SHOO - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Steve Madden Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference is being recorded. [Operator Instructions]

to of conference Relations, Corporate like speaker to Danielle now Director today, Development would hand over the your McCoy. I and Investor ahead, go ma'am. Please

Danielle McCoy

Thanks, for Thank XXXX Chris, call morning, third earnings our quarter you webcast. and and good joining everyone.

like statements future. we forward-looking expectations that during make defined or regarding our in the predictions remind our Before to you the we call, I'd may laws about begin, as certain federal securities

the involve earnings these operating statements current projections materially to these company's other as our these are results. and company's Generally, unknown control. of statements involving anticipated Because differ such, the from statements. uncertainties actual or assumptions aspects revenues, not and known relate based and risks, performance within may And factors on expectations, and they results

and to with company after Any risk to the cannot from annual the today's discussions include call as this you other the forward-looking date. be time the represent Our judgment filed relied and urge current SEC refer detailed upon we reports as to time of our time of of statements these. faces, and report

other information, law. We most events as are disclaim comparable obligation to new forward-looking statements disclosures the directly basis, A release. otherwise, publicly contained associated or or and on The are applicable GAAP unless whether financial as adjusted in any results required to our result an of or under revise except a financial noted. reconciliation update earnings intent any future discussed measure otherwise

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

Ed Rosenfeld

quarter results. review thank you Steve morning, everyone. Madden's joining for Danielle. And us Good to XXXX third Thanks,

significantly expectations. with included earnings pleased exceeded performance, which are our quarter We our third that

in the highlight Our flagship with channels strong the in performance we Madden operate. the across brand which quarter Steve was

consumers to and that team in Steve Madden, with his Steve outperform to the are and both enabling footwear handbags starts right continued it with all assortments and trend resonating competition. create design product and For us product

to We brand's increased with supporting core with its serving the deepen the is that are connection also brand marketing investment customers.

capsule focus period coverage supermodel building business truly nine a launched our In editorial outstanding XX% for Sales Klein, renowned are generated compared seeing co-branded And has up in digital we social outstanding by to buzz. stevemadden.com marketing QX, that last media results. photographer a QX of on accelerated months are and year. Harlow, we year, the of and Winnie now comparable Steven footwear first campaign to with the the on and continue collection shot with

been. stronger our we brand is believe Overall, it's than flagship ever

also among that Brooklyn a with has devoted quarter We that opportunities the completed growth on provide company designs based native millennials we classic that today's had particularly brand. stylish along digitally brand to acquired August a two more going we Founded following, sneaker acquisitions the fit culture. forward. XX, XXXX, in in GREATS On the unique marketing connects to lifestyle, that announced meaningful casual attracted based with GREATS

much dilutive bigger significantly we in first million million earn expected The $XX.X an optimistic completed out the sales years. month business. this the the plus be GREATS we are is than XX, the and to was business year. in acquisition cash for modestly is earnings coming to in net $XX June With that believe XX brand current grow trailing we And through in can

us. ideal Dakota partner would BB we have make on BB Dakota, apparel women's Dakota product then we that contemporary California had assortments years following that as for BB for we based had thought company. We spirit announced acquired the with were the Madden that Dakota brand brand, many and XX, a And August apparel and been aligned of Steve an long the BB

to acquire thrilled So the were arose opportunity we when it.

Dakota brand Steve BB Dakota’s Beginning Steve transition fall collection for distribution, Madden will BB line. a existing opportunity we in to of co-branded abroad. domestically well significant the BB Madden as Dakota see Dakota become new both to distribution and BB And XXXX we as

XX sales year. completed the is through had an of June trailing BB Dakota million and Dakota out. cash XX, earnings we million net In the BB to in $XX $XX in modestly be earn The months acquisition the to expected plus acquisition for first accretive

you of So in on approximately a year combined expected to one. and forward. to are progress be We these BB we forward move two with breakeven acquisitions basis, updating GREATS the on acquisitions our look as Dakota

well with for that offers joint also with are Link record other new brands. We capabilities to successful China brands, Link in a as business [ph]. online we XXX China Channel a well formed offline, under XXX track partner its both as venture family superior announce brand pleased approximately operates as Gaga, for multi franchise various Channel international brand as September, apparel the footwear own that a stores in as stores approximately e-commerce and

XXXX on spring to open Madden expecting our planning to locations launch additional XX% JV and the VIP Steve Link. XX% JV and in store open and We're in XXXX. is three to early operating business first of are new by The we in JD Madden Channel already XXXX. two Shanghai Timo quarter, The owned on on in is Steve to and the back half by this also

administration the of into slated footwear, includes two produce. December on that into effect to situation. List Now, we August, went categories, apparel, which effect XX. and accessories it divided into current List other on announced List products, on In which and was XA, September a X, go X List on XB you XX% is the Trump which update impose certain I'd to would X like tariff tariff

on List XB. half half were our products XA X Of on and were roughly

is other has this impacted List mitigating with Our employed approach we that the have produce. to tariff and to that the to similar X we certain accessories handbags tariff strategy respect

remain moving suppliers three, in of that prices. concessions out good one, raising price production and are China; with the two, our selling China; get We working to on

X XXXX tariff a X List $X.XX that the share. share. per of negative After in the from is approximately approximately per mitigation, impact $X.XX we negative impact have XXXX impact from tariff from share $X.XX addition earnings that discussed, in total tariffs previously for per This List is the to to we negative estimate the

Despite raising we quarter, guidance underlying the the overall. our XXXX X incremental tariff, the List and third pressure are in based EPS business planned our earnings in from on today the above performance strength

tariffs, We a have of only year-over-year and faced significant year, not bankruptcy, a also Payless this the challenges rate. number tax higher including but

headwinds. And so on solid deliver are track despite be to earnings we year this to those pleased growth

to that positioned we brands to to business the significant create further to earnings we believe are continue our We growth And shareholder think power and drive of our of long-term. well a the testament that's over the model. and value strength

to over our revised in review and With more Danielle that, to outlook financial detail. I'll our turn results it

Danielle McCoy

Thanks, Ed.

are We with pleased our quarter third performance.

Our $XXX.X prior $XXX.X consolidated sales million. to to increased net compared million year net of sales X.X%

X.X% increased $XXX.X sales by gains net label. in women's footwear Madden Wholesale to led Blondo, Steve private million and

our Our was growth in SM through a Europe highlight. JV also Europe

accessories of the sales sales Steve again addition the increased and $XXX.X of Dakota. Madden quarter million. marking growth. net also the fourth sales apparel, In XX.X% standout consecutive benefited Net handbags its quarter, double-digit from to wholesale in BB was once

sales net segment, our $XX.X In X.X% increased million. retail to

increase the of a X.X% quarter top X.X% year. last same-store third Our sales in on increased

stores, as including ended e-commerce quarter the company drive well XX operated segment. continues X growth operated stores, e-commerce and with to Our retail international XXX in outlets as concessions business the this We markets. XX company in

Turning to other income.

income, expenses third year's Our $X.X royalty to in quarter. compared million net licensing million quarter $X.X of was the in last

last $X.X was commission million class income million to first $X.X year. compared While

margin offset was Consolidated a was gross and But decrease We the footwear achieved apparels, margin XX.X% in compared XX increased to the imported XX wholesale primarily from to for basis Wholesale XX.X% gross tariffs quarter than the China. on in basis the XX.X% point a by more the in XX.X% year in year. points to gross increase due wholesale goods to prior compared prior margins. this quarter. accessories

Retail gross activity, compared by reduction promotional full selling margin and the year stevemadden.com. to was a driven in on price particularly XX.X% more period, prior in XX.X%

$XXX.X for operating or or expenses of the in compared XX.X% year. $XXX.X Operating last increased expenses to net quarter same of of sales period XX.X% million the to net million sales,

were as of XX.X% net of Operating sales totaled of year's year. XX.X% BB net third and operating or sales prior the Dakota, or to GREATS quarter for sales. million, last $XX.X to quarter Excluding million expenses compared the flat income $XX.X a operating percentage of income

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

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

strong. balance to our Moving financial sheet, foundation the remains

September million. figure XXXX, cash Inventory As $XXX.X the flat marketable to totaled and $XXX.X approximately year million, of and debt. $XXX.X million of securities XX, had prior of no we

$X XXth September ended the consolidated turns and inventory XX CapEx was times, months for our quarter in last the X Our was million.

net repurchased we of employee million, XXX,XXX approximately which for through includes During awards. shares shares the $XX.X settlement quarter the stock acquired

Last, business dividends. Directors XXXX. dividend our the the December form to to $XXX on of record stockholders million company's dividend share. share approved be Board an increase of XX, on The returned as in shareholders close of of will December quarterly Since over and XXXX the to per $X.XX X% have payable the in repurchases of XXXX, XX, of we

to we our guidance, turning net XXXX earnings our Now and sales raising guidance. are

XX%. of now Included rate from XXXX, full of For sales up net X.X%, $X.XX. to of now a expect previously, the for in the is X% we year guidance compared $X.XX range expect year approximately EPS previous the to this $X.XX $X.XX to range and growth the in diluted to full X% to X% of tax

Operator? Now, I'd question. like to operator turn the for over it

Operator

our line question from you. first And [Operator Sam comes the Susquehanna. Thank Poser Instructions] from of

is now open. line Your

Sam Poser

I've gross to can so you the for you would year about the and SG&A Good that taking either the sort the be much few, morning. quarter? very so Or you full way implied for and want got fourth a implied walk of it in helpful. the through question. on my margin go Thank

Ed Rosenfeld

you sure. year in back I'll give the the you full quarter. numbers fourth to let and Yes,

sales on We've to seeing. taken you've margin that think we're that up gross X.X%. the performance strong based the expectations our so gross I that -- X% obviously margin got up

be now end XX that we're up thinking we basis basis we will points. to think year XX SG&A also So points a the about margin. roughly up can gross Well, XX of percentage in sales as that

you that So should there. get

Sam Poser

breaking that's between tariffs how different where in with Thanks. And factories. about you're to and of you then, the the Pricing production can going and moving year? China out next the talk working and be offsets

Ed Rosenfeld

Sure.

List concessions, getting selling terms of as prices. going the half that well most new about are of we're in mitigation back of came through, -- tariffs, which if factories and to the back our mitigation price the raising the the year in So talking the as X ones,

move moving into production a we year, of course, next As also of be will out piece China. bigger

at our XX%. I apparel think year. at X think China look It's you up, think of this shoes, in accessory I if List products X that little about XX%, on if XX% categories in that other -- bit we're a but we're shoes were I the List that about are overall, than lower number and bring some

the really But raising plans XXs. don't will those are not frankly, moving the rate year, we and together, the continue on pieces beyond But obviously the get putting be going first lot try concessions year. then achievable at that I China are out selling price China get think would still in remain of to and there good is prices. of we're goods to and that be there. into any The goal percentage anything We next to there in that think I try to a

digits we've On But maybe going I'd in number into average prices, a the on really digits. that more see little only raised you'll be say footwear higher, low-single side, spring. mid-single selling think I like handbag

Sam Poser

of And give you then within number some comp, talk year-to-date your the can us you can mortar the and comp the between digital. your your growth for give But in digital brick and idea you variance you growth? -- gave about date us can

Ed Rosenfeld

negative again and Yes, quarter. the brick in mortar was

So all of the from growth digital. is coming

Sam Poser

can ideas it we model better negative, what can degree was give And going so us you forward. it some

Ed Rosenfeld

mid-singles. About

Sam Poser

much. very Thanks success. Continue

Ed Rosenfeld

Sam. Thanks,

Operator

Edward Markets. of with next Thank comes line Yruma our you. KeyBanc from And question Capital a

is line now Your open.

Matt Degulis

Thanks questions. our taking Good on is Morning. for Ed. for This Matt

So can handbags -- have been you hear strong me?

Ed Rosenfeld

Yes.

Matt Degulis

footwear on Handbags you footwear, retail label? you in a Okay. and strength, that's and informed us particularly experience in couple for can driving what private quarters learned terrace what's update have process since the strong handbags for how wholesale And a talk bit that now. been before about from you you Can tariffs?

Ed Rosenfeld

had mentioned, Sure. we've I which And four couple very respect quarters better was it think Yes, Madden Danielle I really years quarter look, a as really now growth. digit of really And Madden the Steve nice with growth modestly. we've there. that in more just was now in this it's handbags a of row growth in there. that think more of drove branded Steve double up actually a but been of handbags to Private the handbags, label formula found and

product I think market. assortments fashion of I in gotten what mix handbag well much been somewhat we've and think performing have obviously, core that better the overall a line nice and challenging and is

we're there. So pleased what with seeing we're

if of of I that's List helping tariffs frankly, say what List what out from lever about learned, one to difficult anticipated. List that if has the if say Look, we've experience how about about more think somewhat you had moving the we've you learned think one terms about do than the would we've you we of three In in going production us China X think I with and had I'd and X, the think those -- been what X. that plan that levers, think we in

countries We've lot we've goods places to other those prices significantly seen certainly lead longer Cambodia the and moved other into in run and rise of challenges. other in definitely handbag and times challenging. but been a it's We've category, the

been, able factories I pleasantly the say would China. surprised the get of been price out we've about we've However, concessions in to

as that's category But -- in from we do pricing that footwear. more I keep mind have a something think mentioned, bit as forward power we I that's footwear. one in So little footwear in handbags we’ll a takeaway is different move

three, number List with so X will to on lever more respect handbags. X we List pulling than raising footwear is prices selling to be and which aggressively certainly did And with on respect

Matt Degulis

environment, department for for year? what orders American Thanks expectations the channel your of can wholesale in the North and once very And talk the you and inventory stores? helpful. Stanley bit And the a differences between specifically any about at are rest mass,

Ed Rosenfeld

think the overall is Look environment, challenging. pretty I

posted outperform or in If broad environment. retailers you haven't at look really throughout the But from retailers managed the have they space, numbers we've the category been multi line stellar. that been to that the

challenging I think we've despite are competition, and outperforming and we able products the grow we're think the we market to been right products through have dynamics. and our the so selling

tier. a we’d With respect -- across to our seeing call the I variation anything, of brands, there's say I don’t would performance channel. think what we're ton the better If first in

our bit the So of other that little channel, and may the not e-commerce excess inventory do price but like performing, retailers the products department a from stores there in be more vendors. there's because are I off certainly challenging amount think a out fair

the And so from that make or product makeup those that for can off pricers have us reduce us. from appetite makeup

part question? what Sorry, your last was the of

Matt Degulis

At once orders?

Ed Rosenfeld

provided. the on I quantify well, we've is I this that's -- mean, mean, that guidance the we something But call. Yes, don't I’d baked into not obviously

Matt Degulis

Thank you.

Ed Rosenfeld

And we're obviously we have getting that are -- products performing.

are we getting yes, So, reorders.

Operator

Jefferies. Thank Stichter you. with from question And our Janine next comes

line Your open. now is

Janine Stichter

because also seeing significantly business accelerating sounds sales what it about Hey. But interesting that’s you're taking Good want talking like e-commerce to pretty like sounds about then question. morning. there. ask lower promotions. Thanks I for my the you're

talk So just of doing can or there about business? what's kind driving you're differently you that anything

Ed Rosenfeld

promotional Yes, really seeing shipping. about significantly activity we're particularly we the free stevemadden.com in with of on site. year, their excited And we you level we're the went of on summer and really recall pulled day that as to last the two concurrently back offering what on

of shipping So offer. that as marketing consumer really opposed really were resonated with for stronger us. ourselves discounting, has And worked has we that sort to with the this

to move forward we've dial online. promotions continually we the able as back And been

to but drive seeing with And we're well we're at got better great seeing really the a success lot course, and of paid much a we're other we've as as with -- site, work -- influencers returns doing things of Now, seeing to doing lot there. traffic social, conversion. of we're also some more

and think that in been that as on of particular And mobile. re-platforming, you the talked has we and know, did just of up options the got us we've very things which new really, had successful implemented of a we good our I impact course, helped some we've for payment going, the drive conversion the about nice lot to in past

things good kind it's this positive to story happening of there able of lot and drive a discounting. sales growth So be without to

Janine Stichter

other then Payless out some just your the partners. bankruptcy business, of that And is about fair. that seeing ask label what you from wholesale as I being to wanted also driver footwear of Okay, called of the recapture strength, private any think related to a from with there you're

Ed Rosenfeld

Well, -- look, really Payless tell of up is you doing Payless exactly trying running It's business loss the that of after much hard that we we're year, them business. this with to customers obviously, down are that on digits go exclude to double how overall. related based Payless, if still the are to we remaining

particularly do pretty I about communications had of to how had were in market think that. to placing some to orders certainly they QX, were share of some additional we that, -- try we and were grab that with attempting them

there's a there. don't A definitely to piece the majority it is way related So, of I no it's Payless. think to really number give though. it, of

Janine Stichter

Thank you.

Operator

Thank Lejuez you. from question Paul line with And Research. our of next the comes Citi

now is line Your open.

Paul Lejuez

the also AUR, wholesale I'm actions benefits the mix that's of -- AUR? driven business? a helping your is you've I units pricing by right AUR thanks. versus How more that of are had being being your a I just wholesale sales higher some questions. guess, Hey, kind curious also of if there's maybe couple or now And much increase I in seen guess higher if already shift,

might you're changes business then talk of And bit boots, any those pieces within one a trends that could just and if strength in about seeing dress wondering the out little particular. Thanks. fashion you drive in of secondly, there any sneakers,

Ed Rosenfeld

that's up nice booties, trends, quite us primary few growth But category haven't the AURs terms last the a years. a where in year-over-year what is right and now and about for the the one And we're of is little But our unit think booty fashion driver seen. heard few we're the boot things in excited seeing working And as Yes, talk about in boots overall I one then you in of are a that things we've now. bit. Sure. of seeing there's we're much me that's growth category. the

boots for [ph] combat are looks, good doing well bottoms boots us. are with again low we're So are our knee the western, performing, good, over inspired

only then but a other across seeing categories, of in really we're trending. materials boots And not lot different

are So prints snakes good, vinyls, camo. are animal very performing, rhinestones, studs,

a for us in to there's So success having we're with terms nice with work lot some materials, of and that.

Paul Lejuez

can raise just of us year. you. businesses terms for in guidance what then size size expecting frame And to you did the -- acquisitions, you your next impact how are Got year? sales And the of of for that two for those the this

Ed Rosenfeld

Sure.

the at $XX Dakota BB GREATS again, time businesses, in $XX of million. acquisition trailing the XX So sales, months million

as As Dakota GREATS. far raise is including and year sales in this the BB really the reflective raise of

the number guidance, year. the So we raised in And August them at we that like the and end we through a around of midpoint, that's in middle combined BB sales since I basis million. something the think GREATS Dakota the and $XX our of expect for on acquired

our next year I'm expectations talking out going to guidance. call, until next delay we when put for our about

Paul Lejuez

still enough digest to these you Or appetite looking follow then are around? for one two or any further And for acquisitions more for just you. now up, you Got guys?

Ed Rosenfeld

looking. still always we're No,

I opportunity certainly successful. we sure them on if wherewithal if they're the along, a lot think interested. deals. make to obviously to of are be These right we'd time spending came We're that the the opportunities. do smaller relatively right But additional have we acquisitions still find

Paul Lejuez

you. Thank luck. you. Got Good

Ed Rosenfeld

you. Thank

Operator

Riley a of our And from comes you. B. with next line Susan Thank FBR. Anderson question

Your line open. is now

Susan Anderson

and GREATS Nice to how morning. could this you some BB think sneaker to acquisitions. the are on Hi, and on brand Maybe term? you just brand? don't men's expecting just that in quarter. Steve good could follow I job replace how color Madden GREATS big up guess -- you And I the be longer if know for your Dakota give

business? you thoughts And And then and for not brand if you you I BB the margins just day? how of then, apparel rebranding And about if on Dakota, do one be the could both Thanks. there's big for the could of consumer. could give their versus any those, color guess, then your on confusing talk think current

Ed Rosenfeld

Sure.

customer is I'll start this so base, separate not GREATS. to a cetera. men's. Steve identity, is with replace we're This a brand different price different Okay, -- Madden No, different with et not point,

doing intend business what we'll certainly, in men's that well. we So, continue as and to Steve Madden grow doing we're

far all overall is I a It's going for they one put not multiples limited could terms of in almost number of many the say which to wholesale on the opportunity They a have store It's all as one it do Nordstrom can in still greats.com. It's that's a of As have where on it GREATS, today development. early clearly today, be brand got stages basically customer, and its is direct-to-consumer very distribution. Soho. in sales.

we do we we And, think grow business significantly. pretty over can expand time. the to intend distribution this So

I In Dakota, rebranding. was question BB terms the the of about think

So still to co-brand business, that to Madden they -- about on the think but has opportunity intend essentially in brand starting a Dakota get about pretty we've the do the that credibility Steve spoken in capitalize the seem a apparel we there. excited wholesale XXXX. category. into of to the do fall BB way We that's customers and And a

opportunity there's is margin operating will where currently to money get get profitable, of the We've overtime. be improvement to is again, average up break BB business Dakota relatively diluted And We that we a below margin. operating more loses modestly margins. it also -- we to but GREATS money. there do company to that for have our and average our and think quickly. terms But In in said Look, that company year. we've think to said first loses even in plan

Susan Anderson

second of business, good Great. about about all from And weather you early see like quarter with this at And and could quarter Did then terms business? you reads if performance Thanks. you sounded perform talk I any about you in of -- out quarter think I well. parts that of the the country on also too? boots can up how of it coming felt fourth some you just talked the feel if warmer in starting impact just follow

Ed Rosenfeld

about We boot that far. commoditized Yes, felt a really I of start versus that our that what running year. type in slow boots with the talk prior like the haven't the off category do we've think started to very up really the have or year. performing. we've the market digits We're weather. But heard some been more in pleased are some others a fashion cold due we so double weather may to boots slower little do boots performance

one I say the knee. as guess, well about over really booties, been the I it's would as caveat

boot is tall hasn't kicking over in that shaft have excluding in, knee or you later. the So kicked

And to so partially weather. that be related may

Susan Anderson

Got it, luck that’s helpful. Thanks so for much. Good holiday.

Ed Rosenfeld

Thank you.

Operator

Thank And Piper with Jaffray. Erinn question of our from comes next Murphy line the you.

open. now is line Your

Erinn Murphy

just your strategies A you season? holiday. Good And thanks. head expecting deeper your days between footwear the we change year business. peers higher kind then, of for into does activity cadence talk just of your that attack about season? holiday to how what for and the promotional six market you any this Ed, holiday of Christmas, sticking is the plan morning. guess, go to on does of I Thanksgiving lot about promotional as for Great, talked a you the Can side have expectation

Ed Rosenfeld

activity pointed prepared and That's we've higher earlier, said, for. we've same inventories. we're the certainly chatter out the of our in well something about That controlled performance our seeing that promotional we're industry. look, margin this as raised actually across forecast retail, gross expectations at Yes, I because heard the strong being

going be we're to as this promotional think year. don't as have we others so And to

In of terms essentially or we Christmas. number to moving tend fewer days our the promotional and Christmas. number look, season, calendar design shorter between Yes, Thanksgiving backwards from holiday the of of shorter day --

our for shorter continue do before stores. to just retail kick and our we that promotions promotional, that a Black we'll Monday, really means holiday you're there's Friday, where little talking that, into be bit we're period own period typically Cyber after about will So which a if not

Erinn Murphy

I of longer I this puts have do from that think And you to Okay, EBIT now, years operating number just Do margin term years? mean, even the then the of this help your you mid the very takes XX% the probably low the has XX% comfortable to margin, you range about then low How think the maybe margin yes. XX%, with performance or for us guess top strong Fair by with for business year. the operating last moved of going enough. six guys a down three are consistently term on your had think scaling here? in longer five about kind and just line you end the just -- low and over next years

Ed Rosenfeld

see stay That And year, have significant this operating we said, obviously they would next pressure that we us tariffs. pressure further to Sure, here. tariffs north in up provided and continue margins would will could has the yes. excluding to Look, place. in been being a tariffs year, think been these move be if there were I start that confident no tariffs fact,

that forward. particularly absent operating for that But, there's some we move margin leverage to do as think expansion here, opportunity I SG&A

Erinn Murphy

you kind end the there just reinvestment sticking do maybe as then Where the And just reference the on SG&A, the Okay. of marketing. by be marketing your beginning you year you feel a in at are this talking And bit are collaboration will further more of script, about more on sales? of the with bit little Winnie maybe different -- individuals? a talk expecting Thanks. of the about of pipeline little just collaboration with traction percent a

Ed Rosenfeld

of X%. still below sales percentage a as overall marketing look so Yes,

this So prior number, year basis XX points relatively to roughly still be year. up a low the it'll although compared

and return So very not that investment about an we there. feel we're increase getting insignificant good in the

really really us sort been nice only to seems tons Yes, and has about media with media but herself, provided consumers, that -- resonated from thing have we've and for halo most probably coverage, Winnie of a the of really, importantly, in not editorial the and earned social Winnie We consumers. in also brand I was posts great, of all cetera. there and et marketing talked think, particular, terms gotten celebrities also engagement

So it's to have out not forward consumers. things look going more yes, and be that we'll calendared like look at for something we every engage I our doing optimistic mean but that we’ll honestly, continue ways with to season,

Erinn Murphy

much. thanks Great, so

Ed Rosenfeld

you. Thank

Operator

you. Thank

comes Our Wedbush. with next the Svezia of question from line Chris

is line open. Your

Chris Svezia

and the If and it outlook, it on guess, just the and where maybe just just tariff some thank on why maybe sales you taking question nice outperformance I implies assumptions acquisitions I morning QX. color core and core about for you comparisons on is running year-over-year maybe just some the it given the make call for flattish, the little mitigation. would my of business on first up a what's questions quarter basis? have Good the the caution, for business I implied be being of is kind maybe is flattish the conservative, what's a slightly, job

Ed Rosenfeld

challenging. a get function think points A comparisons, lot you of basis year, that it's I the last QX more if of comparisons at XXX just look almost QX to

if you at big So couple I QX. up it. year, the you of that's make XX% we a in if think said recall, accessories I call wholesale piece really mean, last were look I there

that that be been area. consistent we about We we and we wholesale that do get have in in be in told anticipate XX% against will pretty accessories down to to up trying fact people that actually the prepared and people for all QX, going would year down

then even a think compare. wholesale in I And there's tougher footwear,

September late, year. in the was in shipped we last up that little We boots them October shaft fact, we year. them a did bit year to moved tall we we in that things shipped One in think this we later last and shipped too of

that some from did so And to QX QX. move sales

Chris Svezia

helpful. that's Okay,

you you’ve called understand $X.XX the On tariffs, just the and no? are -- the proposed factoring is are in so XB -- I List out, XX/XX you on or

Ed Rosenfeld

to Yes, has two it's two we're in pretty that only but brought no going anything impact XX/XX. we weeks because out and weeks to almost ship us those last in before that much

Chris Svezia

referenced would have And more that have business, theoretically much initially a Okay. more like think Is seems power, $X.XX accessories all $X.XX pieces the fact of footwear the I mitigate on more just just you or pricing you’re exposure. you you making just in thinking were -- tariffs, increasing that this year? about it to of you process? it mid-single were the color larger versus TOs just given any factor that are digit existing into around just written does you pricing how adjustments how then the the of that thought for And those exposure, Are to that? balance the

Ed Rosenfeld

about Sure, couple well, of things say I'd that. a

the of List that of X First I mentioned earlier keep on about as remarks, XA. in in our mind were products all, half only

tariffs until see not issue. half to them to products the and so So some advance XX/XX were also tariff. an up don't were delivered able We move of of in be

get before things, the sort were factories the before so, And increases $X million those mitigate of able from million. price concessions through to meaning our to steps or impact down price to gross two $X customers, we our let's to to say

price the also down answer you’ll open and went on prices then we that back that's back did if customers orders the orders and and have how got the question, so factories and we we have a more and and yes, open they to year, accept concessions to to into orders, Obviously, impact. go did you on our open our increases, XA your XB, on And price change significant impact. roughly and going those got $X.XX from next

Chris Svezia

by probably sort driven gross sustainability? about into process baked think your of the the lastly, you then lot I viewpoint your retail of in the helpful. And from on QX Okay, just just as that's of perspective, of being been able a just the What's sustainability digital, And margin quarter. gross what's very strong margin a sort retail? business, on on plan mean, that’s in thought sort

Ed Rosenfeld

that think of. time continue what Yes, to mortar, particularly in going that these we the move so with strategy forward have, be to I particularly, is less we online. and promotional relatively cognizant QX bricks is have obviously we’re to that's which discounting, days,

could flattish quarter So ago we of we were be you're to where QX, gross saw but improvement to and going strong pretty a that not same see had fourth margin. the we a year kind in you

that's impact. good because the touch think down target. Maybe a a I of tariff

that's way So think I it. the about

Chris Svezia

those think footwear. stores that -- thing, accepting retail increases do just reaction passing been response the pricing increases what's customers? from terms of your wholesale price then the them versus of is Final How sort your sort on customers about of Okay. just in wholesale retail on we and through

Ed Rosenfeld

wholesale it, go The have The raised and retail. retails retails stores. did majority they as but terribly weren't it, customers retail our raised raised obviously excited about with along them have of And well. in we've

impact far to so through. have any sell we And discernible seen not

consumer that paying So it is it. seems the

be to in remain really the bit price. little initial digits. low-single holiday, tariffs spring these on place we here If a and Now again, fall we’d on beyond, looking raised take more into going in business

Chris Svezia

and Okay, all around Thank you holiday. helpful. best the the

Ed Rosenfeld

Thanks.

Operator

Thank Marotta & you. question our from And Steve from of King Associates. next CL online comes

Your line now open. is

Steve Marotta

and Ed morning, Danielle. Good

on it acquisitions you this should or a say about that in what due the pertains sales specifically increase the You earnings delta were was I But much to acquisitions the of year the the primarily. guidance, to what to specific mentioned is the guidance was. for adding to talk as bit little clear due just were TTM pretty Can and acquisitions? expectations you how delta earnings the very

Ed Rosenfeld

the pretty so are Yes, breakeven. acquisitions much

the is is in acquisitions, in sales not. to increase the the not is the earnings So -- well, increasing increase earnings related

through for of margin, are that's is previous means expectation that the have and business of organic gross much the in-line the really right having So, up that's the selling our having or is function a excluding with and the product sales function but what business forecast, acquisitions, a a higher well earnings pretty primarily managed which very inventories. that come

expectations And then improved little expenses. for also a there's operating bit

little a we bit expenses anticipated. the better initially controlled we've think than I

Steve Marotta

in you that just acquisitions considering the Can talk quarter, flat year-over-year little in organic those inventory and cause that are bit the takes sales puts flat acquisitions about any places where growth? given there on too helpful. inventory your was the heroic. And semi basis and were and you Okay, also, there really are follow-up a that's business would pretty a is your that a two light inventory, good, on a or

Ed Rosenfeld

major Yes, have that to We look, you focus the need know. achieve the as for plans. a inventory that's sales do us we

too team highly So always. focused the priority that, environment. a I that been has have It is think to you is job. light really something as real good It inventory. uncertain managing But know worry a don't company done on is you think And for I we've there. this an we're

very down I'm we're pleased So I you're think singles, inventory. with the how excluding they've high like in But acquisitions managed that. right,

Steve Marotta

Okay, any reiterating just then or inventory said? and takes management, that's you again, early necessarily shipments what other great. no, it's And puts just,

Ed Rosenfeld

remember I'm a on year we trying X. to right. List that's if last something the pulling third had we more quarter Yes, if just -- little in bit if were pulled due tariff to

a you. So somewhat to there back have I’d there have been really compare with be may to look honest easier

Steve Marotta

that's I Thank back. you, can look helpful.

Operator

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

Your line is now open.

Laura Champine

question. my taking for Thanks

footwear you historical any is So, when increases price costs what increases of price? digit can mid-single doing? on just list offset Ed, it read competitors digit spring you off perspective the time give that to about talked Does mid-single sort us vendors similar can last in And early are tariffs. from you your collection as seem pass your made to that you

Ed Rosenfeld

have we into In terms that. visibility great competition, don't look, of the

our about the and we've anecdotally, we're think in we think definitely I range. probably peers raising similar prices, heard

a year that. there's years shock a not can't lot will history, it as history ago I price on recall and I of having exactly a As look, tariffs, XX% say with what far we're of was. like handful

about X%, the X%, The to industry more obviously consumer. through And XX% we price the would is with did RMB the challenge I dollar this weakened But at X% of not X%. significant say pushback by see did And tariff. a a increases lot time. maybe that a against pass

what happens. we'll see So, have to so

Laura Champine

you. Thank Understood.

Operator

question Sam comes Thank Poser you. And Susquehanna. we have from a follow from up and our last

now line is open. Your

Sam Poser

inventory follow List you you'll of bunch Number do idea those you where the a X tariffs, potential of ups. forward that tariffs? to us goods end for the got higher the one, in avoid give can your at the I've of anticipate pull be given the year, some -- whole to

Ed Rosenfeld

bit but Yes, think you'll should be that, out whack. it see of I a don't little majorly of

Sam Poser

below rate. through on where tax Can where is number quarter all? because is year -- much well everybody And just some you how full Is the fourth that was? rate your the was prior walk looks that then it if can additive, give to your And just at color expectation? you tax relative us like

Ed Rosenfeld

three In XXX more basis in basis quarters, XXX imply than for rate between it's Yes, full to the But I year. much does think rate in In tax we last anywhere first points running out year. that higher we're were year-over-year higher to I at, up compared QX. looking XX% prior like the tax will QX, XXX year. point points the

Sam Poser

of forward we think normal? should is rate going XX% And a fairly

Ed Rosenfeld

for earnings of discrete now. that -- are stock-based mean, But, tax jurisdiction, point well reasonable parts XX% a be get I think, as of we lot there compensation. moving a could Yes, related of lot in is amount there's expense someday to guess of there it benefits at a starting as I a our terms I these discrete by the or

Sam Poser

And if come we do impact. not see the XB tariffs into

tariffs, would you will by the and the were next tariffs year year I than you be the you speed impacted to your this everything, assume that more to have of market change. ability that Given existing given

should that then the how think do year, we think year? when we question XB the we $X.XX if impacted about And roll initially next same see about So, this in.

Ed Rosenfeld

we we're call. next impact think overall And haven't think you next tariff overall on yet. color going to try at time year will we year. for I do Look, what provided we’ll give that the be that also think guidance -- I to next We'll on the

Sam Poser

deal I athletic assume so -- strength I I increases -- then is from asked about then was on. of from -- I And just But the -- boots, price you mean, what of and say And your the the given price lastly, gather that good. what you. thank the currently lastly

the getting over been mean, likely to you're also, a about. about lot for right? I new stuff higher the got good trends spring of is about you have fashion, had able are I thus You good one sandal talking through products prices guess number because the spoken that on that helping you're probably you've going feeling reads that to would a year, year next these have initially, And prices. far you. a And you've there's that you're pass reason is of

getting a, assume. at getting and the -- shoes price for it I right That's who's So, looking too in taking the who's resistance.

Ed Rosenfeld

think I strength Yes, given the we to take have to try as that the to -- in other there's X good that in that to raise of the what a overall the given as anybody and momentum lot of captured price the consumer we're in position only brand that it's to trying else see that not And only doing, for a product products -- respond of to given a will of look, not only sell-throughs companies, to to strength our have we'll prices our us, from be consumers. List and I about how exactly it everything what not folks tariff consumer that. I to China, to comes be think we're shoe and going XX% remains now does the it's But the velocity And assortments. given demand seen it's that mean, others.

Sam Poser

and you -- to And for going a product the to given happen you about others, tariffs you the what's also of in have of and now, looking do mix time, bringing think current newer do product. long you bringing sort had of more spring of in of some overall some are an when as sneakers for obsoleting shoes your of

at it's it's a points straight an than of they would otherwise increase, introducing new have sort up situation? price been higher a of So kind not price product

Ed Rosenfeld

on Well, But those. raise dog we're taken have I that stuff have it's don't our in deliver for to few to think we think wag we products than going prices think the your want if existing. tail I are wants. to customer on let point the to years, line those is here, well new been to think easier continue we a that products the want that And I the

Sam Poser

it. luck. good Appreciate Thank much you very and

Ed Rosenfeld

Thanks, Sam.

Operator

question-and-answer for now conclude the to would further today's I Thank that session. does Ed Rosenfeld to And turn call back any like you. remarks.

Ed Rosenfeld

Great. for on you we Well, quarter call. to forward great very us fourth joining a and day. with speaking look thanks the much Have today

Operator

Ladies Thank gentlemen, today's this call. concludes participating. you conference and for

now may disconnect. You

Steven Madden (SHOO) 29 Oct 192019 Q3 Earnings call transcript