Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and welcome to the Q1 2023 Steven Madden, Ltd. Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event today's being is note recorded. Please

time, to Danielle this Relations. go I'd Development like over floor Please the turn ahead. McCoy, Investor to and At VP Corporate of

Danielle McCoy

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

that cause the those answers I'd issued release among believe described including forward-looking to such of statements the your SEC. These risks we be could that materially have begin, actual differ that with the press include, remarks statements to expressed forward-looking earlier subject results from today meaning Litigation risks are others, These to to we forward-looking statements like Before our by questions matters and Reform Private you that or contain remind our filings follow to implied in we Act. Securities make that statements. we within

disclaim are We into A forward-looking reconciliation which on call noted. associated are all. updated may basis and most to unless our be at on if today's release. The not earnings quarterly call, otherwise these any financial disclosures an comparable to measure obligation in adjusted GAAP conference discussed other directly results financial next contained statements our update the earnings

Ed Joining Officer. Zine Chief Mazouzi, me Rosenfeld, Chief call today on Executive the is Financial and Chairman Officer; and

I'll that, turn With the call Ed? over Ed. to

Edward Rosenfeld

for to review us thank Steven joining and quarter Danielle, you everyone, first XXXX morning, Thanks, results. and good Madden's

revenue the were tough quarter spending, we EPS a in as they prior were last year, up the and consumers pre-COVID choppy patterns as call, prioritizing inventory the on we XX% environment a up on customers talked lapping XXXX. including we back with to extremely the quarter, wholesale retail XXX% were was was diluted you to control, comparisons our and from pulling where order earnings spoke we discretionary first challenging about When setup faced conservative as

earnings ahead In light deliver of QX backdrop, and to we of pleased revenue slightly difficult the expectations. were

while industry including in levels, operating a demonstrating inventory performance our driving model despite strong landscape, gross reduced benefits promotional environments. significantly our inventory turns retail leading business also We the our margin challenging of

on talented test-and-react As we move our led capability, into Most forward, strategic design by combines initiatives. quickly. our remain products we and market leaning model, to teams proven we speed which to and Steve, importantly, them are trend-right strategy executing create bring market to our focused

run This economic lean placing of needed, customers about chase enables on in and wholesale upfront. cautious when to uncertainty, goods agile us season critical inventory model are advantage in and a when orders significant periods

brands with key investment, our with drive remain in and closer initiatives globe. marketing These long-term of enablers foundational relevance drivers. increased business our to four across support to products and continue the targeted our also the order connections We our and consumers, brand

like outside footwear handbags our in by apparel, direct-to-consumer strengthening markets expanding U.S. in digital led categories of international Driving and footwear and business. core growing our business wholesale

first quarter our business very revenue the the pre-COVID quarter wholesale in we shipping, by largest of wholesale, of under conservative spring our with combination to turning in tough pressure due versus customers So, performance year. XX% prior the our was to from and had wholesale with revenue initial comparisons orders XXXX, XXXX. up QX. ever In In

year's this XX%. first wholesale revenue quarter performance, record that declined Against

which number did our ahead the from of on pull in quarter come of trends us side, the wholesale On second for QX. for revenue positive we a enabled key orders and expectations see March, items wholesale forward to customers into

a revenue in X% so in similar reported with the other quarter, what's in came was been we Our have far and latter below seen by the we in direct-to-consumer trends down sales in of in for business DTC quarter. March. on the the saw the Consistent QX, industry, particularly hand, others decelerate decline. year-over-year expectations QX, part

international business consolidated spot consecutive revenue our DTC, for for in revenue XX% QX. of quarter. accounted the the both was and over increased quarter, XX% Across International a and third in bright wholesale

we to expect ahead, the Looking operating environment the near-term. remain in turbulent

by That and track And share economic that remain core taking our difficult long-term. looking value and our of conditions, and said, strengths, people, executing and out ever further, a brands a our ability during challenging proven over market on record growth confident to create we navigate we we can significant as the as business periods. have our strategy, leveraging for model drive stakeholders

our over quarter provide it and results review financial And more outlook to Zine, now, our for I detail in first will turn to XXXX.

Zine Mazouzi

Thanks Ed, everyone. good and morning,

XX. decrease first was million, quarter XXXX. to Our $XXX.X X% consolidated the compared in a revenue

Wholesale was business to from branded declined continue primarily XX.X% revenue million, million, XX%, our is $XXX.X was wholesale which Our footwear compared customers in categories. as an label to down decreased label, work in private XXXX. the while our XX%, channel, The year. level $XXX.X revenue decrease the inventory reduce large mass prior overall done private XX.X% to

million, down in markets. XX%. last to year. a declined growth year-over-year $XX.X The Madden international was was business branded revenue a handbags spot, bright with driven Steve apparel and strong by XX% accessories modest Wholesale increase

significantly As decreasing in was label softer, XX%. footwear, private

an five brick XX segment, experienced XXXX. stores, international to operated including in and our with quarter e-commerce and We mortar well mortar in decrease In direct-to-consumer Company websites the outlets, markets. declines channels. revenue was and ended X.X% $XX.X as both XX concessions XXX as brick We e-commerce million, compared and retail

last licensing the our our in compared licensing million $X.X to quarter, royalty income was segment, year. million to Turning $X.X

quarter, approximately as First Cost operates the longer and under we In no segment. As no segment. we Company model the in previously, under agency the generated the year's First $XXX,XXX in Cost longer buying reports a revenue result discussed last first

XXX activity. driven was accessories in improvement gross margin gross XX.X% points compared last year. margin XX.X% in XX%, and year, XXX points a year, increase wholesale expanding margin increase Direct-to-consumer basis a to XX.X% from by Wholesale was basis was to apparel. the quarter, the compared last gross driven strong Consolidated in prior by an promotional

in $XXX.X year. XX.X% million or XX.X% million were of quarter the revenue of prior $XXX.X first to the in expenses compared Operating revenue or

year-over-year comparisons control cost balance expect moderate $XX.X growth or of result initiatives. roughly for or for the Operating $XX.X year to down income we to totaled with ahead, of operating year. million X% of XX.X% combined million the expense the XX.X% revenue, revenue a quarter as of last Looking from easing

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

Finally, attributable $X.XX share net income XXXX. million, for to million diluted diluted from down or Ltd. per $XX.X per Steven was quarter in $XX.X Madden, share, or $X.XX the

balance the to Moving sheet.

Our remains very financial foundation strong.

$XXX.X $XXX.X had March XX.X% of XX, Inventory short-term we and and at decline. to cash, of last year, no ended As XXXX, investments a compared equivalents cash million million $XXX.X debt. million

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

repurchased in Company's shares includes acquired XXXX employees’ of the approved net payable million. dividend $XXX the XX, the on stock, The June increase June common also we quarter, record bringing the will the repurchase XXXX. stock share. of awards. stockholders total Board The on million share which authorization as approved of Company's through During the million Directors $XX.X Board a $XXX.X XX, to per an of settlement business of close be cash of $X.XX quarterly of to dividend of The

to guidance. reiterating Turning our and share earnings per revenue we are our outlook,

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

QX. shift previous with in from overall, outlook of half QX the and to wholesale is into earnings QX of pull-forward expectations revenue orders our in-line While first a our resulted

modestly QX we to As revenue EPS expect such, QX below amounts. be and

would call the questions. I Now, for operator turn Jamie? to like the to over

Operator

Ladies question-and-answer begin [Operator and the Instructions]. now gentlemen, we’ll session.

first question. Our BNP Tianello Paribas. from Aubrey ahead with question today your comes from Please go

Aubrey Tianello

Thanks for the questions. taking morning. Good

Edward Rosenfeld

Morning.

Aubrey Tianello

is the there revenue what's start overall to wanted Appreciate DTC you for guidance on for XXXX? change I any that to the reiterated Morning. within for But embedded that, wholesaling XXXX. revenue guidance.

Edward Rosenfeld

and wholesale a kept and bit. consolidated we're that's little have expectation DTC the up how the a Yes, the taken the expectation little guidance we now But looking wholesale down-low-doubles. taken we've be bit, to same. And DTC, down up-low-to-mid-singles we've

Aubrey Tianello

that kind And then of Okay, was that? back earliest got your pull-forward could quantifying mentioned you'd in go XQ chase color the size comments the I just think separately, terms the more Thank any on going mode. can in to potentially previously in of And it. wholesale provide you into XQ, of just back you then you.

far any all quarter? if you're out this curious Just play so seeing of at that in

Edward Rosenfeld

the more to QX, maybe orders QX from it QX. into even mean wholesale bit QX forward so was million $XX of or a pull-forward little I approximately Yes. the from that -- we pulled

of that business, In the to we're seeing the terms like we'd not materialize -- that still would chase that see. we to levels

forward Here a retailers particularly of we've there, orders or selling and to and some in really America the But some those And amongst wholesale to conservatism channel, we degree move dynamics still either on overall, challenging. caution jump very continue remained in reorders. strong and North retailers. the items see high react seen

Aubrey Tianello

that is on in follow-up into last one guess you I how you incremental? quantify just take guess I I then could all? or of And kind embedded you or sense. can guidance can at makes how -- like is That that mean, much Do any chase you if guess, point. that I guidance --

Edward Rosenfeld

every -- we and reorder our of business. based strength goes That's of for products, in down the and a in some our chase our obviously selling It of there. and Well, it's have the year. always assumption on part our business up but always environment

based potential customers on with dynamics up, today. would in start we upside. start in-line now. improve say those it's seeing that and I what it we're we step wholesale looks forecast right If see But, to So, that's it there what to like to

Aubrey Tianello

Thank Perfect. you.

Edward Rosenfeld

Thanks.

Operator

our with go question. question your Lejuez And from ahead Paul Citi. next comes Please from

Unidentified Analyst

on This taking is for question. Kelly for Hi. our Paul. Thanks

on happening last over placed you've of to with the seeing. couple last think terms wholesale sell-through Just strong been the dynamics the the were the orders I of lack channel, question frustrated pretty follow-up you that despite of in the in quarters,

wholesale did sell-through can color with -- to you if start provide expectations see curious any there. just you I'll or your that. exceed So, rates

Edward Rosenfeld

Yes.

stock with retail are remains that the through. is have goods selling on that just the what of the too of think, don't We we're percentage sell-through low our floor We're and But sales the are percentage or enough therefore low. retailers. these the pleased I is too levels fine. consumer for goods the our

get what corrected in to and that's the the more with store, back And so get business we levels so consumer. we're up inventory do those can attempting

Unidentified Analyst

out DTC how trends Got through it. the And I'm quarter. then just on the business, played curious

you you I some that saw deceleration. mentioned think

proceed kind you through trends? think curious and to role would you to just first weather you So, to trends what sort to there sort the guiding Any quarter as as are Do play be think as of you -- you great. here? the XQ, start of look color got drove expect of I deceleration through you similar in a

Edward Rosenfeld

weakest the board. the across quarter saw And it's Yes. that's I the mean, month been what I that pretty for reported pretty much March certainly categories widely we come think to of was us cooperative. saw pretty below for as a sure quarter in I'm in down not We March, caused overall. step the was weather well. for our significant expectation which DTC discretionary

there's may weather think to be a to case good but that that of overall layered some I I be consumer played think softening, also on well. part So, that's as made a there that,

but for compared because Keep -- March, for this forward, remember to hopeful that soft. is quarter quarter better to or only we move June. mind for the our to-date, in if that easier we're the full April do starting said did comparisons in the DTC quarter get that's were get going that in substantially as eight QX. we the I'm overall where in the down to-date, in-line we've improved We we with still

levels, in points pre-COVID look versus you somewhere neighborhood basis our about around X,XXX in got June. starting DTC at If we year the easier comparisons, of last

Unidentified Analyst

seeing last Got of about of on the quarter. you fashion terms update speaking it. in to question spoke piece think what I you more for me. fashion, were the business, optimistically fashion just trends were Any the when just we you And last

there. just any So, update Thanks. curious

Edward Rosenfeld

Yes.

very In interest this been I think material would terms callout the make been I spring, important. of big is what's working has

there's things important and Denim, Metal Pearls, Raffia, has Gold for like been us. So

that So across has a lot of worked stuff category.

we and season. where for -- and talked would category. we've area That number things category and been, foot think We've an that about, for industry for I beds being relative call talked tough in I a of overall the areas a think while had is a sandals, sandals of been of and about thing the of cooperative excuse weather outperformer. other lot success couple stretch flat particularly much relatively sandals I not out, we that's a The me, I would with

has biggest So, about. been that's the feel is AUR ones. that have challenge something it items one good The we there been lower

unit So, that us in terms mixed the has down of retail. average

closed a is The up casuals, really toes, other spring bigger this and penetration loafers, category cap that spring etcetera. last or is has higher

Unidentified Analyst

you. Thank it. Got

Edward Rosenfeld

Kelly. Thanks,

Operator

comes question Jay Sole question. ahead next from from go with Our your UBS. Please

Jay Sole

Zine, QX How stats question us gross Thank little Zine. think SG&A two Great. in a those feel margin you much. below mentioned Can you bit would so levels. and you QX? be an about versus you for EPS QX give sales that in I Thank QX idea My about is you. dollars?

Zine Mazouzi

Yes.

to that benefits an the margin, reinvestment see will against that. still that total. price from some gross comes into promos always if retail also and mix freight offset of doing, of improvement For and the had we the that expect offset we're that that there's in gross additional from remember as well we margin But mentioned we the

than second to year. So, bit we part little should growth, what sorry. your if I'm expect QX compared better of question? not similar maybe the was a last And,

Jay Sole

Operating expense, just the dollars --

Zine Mazouzi

Yes.

bit actually, base compare was of light between expenses last there unusually QX quarters but against, where timing little funky year. of lot a expenses, the QX On low was operating a was to

As LY, what of to QX. seen be we in neighborhood X% to somewhere the compared expect forward, in we move we've over

of we're all are see in certain domestic So, COVID everywhere looking even some around every we're fat, and all lot we're not carrying applies we should moderate. can controlling But eliminations ton back of times. segments, and to businesses, that areas, expense a very We that we we And significant a targeted we do definitely We're do international. a the it and job did or cut expenses sure belt. doing making have controlled. tightening single as -- at

Jay Sole

much. Okay, Thank so you got it.

Operator

from Tom ahead from Please with comes go Nikic Wedbush. question question. next your Our

Tom Nikic

how wholesale would normalize that big there Is there. any the benefit difference was or Thanks guys. wholesale kind I on trended contextualize for of gross in private pretty could the have the my big solid, kind like business was but gross absent label in there quarter? margin assume taking branded a question. in would way Hey, that you and declines the margin of the based business label The mix the between that business, private

Edward Rosenfeld

driver label what could the side. there wholesale the biggest with But the was factories and you to that and branded, I from you will not particularly a on get from tell is benefit a better private is to freight, -- after the accessories Yes, mix shift that number call. pricing driver, bigger is we the actually

Tom Nikic

about been impact on that you they But, meaningful there, would there that Middle have call Thanks, the Ed. a XX DTC it quarter. a a the contributor which DTC was of so, like stores also bringing DTC was from in And follow-up think I it. like-for-like Got growth conversion? East if franchise about year-over-year? on to last DTC was like-to-like, quick in-house, business, to this the And kind had talked meant what

Edward Rosenfeld

Yes. That contributed basis about XXX points.

XX%. QX, Middle in would So, the we you X% excluded we were down been East have down if conversion

Tom Nikic

year. Got of it. Thanks, the Ed rest for and best the of luck

Edward Rosenfeld

you. Thank

Operator

your Our next from go question Capital. from comes with Champine ahead Please Laura question. Loop

Laura Champine

question. my Thanks for taking

of year dynamics some overall far on is the knowing kind but are pair where that so been terms this far price where in last price per of QX, business, year shifting you've can all the pricing net-out just given versus QX? increases, the back, of in do so taking comment in we Just you promotions

Edward Rosenfeld

meaningful to always QX. answer and got instance DTC them AUR the business, the particularly if all at honestly we a in be so because It's businesses because you We're know looking like mid at Madden I don't singles always mix. together U.S. in we've gives answer to many down for expect But only look hard that our -- in Steve that about putting question, different it's

Laura Champine

now? if also what's Is the that sort overall, look And mix of it. down? at Got right pattern we

Edward Rosenfeld

that up mean down I not business private the mixes us brand sure more I'm label than But a is and the because actually company. Well, back for total -- the

Laura Champine

it. Got it. Got

Edward Rosenfeld

is that But, answer. the

Laura Champine

mix? Yes. say to sales experiencing Does sense right price are than by that that now more by it pairs you're driven make declines the

Edward Rosenfeld

yes. company, at looking the you're If overall

Laura Champine

it. Got

Edward Rosenfeld

but I think Yes, so. line, don't by business no,

Laura Champine

Got it.

Okay.

Edward Rosenfeld

individual a if that's of But label, you're about pressure looking decline because If the you're driver the the private big businesses, of is within significant. total AUR units. the again, in at company, asking

Laura Champine

Understood. Got Thank you. it.

Edward Rosenfeld

Thank you.

Operator

[Operator Instructions].

Our comes your question. from from Please next Telsey ahead Group. go Telsey Advisory Dana question with

Dana Telsey

the Good in or first the quarter beneficial are third and they're shifts into a meaningful wholesale for morning, everyone. business do do additional Ed, And you? occurring point what you. fourth as quarter, quarter you quarter see shifts Thank manner at second begins you resume expect about that's the think to in more with from way the that ordering? chase you

Edward Rosenfeld

QX, Dana. and forward, still don't I half. to a shifts don't about going the we have because obviously back meaningful at see Thanks, know Yes, something QX monitor lot any that's this but we'll between there's point,

of to In the the knew chase that. business, I terms I wish answer

can I and ultimately think the which focus having is through we're to into getting doing having we it how what because to -- sell of encourage to there's great that's we direction right control, products, and headlines can more controlling There's quickly consumer, the the economy the trying aggressive. negative on the market it uncertainty the step up of wholesale now. a get lot in obviously of lot But and and our customers market about consumer. a

that now. are wholesale we pretty conservative dealing right so, customers And with are

Dana Telsey

channel Got wholesale channel? own your e-commerce versus of level And own you then both promotion what about the stores, just are seeing it. of promotion DTC, the in and your level in on that the

Edward Rosenfeld

is much had were promotion. pretty first Well, the levels obviously half more the we year, of when overall the unusually, last it when in than we promotional landscape promotional, retail was light unusually

segment and activity certain much much of our does it direct-to-consumer now. be more to controlled but where seeing by driven we seem price-sensitive promotional right are sense. that makes more participating well in population our pretty keeping it we're channels, a think we I are own And consumer

while appropriate trying that through we sure we're keep balance, making the the so, to product. still get And

Dana Telsey

Thank you.

Edward Rosenfeld

Thanks Dana.

Operator

and Rosenfeld remarks. over ladies any concluding I'd Ed with closing session. to be back like gentlemen for turn that, And floor question-and-answer we'll today's to, the

Edward Rosenfeld

Great. Well, the for a call. on wonderful call. day. to with everybody Bye-bye. Have next thanks joining look We for speaking us you forward today's

Operator

call today's And ladies and for conclude presentation. gentlemen, conference and thank with will that We you joining.

your You may now line. disconnect

Steven Madden (SHOO) 9 May 232023 Q1 Earnings call transcript