increased 3.6% to $23.1 million from $22.3
million last year. Reflecting the challenging market conditions, same-store
sales decreased 4.9% versus a 1.3% increase in the same period in 2002. The
same-store sales decrease was due to a number of factors, including the
competitive back to school selling environment coupled with the popularity of
less expensive retro-style footwear. Nevertheless, demand for the Company's
Page 2 - Steven Madden, Ltd. Announces Third Quarter Results
products remained strong, as evidenced by the increase in unit sales, and
productivity continued at a strong $653 per square foot. During the quarter, the
Company opened one new Steve Madden store and closed one location, bringing the
total number of Company-owned retail locations to 82, including the Internet
store. The Company plans to further its retail expansion by opening
approximately 1 additional new store during the fourth quarter, for a total of 7
new locations for the full year.
Revenues from the wholesale business, comprised of the Company's six
contributing brands, Steve Madden Womens, Steve Madden Mens, Stevies, l.e.i.,
David Aaron/Steven, and UNIONBAY were $65.6 million for the third quarter
compared with $70.7 million in the prior year period. It is noteworthy that this
decline follows a 41% increase in wholesale revenues in the comparable period
last year. Despite the challenging environment, pockets of strength in the
Company's branded portfolio included l.e.i and Steven (formerly David Aaron),
both of which posted double digit sales growth. In addition, the Company
carefully managed its inventory, ending the quarter with $23.0 million compared
to $24.8 million last year and reflecting fresh inventory at a level that is in
line with fourth quarter sales expectations.
"The third quarter results reflect the benefits of our strategy to grow through
diversifying our product categories, geographic distribution, and sources of
income," stated Richard Olicker, President and Chief Operating Officer. "The
recently added UNIONBAY men's footwear line contributed modestly to the top-line
for the first time this quarter. Additionally, the Steve Madden brand was
officially launched in the European retail market during the quarter, and the
early positive reception bodes well for future international expansion
possibilities. Finally, we are still benefiting from strong performance on the
licensing front, resulting in a 21% rise in our other income line. Each of these
areas of development play an important role in our plan to leverage both our
brand-building strength and infrastructure across different strategic growth
platforms."
Company Outlook
- ---------------
Despite challenging external market conditions, a highly promotional
environment, and increasing price competition as the holiday season approaches,
Steven Madden, Ltd. remains confident in its business fundamentals and is
cautiously optimistic about the final quarter of 2003. The Company believes it
remains positioned to meet the current analyst estimate of $1.60 for the full
year.
With respect to next year, in light of current trends the Company is cautious in
its outlook and is currently working through its planning process. Based on the
current level of visibility, preliminary expectations for 2004 are for mid
single digit sales growth and high single digit increases in diluted earnings
per share.
Mr. Karson concluded, "With the end of another solid year drawing near, we take
comfort in the core elements of our Company - significant brand equity, a proven
business model, and a superb balance sheet. Although external challenges require
us to remain cautious about the future and conservative in our outlook, we
firmly believe that Steven Madden, Ltd. remains on course to meet the objectives
of becoming a leading lifestyle branded company, driving increases in
profitability, and enhancing shareholder value for the long-term."
Interested shareholders are invited to listen to the third quarter earnings
conference call scheduled for today, Tuesday, October 28, 2003, at 10 a.m.
Eastern Time. The call will be broadcast live over the Internet and can be
accessed by logging onto
http://www.firstcallevents.com/service/ajwz390797009gf12.html. An online archive
will be available shortly after the call and will be accessible until November
11, 2003. Additionally, a replay of the call can be accessed by dialing (800)
934-7879 and will be available through October 30, 2003.
Steven Madden, Ltd. designs and markets fashion-forward footwear for women, men
and children. The shoes are sold through Steve Madden Retail Stores, Department
Stores, Apparel and Footwear Specialty Stores, and on-line at
www.stevemadden.com. The Company has several licenses for the Steve Madden &
Stevies brands -- including outerwear, eyewear, hosiery, handbags, and belts --
owns and operates one retail store under its David Aaron brand, one retail store
under the Steven brand and is the licensee for l.e.i. Footwear, Candie's
Footwear and UNIONBAY Men's Footwear.
Page 3 - Steven Madden, Ltd. Announces Third Quarter Results
Statements in this press release that are not statements of historical or
current fact constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other unknown
factors that could cause the actual results of the Company to be materially
different from the historical results or from any future results expressed or
implied by such forward-looking statements. In addition to statements which
explicitly describe such risks and uncertainties readers are urged to consider
statements labeled with the terms "believes", "belief", "expects", "intends",
"anticipates" or "plans" to be uncertain and forward-looking. The forward
looking statements contained herein are also subject generally to other risks
and uncertainties that are described from time to time in the Company's reports
and registration statements filed with the Securities and Exchange Commission.
Page 4 - Steven Madden, Ltd. Announces Third Quarter Results
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net Sales $ 88,663 $ 93,018 $ 253,105 $ 247,740
Cost of Sales 53,067 56,763 154,236 151,960
---------- ---------- ---------- ----------
Gross Profit 35,596 36,255 98,869 95,780
Commission and Licensing Fee Income 2,205 1,819 6,040 4,637
Operating Expenses 26,094 27,572 75,324 74,106
---------- ---------- ---------- ----------
Income from Operations 11,707 10,502 29,585 26,311
Interest Income Net 426 348 1,218 770
---------- ---------- ---------- ----------
Income Before Provision for Income Tax 12,133 10,850 30,803 27,081
Provision for Income Tax 5,060 4,582 12,901 11,458
---------- ---------- ---------- ----------
Net Income $ 7,073 $ 6,268 $ 17,902 $ 15,623
========== ========== ========== ==========
Net Income Per Share of Common Stock:
Basic $ 0.54 $ 0.49 $ 1.38 $ 1.25
========== ========== ========== ==========
Diluted $ 0.50 $ 0.46 $ 1.27 $ 1.14
========== ========== ========== ==========
Weighted Average Common Shares
Outstanding:
Basic 13,073 12,706 12,930 12,544
========== ========== ========== ==========
Diluted 14,267 13,763 14,061 13,678
========== ========== ========== ==========
~ more ~
Page 5 - Steven Madden, Ltd. Announces Third Quarter Results
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(in thousands)
September 30, 2003 December 31, 2002 September 30, 2002
(Unaudited) (Unaudited)
Cash and Cash Equivalents $ 34,180 $ 56,713 $ 44,896
Investment Securities 44,409 22,510 14,663
Total Current Assets 109,544 105,354 113,571
Total Assets 170,518 150,500 144,623
Total Current Liabilities 15,406 18,893 19,654
Total Stockholder Equity 153,398 130,075 123,486
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