Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the 4Q 2022 Steve Madden Limited Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. This event is being recorded.

I would now like to turn the conference over to Danielle McCoy, Vice President of Investor Relations and Corporate Development. ahead. go Please

Danielle McCoy

good Fourth and and Thank for you Thanks, and morning, Full our Quarter Call Year joining Debbie, everyone. XXXX Webcast. Earnings

our on of statements. materially answers begin, remind implied forward-looking to statements be we like that others, our our within other remarks the discussed Securities which otherwise we believe directly that could that conference forward-looking are results and press measure the Litigation we noted. results forward-looking statements at statements, financial are earnings to reconciliation risks meaning by Before filings release. an that disclaim unless we comparable to next follow, among call, earlier not Private your to are I'd including A if update or make forward-looking The questions, and today's cause be the expressed contain updated the most these to differ risks you subject quarterly contained statements to SEC. those matters in may Act. have associated These from release adjusted earnings include, described until These such actual financial with that any in Reform basis, our issued call all. today disclosures We GAAP obligation to on

over Mazouzi, on Ed? call Ed. Zine With today Financial Chief and the to and is the Officer; Officer. call me I'll Chief Joining Ed Rosenfeld, Executive Chairman that, turn

Ed Rosenfeld

Well, Fourth joining and Results. Quarter everyone, XXXX thanks, us to thank and Danielle, Full good Steve Madden's morning, review and for Year you

expectations despite results earnings fourth our pleased an with to backdrop. are We delivered line quarter have increasingly challenging in

strategy. These with of as $X revenue our first crossing record execution for our strength financial the full lines. on well top results the we time of year our growth mark demonstrate the in business of For brands the as percentage the power disciplined bottom the and both billion and the performance, XXXX, double-digit achieved model

walk on you briefly in the we and made me through progress initiatives key Let our strategy that XXXX.

always, as test winning market combines utilizing react of assortments talented proven First consistently our and teams, capability, a to strategy model, the and product. get competition. speed-to-market By and is trend-right product with them and create priority, ahead our foremost, which an industry-leading we top design

We is product are this four creating supporting an effective marketing, marketing outstanding key consumers, great and strategy. full consumer enabling then By with always-on success engagement deeper funnel with our our our in business connections product turn are which we with and combining drivers.

by XXXX penetration XXXX, direct-to-consumer DTC increase revenue first DTC DTC increased points over time XXX in XX%, business The revenue our our to Compared In increased digital, overall period. a including have for up was digital. led first X% $XXX which is this our million XXXX, of by pre-COVID we basis driving the over and time. and XXX% exceeded approximately

second Steve the and Our In year. to of Steve the for exceeded over outside XXXX, Dakota-Steve revenue business overall brand fall key and we increased revenue XX% $XXX Madden apparel handbags the from year for our transitioned Madden apparel, In grew successfully BB increased Madden XX% in XX%. for footwear. business XXXX. business co-brand of and accessories XXXX, million expanding apparel driver is our the

and business third growth largest over business in the International our last represents long-term XXXX. our believe key driver forward. growing the going grew we revenue XXXX, XX% is business our we compared fastest-growing been of opportunity Our years, part international has to it international markets. few

revenue, XXX XX% our of represented basis pre-COVID the points total year, international up from XXXX. For approximately

the we gained has is and decade Group a of strategy the the and locations. Steve we leading East, XX.X%. significant joint JV There player distributor in to and transition own Middle We with the also in in had key ownership and the new expect between are the see when strong Apparel from In a traction opportunity to partnership region. distributor a in in end an in in relationship for this growth a the the GCC, We formed regional over that business recent make forward. continue In capitalize brand we've Apparel December, Group. territory, owns order the to year markets. stores years, Madden XX converted going Part with growth XX.X% model venture currently on we our to to model XX international model drive investments XX business we to to of

footwear wholesale is footwear Johnson. wholesale mark, Anne Steve business continuing in the that growth a revenue to our Finally, year-over-year XX% business. Madden, strengthen core driver of brands; In XXXX, Betsey our including increasing the each our over $X four more reached Vita, XX% key largest Klein, remains U.S. of and than fourth business U.S. XXXX, Dolce billion

became our progress pulled to XXXX back strong prioritize customers overall, increasingly a more inventory and back That year began operating environment pull our initiatives. said us, strategic tangible Madden we was wholesale So spending delivered impactfully on the orders performance of each challenging Steve year on progressed. Consumers demonstrated as record and control. key financial discretionary as the to they on as for

quarter year XX% fourth We was in quarter a culminating with went we the was challenging the to up in up lapping also year EPS as face prior diluted increasingly when XXXX. comparisons XXX% revenue were pre-COVID and where the on,

ahead, near As in the we challenges term. persist we look to these expect

proven the That when consumer to faced what to business during orders. and in a track to overall season faced first first market uncertain, a we QX. Our conservative the wholesale a for taken compares challenging have spring outlook tough quarter to similar particularly comparisons the very inventory of difficult chase ability in periods, approach The goods we lean spending navigate our are in conditions and record when is customers half, have in taking to run largely share model, we us market enables said, due economic which and needed. on agile

us our confident that we will out leverage our and core to to Looking which business term. over sustainable our growth enable value and brands, continue initiatives, our strengths, our deliver key the model on drive our progress stakeholders further, for in remain to long can people, we create turn strategic

Now our I'll and and to detail to turn outlook Results Quarter for XXXX. Financial initial provide review our in Fourth more Year Full Zine over it XXXX

Zine Mazouzi

Thanks, in Ed, and good revenue morning, XXXX everyone. a terms earnings. both record of marked year and

$X.X Our consolidated billion, XX.X% was XXXX. XXXX revenue in compared increase to a

increase up an power million. $XXX.X in accessories compared revenue was revenue billion, the XX.X% vendor increase prior including in of wholesale footwear billion, year, revenue wholesale wholesale an to Our to and $X.X XX.X% XX.X% $X.X of to

Operating compared growth in and XX-basis both margin driven million, by a in were compared million the compared increase a to e-commerce $XXX.X XXXX XXXX, to XXXX, businesses. Consolidated Now our brick-and-mortar direct-to-consumer increase in to segment, $XXX.X revenue gross was $XXX.X million XX.X% expenses XXXX. in point X.X% was XXXX.

income expenses or in XXXX. revenue a XXXX revenue or XX.X% last XX% Adjusted $XXX.X $XXX.X of XX.X% million operating to As percentage XXXX XX.X% of year. of were compared in for totaled revenue, compared to million

rate year in was tax to XXXX. XX.X% the for effective XX.X% compared Our

to million Finally, attributable share, net in income highest per the diluted in XXXX. $X.XX Limited history $XXX.X share company's for $X.XX the the to year million or $XXX.X compared or Steve diluted per Madden was

results. quarter fourth the to Turning

was the in to when pre-COVID mentioned, prior XX.X% revenue an quarter up the decrease as revenue the XX.X% I've And in consolidated year. comparison fourth fourth compared faced of was extremely Our XXXX. million, XXXX $XXX.X to to we quarter an difficult

revenue up million, retail XX.X% direct-to-consumer $XXX.X with was in wholesale to wholesale up up driven X.X% We XX.X% Footwear when Our to the six brick-and-mortar year XX.X% was a by concessions compared XX.X% a XXXX international was XXXX. including In brick-and-mortar e-commerce Accessories revenue partially last Apparel e-commerce. wholesale to by modest as when down was was million, from Wholesale million, a increase compared XXXX, $XXX.X decrease and $XX.X ended to revenue XXXX. well websites $XXX footwear XX in XX year business, revenue Wholesale Wholesale offset XXX outlets year markets. prior stores, down and segment, as to company-operated Accessories decrease revenue million, the company-operated in revenue our and XXXX. a Apparel was decline when was revenue XX.X% XX.X% to

Turning to our segment. licensing

quarter Our and million compared income $X.X $X.X last license in the year. to royalty was million

our quarter, a wholesale those model. buying remaining the from label of a to last business model discussed customers cost agent and we've private completed transitioned we wind down As first

rate fourth we such, prior did revenue versus approximately fourth gross to As the gross margin in the not Wholesale XX.X% year. compared quarter generate from $XXX,XXX quarter revenue last the first in to in the gross was million Operating in XX-basis XX.X% last was in call the basis low. closeouts increased to margin in quarter, in year. closeout points segment the Consolidated driven $XXX.X XX.X% expanding XXX was XX.X% last was last of unusually due was million year quarter The compared margin prior compared activity increase year were expenses point Direct-to-consumer a year. the XX% by compared reduction to when year. $XXX.X to expense.

percentage were year. XX% an million million a penetration revenue down higher last totaled operating to DTC. of a income XXXX the or deleverage As quarter X% of for the revenue, reflects compared and $XX.X expense a in in revenue XX.X% quarter lower of of XX.X% base from or expenses on revenue, Operating $XX.X

XX.X% Our effective XX.X% tax quarter for in the XXXX. compared to rate was

XXXX. or Limited Finally, share Madden diluted income $X.XX per quarter $X.XX million share for was compared $XX.X Steve or diluted net million attributable the in $XX.X to to per

the to Moving sheet. balance

remains foundation financial Our strong.

million $XXX.X cash, cash year. debt. As and in million, of $XXX.X Inventory prior we the XX, had investments, million equivalents, no of $XXX.X and from down December XXXX, short-term was

million. Our CapEx in the quarter was $X.X

of share and net $X.XX During stock a to will settlement XX, the million business full XXXX. we company's in Board to through quarter and share acquired on as payable per XXXX, The of returned our the repurchases stockholders respectively, on dividend of March totaled March million, $XXX.X of cash XX, XXXX, The Combining year approved fourth close Directors of be shares of $XX.X shareholders share. the dividend dividend, record including million XXXX. employee quarterly the repurchases awards. and $XXX.X

to Turning outlook. our

diluted We the X.X% range of be $X.XX to we expect to compared $X.XX. to revenue and for XXXX, expect EPS to X% XXXX to in decrease

quarter very QX to we we EPS similar in XXXX, percentage reported at extremely decline those As I the mentioned, QX. faced rate faced to the in for what XXXX. year-over-year of fourth a just similar expect tough Therefore, to quarter we we and comparisons of first revenue

over Now I'd questions. Debbie? for the like turn call the to operator to

Operator

[Operator the question-and-answer begin session now will Instructions]. We

First question Paribas. Tianello Aubrey BNP with is from

Aubrey Tianello

First, wanted revenues and a year color wholesale you DTC revenue embedded provide also for possible, as see for any for to first on in could quarter the what's if guide XXXX well? and if more the possibly the

Ed Rosenfeld

we're looking for full digits to DTC to be So versus for high roughly up wholesale to be the and single for XX% XX% year, down XXXX.

we declines you In in with revenue expect QX. line terms year-over-year of for think should I reported what just

Aubrey Tianello

if particular, different particular the in kind evolved how the quarter kind maybe the color in Any or compared call could the on seeing you that's on the then wholesale to side, terms from in And side, fourth to customer pockets across out you're or and strength sell-through weakness your what provide wholesale maybe of it's of groupings of first any footwear on of board. similar quarter.

Ed Rosenfeld

some are we're pretty trends Obviously, generally consistent seeing speaking, but others than channels. better across

really need our out in particularly I Steve to anything So, our goods to inventory some think is the challenge think there. in. call We too more wholesale don't The we low. in customers think Madden, core the there's they're channel, brands, take levels for us

down inventory about where over ago. are asked they And were sell-through. you Our a year levels considerably

the Good the to So, news out less and customers rate. important at higher with wholesale percentage levels, customers, sales that to much inventory at are level, consumer decline lower. through will Hopefully, our is up is, in are if stock increase sales which selling the goods you the lower than the decline those levels. inventory in most look also the a step means our encourage

Aubrey Tianello

where I of your And to be your when partners have now you And at alluded lead for one follow as that ability could that may at like maybe are in just if where normalized fully on terms then kind to, of chase? and ready those well. Curious you're more. if wholesale as times also,

Ed Rosenfeld

to able times lead to in being to to back and normal, The to pre-COVID is means about. utilize we test close essentially we're back back differentiates really excited to levels, what think to which we're react react, capability, market the model are our something that's being season. Yes, to us, speed and that run able

and looking And chase this doing so, to we're that are we forward year. prepared to

Operator

Next question Capital. Loop Champine from Laura is with

Laura Champine

seen wholesale a business be your from that direct wholesale I sales you get to Have that the but much the pattern year order have for QX pattern historically? full grows? actually is down much why year, if at would weak, like that full down at sales that

Ed Rosenfeld

consumer the seeing pretty happening I wholesale what terms part, disconnect in the of our now what's the ordering. for customers got in board, they happening inventories a our most wholesale from wholesale of -- because Well, than in with categories, and right across wanted inventory line. That's position were customers what's get think we're demand our is big those they more to and pretty much into having all a looking

back felt for obviously, in year in with the the pullback any saw the in been numbers, So being that, that's we've pretty first in you we the to that half We're spring feeling see swing far on starting obviously, customers orders and improvement a they that start how seen A We're seen orders. from in an that their little has of as we've consumer half, year double but pullback can the we're pulled to in hopeful the in Has that of digits exceeded XXXX down, well far. in so going but year. and That's full there demand. back that bit, We start in spring. the dramatically we're consumer wholesale demand? faced back we're QX, terms wholesale. what

Laura Champine

that And DTC DTC of but spread where for historically, is you kind a does but DTC wholesale understand I year, digits. better, up and full the wholesale between seen have double down is where often

Ed Rosenfeld

wide is usually to about back. time. have I'd news can't look The a is things remember. good converge I over This pretty these this divergence.

expect a period. it And for so long sustain don't this like I to

Operator

Sam from Trading. is Williams The with next Poser question

Sam Poser

about year of that less couple way and I first the about one, the Is XX% guidance, data the within good fractionally wholesale, think Number the back within guidance a about would up wholesale what, think assume when the you're and questions. A half? thinking you in to around, half then in it? of

Ed Rosenfeld

numbers ballpark. Yes. in -- the you're Round

Sam Poser

ago, forward all -- of And then have? used and supply you more much you because XX%. support penetration would being about a everything you you DTC change, carrying kind if were with you you but the X as do doing were of of things did inventory, less to fast is Because goods how same run inventory year today XXXX? to the -- how the if just running equal, Is turn really and to need volume what around guys -- prior the at speed carry more slightly you're direct-to-consumer just the of need because you normal, business that is need you now that the -- with weeks to back the than in to to -- inventory

Ed Rosenfeld

turns Yes, fast that's to right. close X times Wholesale as about as DTC.

we've increased to points to is compared basis going the turn. DTC as overall penetration about down slow that this XXX by So pre-COVID,

Sam Poser

reflecting sort you? the are it? that web lastly, then into today? you their the And wholesalers will account with business you improve app Or are of taking taking you're guidance seeing Is what

Ed Rosenfeld

trends go then and after really we're what some would here. identified to wholesale the business, mostly are seeing upside mode want that today. potential really chase be reflects guidance want get we The and into customers chase If to

Operator

Next question with Securities. Tom from Wedbush is Nikic

Tom Nikic

how should should Is about margins guess, this margin for I year? about year we the think there SG&A, and for versus full gross think any QX? for both we way

Ed Rosenfeld

the rates. number get there's remainder the freight increasing most the lower increase little for In puts in gross benefit improvement XX.X% factors, the terms XXX takes of We're that penetration. basis DTC over see a some margin of factor that points. is we of we mix A and we'll in up And from of ocean margin, think the a That's overall. of year. the biggest is about then and targeting number can just around the of but gross nice a of half

the obviously, that operating and guidance going Overall, DTC, change. In at XX, SG&A, terms if sales there. XX, this mix of deleveraged be shift decline towards having we're with margins, there's sort of implies to the and looking you're

Tom Nikic

growth. And follow up versus wholesale could if on the DTC I earlier

high region. in a singles contribute DTC? said XX-ish you seeing the you've said subsidiary? from distributor think single-digit that stores this I that that East Does I the Does of to the in year. Middle the you're growth got high conversion think up to So you DTC contribution for include a

Ed Rosenfeld

well, included It is Yes, There's does. that as there. does. but it comp growth

Operator

The Jay is next UBS. question with from Sole

Mauricio Serna

of business? Serna are guidance there behalf terms wanted DTC we're you And you're in does promotions? are promotions? year, guidance? about baked impact Mauricio you as I is quarter much. will the higher how any the is negative Sole. ask, also about the Or or then that over the so and expansion talking you're Jay of into you margin XXX on basis when a when And that that XQ, This first similar the what down, does decline to the thinking about from Thank that does gross imply thinking expecting be seeing points, include in for DTC how margin gross

Ed Rosenfeld

in be of be DTC of X%. think QX. were should down it terms saw half QX, XXXX. In we back in pretty what down to in QX, the yes, you in similar QX, range should I that X%

In terms at that low back of we've we half in we the built actually unusually can Remember, half. activity in last level promo first still we in have least more But in or promotions, had activity. activity particularly the an promotional less promotional think of the QX. year,

similar pretty So for the overall. year, probably

Operator

question Next Citigroup. Paul from is with Lejuez

Tracy Kogan

on term, any trends year-to-date, first I It's change Tracy business. for question Kogan was your second And seen also growth? what where have partners' opportunities ask like your I year acceleration on is if expecting Middle have wholesale XXXX? did international regions at terms or international the in might for a my you you're wanted East? wondering convert in to what in wondering you the follow-up point-of-sale you this then And biggest And of filling to opportunities longer feel in Paul. the the was you in you've opportunities. in? I so business

Ed Rosenfeld

Yes, it's early. still

We've we're POS the some very of year. items excited terms this that In got for spring. trends about

selling items. flat the to got That some novelty et early we've some pretty cetera. I on selling those doing continue flowers, -- sandals, we've think great better well few well. excited We're feathers, do Loafers We're darn butterflies, sandal some very Some is last years. than had about good. flat early with

the So excited about. But getting in those we've got some that we're just channel, things now we're wholesale reads.

that already want prior was quarter We in because those. few a be to a we're have the later, little and in and this bit not about say our spring this as by But starting read second challenges But goods chase. getting test had would we the the ago years. react weeks as chasing tough of year customers month already wholesale take would those the they back ago, took a early did customers because in and to typically, we reacting One talked our to ability to reads. just see to goods for have been now wholesale now,

-- is items. spring very what good still So sell-through channels direct-to-consumer some our and in the early. But we're in then certainly on read is our early the it overall, seeing

do see that despite we're XX-plus In think we fastest-growing the international, we we're last double not terms momentum that think growth formal over still and pleased can seeing We're year be years. of the digits. talked see with us about to this we double-digit the the I percent headwinds that saw year that's been we what in business Obviously, see grower the really there but the going we remarks, overall, the of for part several can XXXX. business in a still last

last of excited the driver still, that over it's regions, think, years. several we're the region That's of EMEA for I terms In about. us, growth the the been most

businesses to where chug in just see the think there, region, in to that's also and of we that Obviously, next Israel we're We've we we in but opportunity. Europe. that continues And that in some I years, headwinds got the our that East there grow and momentum have we're tremendous the nice we're think excited we smaller et aware of great doing there new year. South some about cetera. the JV And few biggest even we're even macro very going then included that business in again and along region really this momentum talked Middle is Africa, about.

in because our terms publicly least XXXX. In there's on, what those eye we there's direction go. region that may to a of know we convert, for regions in discussions But don't talk not couple that I have potential do a at those about other to ready will smaller more we think what are us one

Operator

from is Group. with question Telsey next The Dana Telsey

Dana Telsey

it about typically first? particular Is you see whatever see it you the to discounters what whether category for between the stores, progress, in would As parsing you department looking who orders wholesale may any it's or first? that and think apart, or be, there channel recover the business improvement as wholesale? year And are places

Ed Rosenfeld

our first peer that look folks when typically e-commerce Those are we play stores, the chase By can for. department customers the get that, It's really recover would we mean to I tier that goods cetera. strong first. selling, the et we players,

are businesses the planned other out further. of Some

If about chase mass don't same in looking we tier distribution. first where really into that you be merchants, way we'll of our chase that hot-selling is the to But instance, tier items. in for think

Dana Telsey

of what one slowed of note difference you increase by e-commerce the of down consumer? to then seemed what's like any bit. view terms a consumer in a health of Anything through saw? It from Was brick-and-mortar the had quarter, fourth there of the region? little And and changes the was just your the health modest the

Ed Rosenfeld

alluded as demand, Look, you ago. consumer as it strong consumer think -- I earlier, as a not the was certainly about to if it's year

been has modest. slowdown seen spending and consumer in our discretionary not pretty our have on But now. categories. That demand issue some that's primary right We slowdown

You've the their related get has customers, own pullback been from wholesale this and really X%-ish. down them line. dramatic in and to inventories to which has running efforts been It's their it's more seen our DTC much

terms In -- of you regions. asked about

COVID. City, in New was comp just function -- York a our mean, comps that's that the of store strongest region has sales, you recover at, you that latest but for for If from us instance, I really look been the

And there so easiest. the comparisons are

other I think much So call that. there to don't out there's really than

Operator

a Sam from follow-up question have I Next, Poser.

Sam Poser

quarter Just business. revenue digital the compared in QX a pre-COVID, quarter was your 'XX? your -- store store the like direct-to-consumer your what to follow tell you versus the In how can up and us on

Ed Rosenfeld

Digital, up Yes. comped have up the in of but than number don't bricks-and-mortar. in XX% I that. can much front tell I you, we dramatically me, it's more

As year, you think number XXX%. know, the the was for I

I I it think was if that's was we that -- up what it was know said. but very don't QX strong, the 'XX. significantly from QX

Sam Poser

a during direct-to-consumer this especially the you stimulus situation there have in is that good a around than prior you was lot did So XXXX. where a everything -- to more been and XXXX e-commerce you've of the bunch when you, that, generated but customers business, able of retain for

that weakening coming significantly weak. can't about I caused consumer myself my Is a don't stronger is fair? momentum with a the I know that specifically of pre-COVID the lot fair havoc different you, but people when retailers than lot XXXX consumer, talking -- wrap XXXX right arguably so around being of you're for overestimated arms XXXX. lot -- wrap and Because over reasons. now a I And a caused around they out conflated is were that of for consumers the of the was many

Ed Rosenfeld

there of were a had pent-up of was money et tremendous consumers comparison consumer We payments, to their good a discounting, -- very lot there stimulus year We the were to pretty had of meant some supply cetera. had demand. of and there due and because so a things about was some year. which prior we pockets in a your chain to prior demand in issues, special softening happening. in And lack lot it comments goods little the out lot was moment point, with My a

than against than DTC stronger So point, that's time. a overall, comparing a bigger point. But we your were bit that it was to a much We're and business softer pre-COVID. pretty special little much

Sam Poser

work sell-through strong. back you wholesale And footwear these of then Most just question, retailers I well orders in as one are going goods. seems our mean overstocked they are other your that are precluding rates in what's for here? the and mentioned going as on. than those the which fill-in the Is what's vendors yourself, big as that on lastly, is previous with overstocked it, be where yourself categories that to and than liquidate other to other to

Ed Rosenfeld

you've summed it Yes, think Yes. up. I

Operator

turn for like concludes to Rosenthal the closing Ed remarks. any session. back This question-and-answer our conference over I to would

Ed Rosenfeld

Great. for and have with on speaking Well, next the look day. call. morning, thanks, us this great everybody, joining a to you We forward

Operator

now Thank concluded. has Conference today's attending you presentation. for

You may now disconnect.

Steven Madden (SHOO) 23 Feb 232022 Q4 Earnings call transcript