SHOO - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Steve Madden Limited Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Danielle McCoy, Director of Corporate Development and Investor Relations. Ms. begin. may you McCoy,

Danielle McCoy

Quarter good and I'm Madden, Investor thank our like and and of and McCoy, Corporate to First joining for Development Relations you Earnings morning, Josh, Call Danielle Webcast. everyone. Director I'd XXXX Thanks, for Steve

begin, aspects securities based materially of remind you such, as risk, involving I'd the the expectations expectations, these from known predictions the laws statements we company's regarding within operating our that defined results. as future. to differ and unknown or forward-looking on other they earnings statements our revenues, about statements. projections Because these certain our anticipated actual and uncertainties are make not control, and statements and like relate Generally, performance factors current in we during call, and Before may the assumptions to these company's federal may involve results or

basis, disclosures law. earnings most revise financial and other a forward-looking future applicable on as as in financial directly with include as measure are results the obligation cannot today's disclaim from and information, to publicly discussed these. upon update and time annual relied contained SEC to our refer judgment statements comparable or otherwise time of reports Any risk call The this adjusted of after the the result the reconciliation except be as of to any forward-looking an under any time unless A date. required new filed represent to intent company urge statements or associated to release. current whether GAAP events discussions otherwise, are you noted. our Our other of We we report or the and faces, detailed

it the to call Chairman the and turn Madden. Steve CEO Ed With Ed. that, I'll Rosenfeld, of over is Joining today

Ed Rosenfeld

sales year, of first growth in Steve off Danielle. Good net to joining diluted and performance prior EPS and XXXX strong which to of outstanding XX% as the a start stevemadden.com. increases to Payless. and results. footwear compared Madden's morning, thank compared driven everyone, X% from got brand, for not to despite XXXX the the flagship headwind footwear up with on growth well the wholesale Wholesale quarter of prior in were as review you year our net Madden accessories Steve us sales Thanks, recognizing robust by X% We to sales had both

by was of a despite more recognizing handbags growth percentage double-digit recorded the period. on offset In wholesale had double increased accessories, wholesale Gross modest basis to sales the Payless. in sales segment not digits basis. and so up profitability percentage than increase, XXX basis we outpace the points, margin footwear in sales competition. merchandise Wholesale In the Klein, this saw resonating Our to Madden core addition notably, wholesale by of in quarter Steve first with benefited sneakers sandals. fashion digits are from net of was footwear our strength teams grew across Steve license, as assortments categories, most and percentage that range on Steve year private again, Once sales quarter. consumers enabling and also growth XX% net business with but on-trend deliver compared U.S. to double product led us the a the Each and strong the quarter, Madden were our quarter new division outstanding another we a Anne performers. product standout label footwear to the our ago continued

increase a retail, the business. up business. the increasing We sales Klein sales Anne addition in store In with of overall X% significant handbag X.X% strength of e-commerce our the also benefited from on were comparable

X choppy growth together, you in retail performance, terms also first of very first biggest of put the light quarter months in When fashion year. particularly category Handbags In all the it our the pleased strong of sneakers and gains. were the performance, boots we drove with environment saw in retail.

As are headwinds we we the Payless in we the look from are bankruptcy, how faced to the we the of reasons. number of confident of spite remainder in positioned year, ahead for a

particularly strong to our see in accounts. core our where foremost, brand business, we momentum, and key continue wholesale market Steve and footwear First women's strong Madden take in flagship has sell-through share

like Second, significant with our newer opportunity we have a Klein brands, and Blondo. Anne

few fall, As expansion Klein's expected, confidence as gross bolstering spring over design boot success a Anne College. profitability relative meaningful like Klein will that tremendous in as to marked while saw we And building and had diffusion women's be the Anne to sneakers significant our from growing XXXX. last years delivery, core our a reminder, Aqua in what categories the drove men's also Blondo, margin and control well season of first we business, we in processes on line, to the contributor as in our we are newer

year accounts performing Third, our we Payless that of as look merchant Steve mass market business pleased seeing are are share to so. help in recapture that label. private strong to non-Payless wholesale the us particular, and poised private we Madden Fourth, well. other accessories and handbags the lost label growth turning is are to for very our sustained seize our In due customers this is we momentum them some business to do business' have in already

e-commerce in about for in double-digit platform our digital of of and the acceleration increase results. We XXXX. excited profitability our a those sequential trajectory continued QX divisions stevemadden.com quarter the Fifth, expect sales each as we third to are and business percentage sales new strategies the fourth in of business. marketing consecutive our upward marked year to consecutive drive record

markets. in runway significant international have to continue we Finally, the

percentage business sales we to another JV; When Mexico; and are JV Israel. our expect encouraged by and beyond. double-digit strength Europe seeing growth our new and that we in lie we based driven SM sales and us, by are model, together, put our of in year and business well portfolio in that our directly confident growth XXXX all owned opportunities of that gains what positioned power our year, on of this diversified in earnings and U.S. remain ahead the SM subsidiary, you are the we We our outside the the of drive

I it wanted turn upcoming brand, they Kate to our Kate the I XXXX. of brand business footwear the us as Danielle, in portfolio. over you our license and on will recently Tapestry, Spade take Kate change informed footwear Spade Before the in-house Spade will an that owner terminate XX, December so of update XXXX, to for

category on news We Spade, wish and to business enjoyed we Spade not a Kate this Tapestry's in partnering in-house not to do capability, smooth surprise. While profitable Tapestry footwear overall impact Tapestry look have expect footwear us this significant Kate the future. of XXXX. of the license was losing as Kate with modestly for be did to luck the come the Spade brand a of the only We transition business as with given the them the best profitability in forward and to

to in evaluate turn Looking to our With will acquisition more with to and luxury & over provides it Benjamin to opportunities the our strong ahead, to to us footwear in believe continue brand compete continue market, detail. accessible the we license. review that, results a Danielle I'll or Schwartz portfolio financial through we add to platform tier of either

Danielle McCoy

Thanks, Ed.

to start the with new fiscal are pleased the We year. strong

$XXX.X year accessories the sales retail core compared to Steve by quarter. wholesale sales of to growth Wholesale recognizing were belts sales sales to Our million $XXX Klein, drivers net by million XX.X% increased brand prior and In the handbags, million. of million. Anne addition consolidated $XX.X the the Madden of our sales net to accessories, Payless. mostly segment, label growth in net Steve $XXX.X our from X.X% Anne not addition private led also $XX.X In net net increased Madden increased to X.X% million. handbags footwear Klein. sales and Wholesale of X.X% strong to offset increased benefited

Our retail an estimated impact same basis despite company-operated from We e-commerce with the including stores stores, well and XXX outlets X store the markets. sales shift. points XX increased XXX as company-operated concessions in negative XX ended quarter international Easter X.X%

Turning to other income.

business, of of income the quarter points Operating increased was million XX.X% the the $X.X first XX.X%. net XX% $X.X improvement compared to in compared year. or This last of gain the a compared apples-to-apples which customer, of of income sales segment. margin in by in the wholesale point wholesale the year compared increase compared $XX.X Cost year for accessories, year. The to XX% XX.X% margin last offset $XX.X quarter. XX.X% last margin in million million gross compared first sales. wholesale net partially increased business. primarily our Retail last gross to Wholesale the pressure was gross in by last the Anne to XXX First business. accessories to in expenses points handbag driven the commission footwear, a inclusion compared driven Payless, gross the remainder by XX.X% of quarter while an to by basis XXX to margin strength was Klein balance licensing lower prior for e-commerce million improved than primarily Operating wholesale by of gross prior The period basis to income of XXX income $X.X to XX.X% expenses quarter same Our to $XXX.X $XXX.X the to of totaled of net royalty sales basis expenses operating $X.X the wholesale well operating margin in was footwear not increased in low-margin the margin million million to increase or or year's sales net quarter or million in in of quarter Consolidated as was million year's quarter net for year. XX.X% sales driven the result recognizing as carries

tax same XX.X% was Our year. period for effective to rate in last XX.X% the quarter the compared

$XX.X diluted to per income of $XX compared XXXX. for or was Finally, million share $X.XX the in $X.XX net million per diluted or quarter quarter share first the

Moving the balance sheet. to

Our remained foundation strong. financial

XX, million increase to As Inventory the million securities $XXX.X in debt. we prior an totaled no year, cash XX.X%. marketable $XXX.X million XXXX, of $XX.X and of March and of had compared

Israel Excluding JV, have Klein SM last our did XX.X%. both up was Anne not inventory new of which year, and we

wholesale of attributable our Madden private label division Madden handbags, which with inventory to in percentage are our carry weekly programs increase and a do the comfortable to X and margin as require double-digit Blondo, of that to are drive all top are Steve these divisions but replenishment position growing to We the is this liability handbags, us Steve markdown support replenishment divisions: A portion performing increase is majority at orders. women's sales inventory limited additional with related rate which season. higher significant footwear,

March inventory our the for ended months was consolidated last and times, turn the million. quarter X.X Our in XX $X.X was XXst CapEx

Directors per XX, quarterly of repurchased cash approved repurchase Yesterday, shares repurchases on XXXX $X.XX in stockholders the XXXX. increase be the a share close company's million. Since of quarter, of to on $XXX XX, we our in acquired of record million Board June XXX,XXX declared approximately up payable returned dividend dividend an company through shares million, stock form the Directors of for net employee the will Last, share. have XXXX, settlement to nearly the the to $XX.X Board share June we $XXX of which business During dividends. of The award. includes and of shareholders the authorization as

to the seeing in year turning are Based on Now strong XXXX encouraging our to and the the start we're guidance. sales raising our business, and the EPS we net guidance. trends

guidance compared expect compared of For diluted be to to range expect previous to in X% will $X.XX year the prior guidance of now now we to $X.XX will be that the full We X% our growth net to X% X%. $X.XX. EPS $X.XX XXXX, sales of to our

to like it I'd for questions. to over Now the operator turn

Operator

Our question first Camilo comes Canaccord of Lyon Genuity. Instructions] from [Operator you. Thank

with proceed may your You question.

Camilo Lyon

topics. wanted first one guess Thank here focus I guess gate. the you. I out Great a strength the Good start the of to couple Steve on is business. Madden the just really morning, of I everyone. of

could If wholesale about level. seeing at you're you what talk the just

Madden Madden core You being continues fire. be on business to yet characterized environment your the as choppy, business, the

could it if So was seeing some what that, us just what a transpiring, it could -- related details you're that like sounds there. was channel. you I starting that'd see you're get to to comment, wholesale details if give starting And you from what's on -- just there then give around see just mean some to confirm reorders great. that and to you're you're be that that,

Ed Rosenfeld

seeing we're in Yes. Madden Good brand and what wholesale Steve Madden particularly the morning. with business. Steve Yeah, we're really pleased the in

in double remarks, business in wholesale That in the includes out was prepared and -- a pointed that's U.S. we're Madden we've up and Steve QX. double-digit business, our Steve what brand As footwear women's, Madden digits in gain particularly about. excited core our the

you a the out, relatively environment As point it choppy in first was quarter.

it's the first the the had were think products of and that a environment, about challenging trends we heard but some months really right. of from we've really outperformer of year, few I commentary think we big I lot in because retailers in an the

wedges Our a dad very a that And good, got important as call nice or our job have of what performing. that well, sneakers with continue and lot sneakers, also been our we're most but of are we slip-ons. trends got being we've still and as to big sneakers perform really very we've obviously done joggers lot bottom success well sandals And our -- we materials too. with, flatforms a

anything rhinestones print very very has us. So continues been been for with Animal to Vinyls have perform good. good.

just second wholesale of product with and how are think to to And the question, I the our customers consumer again, really yes, the pleased resonating So with reacting and. it's that. part your

getting as getting, and we're So a seeing they're that strong the we're result. sell-through reorders

the with trend very pleased So there. we're

Camilo Lyon

but me good if your sell-throughs, that. a that you've like on reticent had right? that's change correctly? been change, remembering seems thinking remind that they've correctly, partners am but flipped this to I that -- reorder. That Is Do really about Historically, have I'm --

Ed Rosenfeld

we've that little strong last the a retailers itself, a -- frustrated that is this were that's years ago, looking be getting. we to has really years, over-inventory-ed were sell-through I we more plenty activity -- warranted back when talking about and as maybe of or that than honest, X felt were saw reorder that we year Well, corrected we X But the that well. -- that though, reorders couple were back we think

Camilo Lyon

you. Got

a of now. healthy reorder so then retail a the piece top moving -- of Got on strong has already driver very been a the comparison. reorders for to getting business, few And e-com you're it. So Clearly, just quarters comps. big

just and like us remind initiatives, could free where you shipping, If Afterpay. X-day you with us on these at update are

very active think you've and been gaining think that's traction. been social, I I on some

if we of on the that in we're color that not that change lanes. QX is we some achieved way to the any us where about and there's give you modeling think in think just the we're and going within So that about staying how that should just comp benefit continue -- forward, should a

Ed Rosenfeld

I mean been big driver. has Sure. e-com the Yes,

row remarks. the of in pointed out acceleration we quarters It's earlier As X sequential in that now a business. in

acceleration I starting year. significant. shipping the social, paid improvement I of platform X really really We that that it's on are and experience really row, some We said, conversion think the drove we has next up been we're means has X-day -- ramped on further the good it's our -- there. of driven Shopify significant. mobile, results transition which, free QX the we think of then and a we're of thing been And has in was mobile around the and think get big to drivers in That the we believe seeing lap you initiatives quarters that so there been these course, now lot is a because think majority of the days. touched to up Afterpay there. We're important where improved the vast traffic

the we So as go do get tougher into QX. comparisons

Camilo Lyon

helpful. my final in margin. Very That's contributing the gross then first things strong you the Clearly, performance just half. on is it. the benefit Payless articulated. Got from is that And to of question just being out business the of that the

did, you you pennies it think couple increase If beat. through guidance about the did by your a flows looks us that you because help could how just like outside

So on overall incremental the there an was improvement outlook.

we in once removal the the margin through back year the about balance the Payless progression do how cycle just So gross is the think of half?

Ed Rosenfeld

margin level the gross very of to expect QX even for for we year, we we margin while to the in have that do to of in of taking, QX, modestly. have balance we QX, up of, the because benefit taken business. private Payless be in saw looking same don't gross think we're the improvement I I Yes, full margin recognizing sales up for the forecast gross label just not our are

modest in private or so label Payless, QX I'm expect in in of get, to increase sales. we this talking label private even the flat with about, a terms total, loss And maybe is to even of footwear

So about. way be QX. to margin anyway, modestly the is gross that year, for think full won't tailwind right in But up a the

Camilo Lyon

Got it.

up, happening on to QX label going because the You're flat up of in recapture private sooner?

Ed Rosenfeld

we're pleased working we of one share That's to Payless that. to a other do with are is see our, mass that of things us some Yes. mentioned we're starting that about after merchant really market some pretty customers of of our couple go and

that'll QX. in So starting see Payless we and are recapture of lost to some our us hit business,

Operator

And Susquehanna. our question of Sam from Poser next comes

Sam Poser

your business In you that label You some better with private better things. recapture, what market had private of had assume going everywhere. not, about better the on guys. what the business? label couple Payless going you're was? than had is the that not margins business label So, tests label would private it's that a of And commented of has because Just to any same like private I that

Ed Rosenfeld

to can opportunity just margins continue going make execute, stores, the many primarily the again, for terms We're label about of with it was got a good customer we're in & or of we're the That's to platform much that customers is lowest-margin a area go one just big comment seeing be, business. the what to that too customers categories starting, And if individual into getting of department number small. should them but without I'll we our yes, company. Payless opportunity. to about represent we've programs growth feel Schwartz going and see after year nice private we of Yes, that using business, in in this that Benjamin better with detail

businesses than all of So better our that. are other

Sam Poser

comp comp you you're what what big idea us has the much primarily given e-commerce could between was comps the of these then the how second sort been, quarter? ran quarter, that comp some helped in Easter? was you should that big is of And shift or thinking differential in -- -- the the you brick-and-mortar or how passed Okay. give the how and just And you --

Ed Rosenfeld

we Yes, versus e-com, in actually and bricks mortar. mortar in and were terms of down bricks

more So follow Could in about driven I the the by you performance entire the repeat was the XXX% e-com. comp didn't Easter? than that. question of comp outstanding or

Sam Poser

that brick-and-mortar shift likely I was the Easter being guess down Well, given anticipated. comp

mean overall in So was first it I the in should did The shift, I expect than to comparison second given the given how the and that mean really. be we quarter is well Easter better you quarter? different the not comp

Ed Rosenfeld

a comparison's the Yes, little in tougher QX.

So I'll your will you what as comp. can tell shift I give you assumption for make guess the I we I them. is one thing let Easter that you the -- I estimate numbers

articulated believe because In basis about the QX shift. was Danielle in from tailwind. we Easter think volume's drag it that bigger, it's I point basis about QX, think we XXX point XXX

Sam Poser

I mean in -- thinking traffic. And mortar and that most you that's of mostly Am the that strength that a traffic would just about brick-and-mortar QX expect Easter shifted, from just that, your though I right? and given brick -- proportionate traffic

Ed Rosenfeld

has bricks really Easter mortar. limited impact impacts the shift very and Yes, It on e-commerce.

Sam Poser

Got success. now. Alright. you. me significant for that's it for Well Thanks

Ed Rosenfeld

Thanks Sam.

Operator

question from And you. KeyBanc next Capital Markets. Yruma comes our Thank Edward from

your may proceed You with question.

Edward Yruma

manage ramp about could so does able that I my strength some that ramps, is your anticipation make given profile how you've I Or boots mentioned that talk the of second, year? entire boots. of question. to morning. good and added much Thanks little as then in in you the I Could such. the think season for saw a you business? e-com bit the X-day you Thanks headwind And guess lot think be you about Afterpay I customer-friendly shipping, the are the a that margin? propositions, business, the margin know of Hey that profile? it And a that for you taking guess

Ed Rosenfeld

discounting lot Great. pulled we Yes, initiatives, of margin online. a concurrently, the in of profile e-com, of terms have back we've as implemented also on these

in -- in expansion handful last as of seen is That line being gross margin QX. these higher these overall the of or pretty up many initiatives result item's in improving. improvement and that some going margin gross significant operating margin expenses also over initiatives well. in another we've the big of so So But e-commerce said, e-commerce quarters contribution

we good we the shipping, in boots terms truly there's a boots, -- nice first a first have had our did in yes, wholesale. not sell-through. in In relevant in in it's At retail, of quarter. gain so But least quarter in

reads. boots We into and also higher get for brought good in newer fashion to tests the some fall areas got some

that going does say really into or confidence but season optimism the back to the to So shape us this what half, up boots obviously year. too be it's some to is early going give

Edward Yruma

upside? performance. cadence Got wholesale guys sense drove contributing the has aggressive channel. it reorder it. is And wholesale taking on they Is you maybe kind the Thank that and you. the one final as kind some improved -- stance obviously, within question, But weather's are from performing warmed? of to the follow-up that And that's Or inventory? channel, a more the velocity there, it your your on of of are a strong just

Ed Rosenfeld

Well, mean reorders picture weather think do our about many think overall, as thinking somewhat start year. than think QX. think their got strong a sell-through still with -- I yes, because really improved a -- of it that overall things tough and customers I more in overall to we're I think businesses lot what the our wasn't are warmer. the performance have do I the to seeing great these you're I But really the was seeing if for they're I

Edward Yruma

much. Great. Thanks so

Ed Rosenfeld

Thank you.

Operator

you. Paul of Thank Lejuez comes question And next our from Citigroup.

your You questions. with may proceed

Paul Lejuez

guys. Thanks

saw if quarter. to level, here use you Anne higher you Just away increase the changed anything's -- first your that last, describe quantify from a you of the versus performed expectations. piece curious above Payless maybe the just you if the margin increase Second, just then choppy XQ. word that Could gross Klein, did or And apples-to-apples in of saw in wholesale going couple. the in that benefit Curious business? terms benefit Thanks. just

Ed Rosenfeld

Sure.

what prior if about was included footwear first were if Payless. because also excluding looks have wholesale was Klein points apples-to-apples the Payless, year, don't Anne we Klein out like but you the exclude in the I wholesale we and and question XXX just up basis take Payless footwear. that in Anne improvement So not

Payless related Klein. So was mix, to Anne the and balance

where with Secondly, expected It's Anne Klein, what we're we're that right be. we with to pleased business really seeing. target on

happy there. with the has think was the become terms of yes, yes, performance gotten as in I retail the April, And has then -- in the drag And So in overall opposed has Easter of to it it weather improved. March. course, certainly it's environment, better a benefit as that

I yes, has So overall a better. been think do little that April

Paul Lejuez

Did that that you result expected Obviously, Easter as was the knew lift you the see you see to coming. a shift? of

performed expectations. relative So that's just curious how to

Ed Rosenfeld

Yes.

I think in right really line. it's been

Paul Lejuez

Thanks guys. luck. Good

Ed Rosenfeld

Thank you.

Operator

you. of Champine And next Capital. comes Loop Laura our question from Thank

with work. proceed your may You

Laura Champine

Thanks It's for question. inventory. the taking on really

to grew balance clear inventory? QX? than product feel do of in left have What's you the some well like the faster sales. Or positioned? So that health And you you're do

Ed Rosenfeld

comfortable do inventory with level. Yes, feel we the

focus know, you a of think for that is well it's inventory. and us, I do big As pretty that's we manage area always something

out: through a based those out, just I the she a increase Steve have increase, the called year, pointed she of this there And Steve think Klein was footwear, on spring bit, and particular, big as year divisions shipments timing and you Madden which divisions bags, performing shipments All well If up in was really double drivers a divisions about private digits we SM this if in in in growing there big I X wholesale Danielle a but you total bags. went April. in very Madden little label season. those are obviously women's think we're Blondo, didn't exclude -- and those Israel, ago, were Anne XX%, it

that comfortable content And support there and was and the of inventory to we're very increase April, inventory. in the so level that with the

Operator

of our Vasilescu comes from question And next Macquarie. Laurent

Werlson Hwang

when $XX that on possibly Congrats & the Schwartz for quarter, Laurent. impact million is there I brand color you is the Kate was meaningful Can great Benjamin on quantify for you and behalf year? what maybe? line on This next recall the for Werlson of Is Spade. a acquired. If top around thank

Ed Rosenfeld

that's good Yes, guess. a

Werlson Hwang

the how the Okay. And parse on potentially progressed first Can you month quarter? results by for pretty out impressive comps comps. the

Ed Rosenfeld

Yes, March, better double not January then weakest, was the bit than strong little February was digits, but a strongest the and as as month, February up January.

Werlson Hwang

last as color question for on XXX margin a about What half be to the should this quarter? Maybe drove given the first SG&A? hit the going can we one how question SG&A give bps margin. follow-up versus in And half, half we, increase second Okay. a SG&A? think us some you the is in gross And Camilo's second to on Payless

Ed Rosenfeld

about wage we as Sure. deleverage some out where seeing will pressure Yes, year. business. that's the of line got is higher where we're if I'd growing And think we mix see that QX, where the growing in well slower. pressure something businesses throughout warehousing, to areas. the really One call X that's a The as due pressure are have faster item warehousing expenses than businesses that are

throughout That's should an be side, increase a again, in hit year. really was that's that our advertising. on that and thing QX other is the in the the and stepped that just item not timing. you'll for up advertising, legal, We've second us investment The particularly up digital in But the year. full line see

much So if but little you than think less year of about the bit the in see a saw I year, for you do SG&A QX. certainly, deleverage that you'll full full think

X, And and X so saw guess you improvement in QX. X compared I what to in

Operator

FBR. Steve question comes next & our of from question King Riley from And our comes next B. Associates. Marotta of CL Anderson Susan And

with You your question. may proceed

Steve Marotta

Good morning, Ed Danielle. and

it no you're have a for seeing in by some and seems assumption Has of Just your point putting there that finer now guidance. I recapture implication, on mentioned correctly, the remember If Payless initial that -- that recapture. you that. was

current assume tease out that that in is it Can I you is So what roughly? guidance. differential your

Ed Rosenfeld

we points, it of the $X which from and from raised that in to basis would I the strength in the year comes came in was the primarily private some by sales of maybe increase when business. due footwear wholesale million to -- the say the both related recapture in growth our -- in XXX $X our million, about QX, of We Sure. beat Yes. Steve Payless guidance of increase for on label assumption Madden, balance stevemadden.com. But balance an was lost

Steve Marotta

a in really XX% from I particular, you're sales bit the that X new exclude a the when new standpoint, to X That's your servicing excluding of understand, at mostly you understand the I inventory are the investments that businesses, quarters again, just replenishment X standpoint, this grow also for an something would better. expect helpful. pace And And you, to Is customers from replenishment? next businesses. a in because up investments faster in the to inventory but of little

Ed Rosenfeld

I it think the increase of prior the a same you'll that was see because QX you lot by driven but timing in year. this big saw of to as the Yes, and shipments the in -- don't just April degree versus

Operator

And Thank comes question Nikic Fargo. next you. from of Tom our Wells

You may your question. proceed with

Tom Nikic

Ed. morning, question. my Danielle. morning good Thanks Good Hey, for taking

So I losing year. of just at Kate the Spade wanted the to this so -- brand the end ask you're about

perspective you see the you replace the the if it to a on? the Kate Klein ago. reach Thanks. losing? from opportunity add you Anne would maybe brand on Do when of a see business couple you're composition brought the kind of management Blondo an a Klein opportunity be another You brand kind wondering -- trying added about like portfolio or an thinking And specifically just like And I'm when you're Spade where quarters just of that different to category Anne forward. of I'm the license you demographic to portfolio a brand, brought do brand. going something add and to something

Ed Rosenfeld

good question. a It's Yes.

to additional open portfolio. are the to brands We adding

a few at things. looking actually are We

While opportunities. Hard either that at in terms things few like acquisition be point we'd the to relatively we would say price we're looking stage, to or what think, your license right a that's existing early point, something I in or portfolio. now the brands might to but complementary that's exactly of category, do

less -- most have things a be So today. demographic a interested or price we'd in a where category or do we point penetration targeted that

now. right forward, So we'll there's updated keep you going to nothing but report

Tom Nikic

family channel-by-channel business. a helpful. wholesale where quick well, was just type would pretty from that, Anything you of did just It that kind sounded you it well from Thanks. in like e-commerce Got Like was different there meaningfully within it. one I the be of stores, the a anything Thanks particularly environment. tough is perspective? wondering department channels? perspective on And did follow-up companies

Ed Rosenfeld

call in There's instance, we're if for across seeing really distribute. -- the out. much channels seeing not to think which really we all Steve about strength We're brand, the really Madden you

off-price includes So retailers, channel, channel, cetera. stores, department family et that e-commerce,

board. currently So seeing across we're the

Operator

from Thank And question of Chris you. next Wedbush. our Svezia comes

you with question. proceed You may

Chris Svezia

when double-digit on for Good do QX. of pretty congrats to related guidance that the first the sustainable? guess strong uptick kind footwear, think balance about piece we growth, sustainability something that? year? it the morning think in largely wholesale seemed and Madden, question, of of start Because that just the we most and how about about in just is everyone Is the of Ed, kind the business You're of of I label. a we thinking Or do how business? think private that the just like Steve about

that about about and of how the thinking we're just I'm core forward. going So kind thinking

Ed Rosenfeld

Yes.

have the We that we go as assumed throughout that moderates growth year.

I we're already channel -- is given moderate, But are our we expectations. expect a being we've been said, Steve saying years few dynamics exceeding it's that the stellar. growth grid market we've not into that for and we the that prudent, growth -- in -- the leading that Madden sort now our been where of business, to share think that, selling have of that's a and

So we certainly outperform. execute that hope to continue we and can

Chris Svezia

then and private And you. on then end. on premium business, more the of just the label the Thank --

think You those else Maybe on maybe I going opportunities. on? other And going developing? about little into fall discussions fall. some that color think this you mentioned Anything as Can bit how a starts spring of we what's XXXX? are add Dillard's there at have about maybe program or you a

Ed Rosenfeld

starting those Yes. programs I we're us pretty that about with them are over nice ongoing, prefer growth are next not for much years. to be them stores, a of be -- the and a accounts, some talk of vehicle And to in of already department specific too we some are fall. going couple but this number can optimistic have

Chris Svezia

me. question for Final Okay.

at high about earnings we Just think for on -- the the the year. $X.XX outlook, end, when

first the quarter. $X.XX did You in

get decline. QX assumes the an But math potentially, not end dummy little of comparisons a into year you'll get that that lap. in then I kind half, back I the obviously QX, know would to as benefit to earnings last go you high tougher. of have Just of that And you've got tax that balance range. assume the probably to earnings year declines has is

think the balance as earnings through go in of that could color that any And cadence you be the maybe you're better upside on the as Just we we get where what maybe lever guidance? year. your growth can about implying

Ed Rosenfeld

half year have year, the of drag But Yes. relative half that, the the weaker we half, in half. which from EPS anniversary the back Well, half both in Anne have year drag all and first to the -- or the to first back from year compared first in but second is we offset earnings the reason Klein, didn't we prior EPS the in prior this the half. Payless have which we for

instance, expect do maybe down probably the particularly, due a to to we as QX, well you from back for out. a in the impact hit drag called And tax got bit of as we So be more that. half from $X.XX Payless, Payless little EPS just negative that the than

Operator

question question Piper Murphy of comes from our Erinn And next Jaffray.

Christian Yonkoski

outlet on those trends side the on business. for the retail the performed stores channels? curious some We're morning. How Christian stores between and full-priced this of is versus Erinn This X of

Ed Rosenfeld

Yes, full-priced stores were stores. than weaker outlet

Christian Yonkoski

going business that year you how and forward? end update where Okay. And quick a profitability provide from you're expect perspective China on can you to the thinking and then the about a

Ed Rosenfeld

under It's updates bit but throughout little losing for think losses is we've a now. met pretty kept a we have in Look, not that least no financial our you think alternatives of as been at of some we've the our terms that we'll currently Sure. hopefully, And business. go progress it lot we it's our fact It's evaluating We're there, the for year. China in the has certainly not control, performance. the candid about I secret, made with having we've learnings. right JV been expectations. profitable of disappointed We've money. we're And

Christian Yonkoski

a Okay. category? the on you quick think the Madden brand. color. the helpful And And category, you one, all How do guys at luxury the That's expand? just slowdown major sneaker that are seeing from growth more long to then category or luxury been Steve it's any category driver one sneaker in for sneaker can continue

Ed Rosenfeld

last, hard sneaker how we we see that. don't say don't see And We future. of it's for the important Look, it do right still see Yes. foreseeable category will the but within a signs strength long us category a down certainly We to now. it's slowing and luxury in sneakers. going I very to be lot the energy think of excitement any for

Operator

from FBR. [Operator Riley Instructions] Our next Anderson Susan B. question of comes

Susan Anderson

on And Just there the wanted how about business from do to more up I guess that of early to should performance is initiatives? the feel these come the follow there. in e-com on I benefiting innings and sustainability? guess that the we digital think strong you front? you're

Ed Rosenfeld

like we're in We the really Yes. feel early innings. do

with that not, improvements do other few we're in the we've beginning on, lap now want last got I some I'm that I over we point frankly, next and to initiatives QX we'll continued we've for made out able nice to to So you later runway that growth which that starting said, That share got the year. big year. hopefully think being be the in years, working we've e-commerce

tougher, bit little so slow the we year-over-year forward. go comparisons do and the as growth a So may get

Susan Anderson

rest the I Got maybe could when the I play China of the tariffs it. when to year. P&L this just And originally margin, about do how that? and what the then you guess hit you it cycle gross that so you saw to and expect you if guess on talk did impact quarter out the

Ed Rosenfeld

Yes.

in a our really remain about of last really of a aggressively tariffs other China. the and negotiating I handbags levers: think this of mitigating So the bit little one, we been call, done we have China fantastic on teams the on but the impact X -- talked two, in concessions sourcing job on China to moving Cambodia; primarily goods and accessories. price that out it's And production

And this us so overall the year to earnings -- to material. gross impact for this not QX and and is really year in margin

didn't impact And -- pleased tariffs were the but at so when we end the with we're right QX that's was QX. implemented much in There in that. see very September, an of

Susan Anderson

much. That's Great. helpful. so Thanks Good next luck quarter.

Ed Rosenfeld

you. Thank

Operator

would to time. over like call any further back any the this turn further Ed for showing not Rosenfeld at am questions I And you. Thank I remarks. now to

Ed Rosenfeld

And Have joining for speaking with Well, QX. we much us forward to call. Thanks Okay. day. today's great after great. on very a look you

Operator

for Ladies all And participating conference. This you in Thank program. thank you. disconnect. gentlemen, does today's wonderful Everyone, and conclude have you may today's a day.

Steven Madden (SHOO) 27 Apr 192019 Q1 Earnings call transcript