SHOO - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to the Steve Madden First Quarter 2024 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Danielle McCoy

morning, good and CD, everyone. Thanks, joining Thank Call quarter Earnings first Webcast. you for and XXXX our

or Before from like your risks subject begin, statements Litigation that results that we Reform I'd actual believe that within follow those remarks that we forward-looking materially statements. implied forward-looking the to including could made the our Act. meaning by cause answers Private be These such to to to questions, expressed of statements to contain differ forward-looking remind Securities you are statements

our These described any risks if call, make issued and we these be include, among next all. disclaim others, at until which we to obligation matters earlier quarterly in that have statements, earnings with filings We not forward-looking release conference our SEC. update the press may today updated

contained results measures financial noted. otherwise comparable reconciliation The on are on other call and basis, associated our GAAP discussed an most unless adjusted are to in directly financial earnings the release. A today's disclosures

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

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

Edward Rosenfeld

first Thank XXXX good you, Danielle, Madden's and everyone, you results. joining right. us review Steve morning, for to All thank and quarter

our the outstanding a to foundation result we got and are XXXX, EPS X quarter growth. with that consumers deeper long-term with of of first increasing is start So off enabling The the with of through our disciplined drivers. XX% thereby business our effective XX% our to product for strategy of direct execution strong XXXX. the our connections key results strategy marketing, in success combination creating These to compared revenue team's rising diluted and same period

EMEA the International ex of EMEA, expanding gains international driver biggest period The our each same strong region in quarter and key grew in our growth. to business compared U.S. first in regions. the X in Our prior Americas of in remains including the the the XX% year, first Revenue APAC. driver markets. is international

there trend We challenging continue the to environment. operating buck growth in and deliver despite the solid Europe

has quickly. have Our driven to ramping is that JV exceptional heat we see market. our Middle in East Africa strong JV and continues explosive brand growth in by South momentum the And

is Famous Our key XX% outside overall business. first business driver and business rose or the In growing apparel of our newly second quarter, footwear. revenue Almost acquired excluding accessories XX% the

Our the year same to Madden the prior be increased Revenue than the period quarter. continues handbag business outstanding. third there for more compared XX% in consecutive Steve to

XX% wholesale this additional a apparel strategy the Steve assortments doors to first We Madden Famous in under apparel within sell-through and is Madden its critical Girl performance initial A by quarter million contributed has acquisition part Girl expanded in Macy's and increasing in Famous with launched Apparel quarter, of and growth, Madden revenue to very the driven our also full and ownership. Almost strong platform key build saw strong. the accounts. introduce utilize our in business. Almost $XX quarter been first

discounting. revenue increase on-trend DTC is meaningfully to top key management including direct-to-consumer of achieved merchandise gross and also as XX% these grew We while combination selling a and business full-price expanding the and and in to us DTC digital results XXXX, gains enabled margin channels. line digital. inventory of effective assortments third reduce percentage led business driver quarter our by first both Our brick-and-mortar expanding compared double-digit

inventory reduced many order in orders XXXX our And was rightsize as significantly under to driver finally, inventory our of This levels. strengthening is wholesale wholesale fourth U.S. too key customers in entered pressure much year largest our business. footwear last business with business core and

have year. overall this Fortunately, much healthier those levels wholesale customers inventory

revenue with compared footwear wholesale able we of were XXXX. growth first year-over-year expected, business to in U.S. to quarter, the to X% as increasing in QX return And the

While mass label our significantly in has business, private is which and remain improved overall, primarily the customers done quarter. for in wholesale channel the branded cautious experienced our products strong growth

these of each us delivered to areas, up to first not which a but from headwind we results performance from also of consolidated quarter enabled XXXX top Famous. margin only overall, line So strong XX.X% of XX% in expand drove operating the tangible across our despite quarter for the inclusion Almost

performance positioned we bottom of first for across initiatives our to ahead, growth XXXX we come. quarter Looking the for seeing that only each sustainable line gives track financial drive to us goals to on continue to but key and top we are meet are success our well strategic are not and our confidence that years

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

Zine Mazouzi

Thanks, Ed, the everyone. our morning, In and a the consolidated quarter to XXXX. revenue quarter, $XXX.X million, compared of XX.X% was good first first increase

revenue compared XX.X% in Famous, same Excluding consolidated the Almost grew to the year. prior period

to the excluding prior million, XX% X.X%, in the strong first or increase first in was $XXX.X the Famous. the the quarter private and XX.X% Wholesale Apparel was Our revenue prior year up driven Accessories Almost a label revenue Wholesale Almost wholesale the revenue XX.X% million, to growth in business. quarter XXXX year million, period Famous. or in by comparable excluding was $XXX.X up Footwear X.X% $XXX.X from

strong comp driver, saw was brick-and-mortar XXXX, revenue to $XXX.X compared X% Madden a grew revenue or segment, revenue Steve Steve a on operated gain. quarter was our basis XX.X% the owned and Madden business direct-to-consumer growth of primary a and XX% Apparel In the million, XX%. store e-commerce Handbag increase and first also Our rose

as and stores, company-operated websites international in markets. including company-operated e-commerce concessions XXX XX We well ended the quarter XX outlets retail with X as brick-and-mortar

licensing segment. our to Turning

the quarter The negatively income by quarter $X.X licensing basis margin of XX.X% compared the to Consolidated in margin period in was XX.X% versus the Almost comparable first in $X.X impacted was of consolidated XXX million in Our royalty XXXX. million inclusion the XXXX. Famous quarter approximately gross points. gross in

the XX% Famous up from Almost mix quarter XXX in activity. basis private the and gross Direct-to-consumer in to reduction the driven driven of to comparable -- XX.X% impact in primarily of quarter compared a wholesale first promotional by was footwear points shift margin XXXX in margin XX.X%, period gross business. was a the Wholesale by the label in XXXX,

as -- $XX.X income first revenue percent the quarter of the XX.X% of of the in expenses period XX.X% the from from XX.X% to quarter was the of up for the of Operating comparable revenue XXXX. for were tax first million XXXX. compared million quarter rate XX% year. in The or in was down XX.X% effective XX.X% Operating XX.X% revenue a $XX prior quarter or in

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

the to Moving balance sheet.

financial remains Our strong. foundation

million XX.X% cash prior excluding of or debt. equivalents of March and to million, Inventory and the year of end $XXX no we XX, investments X.X% $XXX.X Almost short-term the As was XXXX, up the at cash, had Famous. quarter

quarter CapEx the $X in Our million. first was

During through there remaining quarter, first net the million awards. its on employee the settlement the was authorization. of stock, company on share of stock shares million $XX.X acquired repurchases approximately At of common including quarter, the repurchase $XXX the end spent the

of of will of dividend be Board stockholders as to of on per close The approved June record XX, payable $X.XX June cash quarterly a of dividend company's the XXXX. The business share. Directors XXXX, on XX,

Turning to outlook. our

guidance. annual our maintaining are We

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

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

Operator

Instructions] of Lejuez first question Citi. comes And [Operator our from Paul

Paul Lejuez

also than you're was you Curious questions. the start business, talk if of quarter, anything better share there's could her without comp the during DTC expectations what what And the traffic, can you XQ? And couple then drivers planned relative from anything? about about perspective, to seeing? to the the about AUR XQ to your A relative ticket, within if

Edward Rosenfeld

Sure. Yes.

internal a of Street ahead terms us quarters come modeled the differently. that a quarter, think I should point the modestly in bit I had the us out our did was full modeled the from but In line had Street year the forecast. will year, say little little in or for I bit the we different first with of

And than for so was forecast our higher Street's the first quarter. internal

that internal But the We expectations. wholesale expectations. board. across our So slightly even basis. footwear, gross ahead forecast and across and of much wholesale pretty exceeded better of slightly performance It accessories across amount the Street were the was slightly ahead exceeded our while margin were internal own a each each we on DTC revenue we we not by consolidated on had

been been in the about DTC. better. to value. But negative. last still a also growth was softer terms but nice In overall that than it in for DTC, where the but shift. increase was single-digit a drivers but has been the we're been nice looking in year. not little April has expected performance And AUR a we'd month-to-date only still we Conversion look, QX where in track weak. I high the And part and benefit has got we in DTC, be And revenue little thought year. Easter comp so be some for Traffic to the was great, DTC question think in That we traffic bit how of not for has average at we're for overall that transaction UPT the QX, we feel in still what that's on we saw due modeled

to we in So little a -- QX. bit year. slowdown be we did always of -- the had through always would planned balance We that plan it the slightly XX% of

Operator

question of [Operator Sam Poser comes Trading. our Instructions] Williams And from next

Samuel Poser

X what's talked follow-up time And better you other the sort thing. going instead And I and there? good on about business, that, Zine, whatever of how a Ed that? you you all, you to of was wholesale First can have talk you say us XX about everybody those last else. one of the -- XX have still off retailers. on from Anyway, caution Can minutes the on on about and probably I'll very prepared branded than then minute were tell

Edward Rosenfeld

wholesale branded business remains remains a Yes. footwear least challenging. side, on The at bit the

approach see to We continue cautious big from retailers. the pretty a

many some business wholesale the are the in own challenges of the that customers And -- and the largest our we're still As that. in of you -- business. think on impact their I having know, negative feeling branded comping branded footwear

cautious. the been their not I The business pretty about them talking fall -- think there great -- of to fashion is about was them we've talking last initial boot like as Many still it looks sentiment year. plans,

are of conservatively. I planning part that the business think people

we're seeing caution quite overall, last front. certainly on that of a while than bit So still better year,

Samuel Poser

up business footwear the branded that quarter? Was in

Edward Rosenfeld

No, no.

It Sorry, should singles the out. to I was quarter. in low down

Samuel Poser

And to your managed vendor hopefully, I'm program that ask in is a way you write those -- there you between could retailers? a going this, and answer, retailers is difference difference to there a orders

Edward Rosenfeld

in, bringing always we possible with can, and they're like as Look, wholesale we much continue closely that. to everybody about as input we'll customers we as and to have partner with do our what as

Samuel Poser

Did your others? outperform retailers vendor manage the partner

Edward Rosenfeld

about Sam, not not a start you with lot there's to customers. I'm of how individual dealing we're going us. telling

Samuel Poser

should then about including myself, mean, me how And Almost we was like Famous regarding wrong. estimates -- how -- think to it I to looks think the

how again. is that just in base we the quarter. some are not about the us so I mean give flow quarter. that how I either that? again, about how you is, how can How idea think should So off mean about and business of to to way million by think everybody big -- looks we think of $XX

Edward Rosenfeld

Yes.

bounce here going to We'll you're roughly around mid-XX% each I to bit. still bit this throughout the more should heavy see about that kind in think it's do that it they this the quarter, to should quarter. this seasonality the little quarterly but is where revenue a It's quarter. a do than little -- per of there's going not -- going -- forward low be

Zine Mazouzi

to And flow expenses quarter. as pretty Sam by that pretty applies much The well. the similar is

Operator

from Sole next our UBS. And question of Jay comes

Jay Sole

Terrific.

DTC talk strategies added expand you How key the about stores this one stores? that Can of I'm sort are by company digital. aspect would led mentioned to about company's apparel about the plan opportunity, Madden of the some just brand the of maybe how the has into -- that year? a DTC. helpful. you're feeling curious thinking about You of you the is that work there the Steve most to And be stores is in for

Edward Rosenfeld

brick-and-mortar from Sure. significant a stores, QX with we're to Yes. getting out DTC pleased in the Obviously, growth. XX% acceleration X% in did of were an overall we're you asked we far And year. brick-and-mortar we so seeing what have gain Yes, store sales particular, pretty XXXX in this QX. where comp DTC in about

that's and So pleased quite were with healthy, we that.

now, international markets. stores really better getting a we're right ROIC are international do some open almost all driven fact, adding we're the those we're seeing in very Again, also that when this with U.S. And in stores year. are returns primarily We stores from than what in or we the seeing pleased those

today. such. have But the of encouraging. terms most international stores not the seen apparel -- that's set pretty look, are don't have stores, are in apparel, our more rooms and for some of We there to up In that's in and pretty we starting limited success markets, apparel some of early dressing introduce don't

Jay Sole

Got if picture ask it. X opportunity see improve year, the in trajectory on much you If next Almost just think the do about Almost And year to margins just can the about more, how I margins. just over big business? Famous this we Famous today

Edward Rosenfeld

question. Good Yes.

that goal And we the it, think that doubles. opportunity get We're over that recall into starting low to already So had I singles. there the I to high think is to get really, And our acquired margin. a business the some into time when about see improvement EBIT X% was there. an you'll

this if you're apples-to-apples looking at about we're they were to looking So X%. at year, comparing acquisition, to X% we're -- our doing prior the that

basis year. this points already gotten about we've So XXX

mind, more in an I about offsets financials, keep the XXX with say, there's I'd basis a to basis, some amortization intangibles the let's of -- in because And getting like years. there's getting for next, a think we're year we're X% basis path on X associated that still points think points XXX here. to about like that again, Now organic our transaction showing But that. reported

Operator

Janine our from BTIG. next Stichter comes . of question

Janine Hoffman Stichter

So I AUR ask about increases. wanted to the

well price retail You the mentioned you if that How And then cycle, maybe where increases much trends of fashion how kind play the higher business. that items? items was you could price you right on just certain broadly, business? a driver there of just versus comment of being gravitating that how into we more out now feel on your they about took the are consumers are in towards and

Edward Rosenfeld

Yes. Sure.

So that's in of price primarily us on -- the taking terms items. AUR, really it's like-for-like not

things compared on because also we're buying year. products we DTC are then based activity there that's a the this benefit contributing also getting AUR in X mixed people to think to happening. back did bit channels, last are I One, And of promotional a an on year increase. pull

about certainly were and the the the environment, There's trend think we're improved we excited some we're over seeing. year. and some of terms trends where cycle I in it market, of In fashion last the newness pretty

Some would that of for the working very us. slides we're things with are performing are well success call high particularly of out, a call that us got I foot some foot we lot spring We've having platforms, also for beds sandals, what that great. are beds,

success that with think on as the working of some heels, flat are augmentation. lot then of there's we're with is that things and one well going backs kit I with as having fun and Sling on and materials lot seeing and a a we're

mesh. flowers, treatments, buckle Pearls, Rafi, So

a executing can on. we really there. going just on there's capitalize design the team And lot is So that there

about feel good that. So

Janine Hoffman Stichter

more. then When with the And a XX% it you operating year, expense there? for the think percent in sales? what's one Great. just about remind trending of is we just marketing How maybe happening can as us margin

Zine Mazouzi

are invest expenses we globally. both in in Marketing the -- U.S. to marketing, and continue

digits. . that's high single going So up

Operator

Tianello And Aubrey of our Paribas. question next from BNP comes

Aubrey Tianello

what quarters, right just the seeing far on price has take this consumer you to year? to outperforming evolved your how consumer consumer love you're responsive more stores, curious I'd behavior the Last conscious, now. being full-price outlets couple you're Ed, promos, more of get seeing about from talked so

Edward Rosenfeld

Yes, good question.

still is mostly that think there. the the I same story

is when relatively that environment other seen. -- the talk wholesale still not think our relatively key overall of many discretionary goods, ever industry. there don't I've demand out the and for fashion robust It's it's metered most I in players goods consumer So to customers we

we do is sensitive. still customer see a that And price

comps. price in in and terms So again, even again in point saw business outperformed or We've more, QX. full that we about had differential talking we an U.S. roughly been X,XXX significantly of that outlet basis the

Aubrey Tianello

operating in I since then a year, are is had a with historically, little up XX% Got your follow lower normal been than margins I And in full know we've the while XQ it. but guidance? year. just XXXX on think XQ usually I it's margin, could if operating bit line a the

abnormal call there's on if curious this Just phasing how think anything to EBIT about of in out margins just timing terms investments year. or we SG&A should the of

Zine Mazouzi

Yes.

on that in of some of causing recall XX% SG&A versus that's and had you if shift. kind think expenses side, I we we and timing most XXXX of last think year, up QX we're the about

Edward Rosenfeld

just think that the still to right way the full I about that. that, up And is I to follow XX% . think Yes. on think year.

Operator

Tarlowe question And next Corey from of our comes Jefferies.

Corey Tarlowe

just dimensionalize was your commentary the made business then Easter private I how business in in impacted about the shift much the encouraging also And perhaps could if wondering mass. quarter. you label pretty you some

So was you more seeing there. what provide detail you're wondering a I bit about little could if

Edward Rosenfeld

Sure.

the We of back wasn't which for shift, that shift us. a Easter us. of Easter weeks terms move really meaningful friends promotion it couple family a and also part for offset In that did of

mover wasn't the needle So it a quarter. big in

business, about back discretionary customers the earliest of where we're almost done pulling terms in seeing private in all on much what pleased categories that's as the too yes, there. then the mass channel they had Again, previous in label And that channel. about we're pretty calls, identified we've big soonest. talked was And footwear and the the inventory

we've recovery felt first. back business. we And But that in And a bounce the also the feeling there nice we're so pain there seen first.

QX, another QX. strong in XX% we well in that up and label see our private quarter of to in And very footwear is business business about north expect

Corey Tarlowe

follow-up then one to And quick question. great. just an That's earlier

points. increased basis that driving XXX is. as margins you're that? saying I'm have mentioned reasoning the think I in that about curious what What's almost you

Edward Rosenfeld

Yes. form in Most gross of is coming of the that margin.

there's Girl starting Apparel we the we the deal, as obviously do of one that. and Almost are Famous brand pricing to build use to strategies Madden As you of part Madden or get those the was for to and NYC billion-plus -- as rationale Apparel. of -- one margin, big opportunity platform with $X we're where part which the think the see associated power, know, with And to we of doing the that some -- businesses a rationale some

Operator

And our next question comes from of Champine Loop. Laura

Laura Champine

Your weighted if significantly I'm great more given is it's any is to showing or wondering that business based? growth. just growth broad And handbag channel if

Edward Rosenfeld

seeing We're have, really that in. handbags Steve of we channels strength across all the Madden

dividends. that's a a lot So lot for pretty made look, that have last now, something but these talking think several a that we been about. we're number really And on we've is put excited and in of we're that an years the focus we this about really of and area -- And paying over calls years. that's on of just pleased investment this

I proposition us with style think that have in great a all quality And is value customer really with to rivals very that shoes hard handbags worked we responding has it that we build starts the engine trend-right have I price a what consistently creating for and think Madden great Steve in product. really product to. that always product and is and

to so is across channels. success translating And really

X international revenue. up high U.S. And big years growth is is driver a channel on look, DTC. the seeing but business a our the been in is So this growth. a in teens that last we're wholesale annual over compounded growth basis of It's great, also

some This So -- growth just journey. we something necessarily this multiyear didn't here. has is a just been start that's success having not

Laura Champine

handbags you fully in you think had can you're handbags doors for of there at doors Are where you that to points you've new any the where open in retail? are penetrated do same use underpenetrated distribution success really

Edward Rosenfeld

and mean, internationally look, there's I I think tons Well, great we've there. that got momentum of runway

going In direct-to-consumer to we in U.S. So grow by to there's #X the focus But in be we lots growing that is channels. of be but channels the within think and particular. those opportunity our most channels can points we're want in, in the for new there. distribution own of I that our U.S.,

Operator

Dana Advisory And our of Telsey comes Telsey next question from Group.

Dana Telsey

And the channel As in wholesale think retailers, off change it in continuing growth, about that the there to you the are off-price how particular to we returning to had then on strength channel. price the you that? it stores, a Is see be and are would acquisitions beginning you Ed, attractive? beginning? What last looking process. you out do And in for? would there, time had remodel mentioned lastly, see be Where what you any

Edward Rosenfeld

Great. Thanks, Dana.

So comp a remains you're that products in, off-price maybe are of obviously, channels. U.S., at look if the the Certainly, other store yes, in lot remains seeing the there remains, they sales strong. those demand and the for you from the healthiest big at from channel. least what their from of those our in brands our terms very yes, And exceeding retailers,

remind So and I that we where well. seeing definitely channel want growth. are an we that just in also we don't distribution is as get Obviously, that you always overweighted keep area the to make balance sure that

and we're see our yes, pretty York stores all throughout terms In of remodel coming, like for in and City. some locations in to New is progress, to of especially year that the got places be you to in continuing what flagship to going we've excited remodels,

where find keep can can add open, there's to would we'll and terms if that of tell would and of know difference. look, to something going what ears you that's we always But we're That's brand don't I another we we at. we color. what our do. to do that a value, be And add certainly we complementary the acquisitions, exactly make and portfolio, then a eyes look in lot I opportunistic.

Dana Telsey

growth? see you call Is ] it Got XXs accelerated any you with it. type Where Is you And and [ that just follow-up had strength seeing DTC reasons international. there? the wholesale? increasing going then the one increase forward? the particular of you are out Do on it

Edward Rosenfeld

Yes.

strong EMEA. prepared was ex fact big continue Europe being operating businesses the quarter those U.S. So been in as really of has growth growth. growth lot the and the are seeing in Americas biggest there international challenging nice we thing regions, across really we our again, of And about their a grow decline. in we pointed APAC. and out it in -- of a it's over EMEA, balanced remarks, to that first driver But the saw environment despite folks each the was We particular, saw what

We're pretty still plans South lot there. Africa. Middle market. our getting We're about growth a and calling that excited about traction been joint excited growing new venture, have on East there we in We've and of we're the

So it's obviously not a huge market, but it's just -- we're seeing really explosive growth there.

that's a as nice so And contributor well.

wholesale of international U.S. channels, years. the terms the more we the seeing we more both in DTC In DTC coming but in from will to channels come expansion versus in DTC, we're are penetrated relative of growth in and think

Operator

And our of a question, we Trading. Poser have follow-up Williams Sam from next

Samuel Poser

Madden One international, then and two, all my isn't off Steve footwear guess looks of is is at wholesale to private DTC. Just me and business questions. giving to mean label showing margins. your the brand. some away I strength And the everybody's your stuff about follow-ups it the DTC about competition outlet like business given

But on seem of to retailers your side, DTC the wholesale be the relative selling to degree wholesale may the business. to product step up -- unwilling your through

to you penetration get is to up So stepping wholesale DTC, it and How international how the customers the penetration take enough get high with enough to the big appropriately. to high not the is, do offset? offset question going

Edward Rosenfeld

of if pie. to making of back businesses mean important more been each Well, those path on you go pieces we I and bigger considerably XXXX. look, we're -- our a have and to

business. I international XX% XX% around think it's of our our about And was now of business. XX%,

think little If X/X the you business in about look it's the at XXXX, be XX% it higher. or of was business. may I direct-to-consumer And a of now

takes -- and time, more anticipate is to in got over step So of we here. to continue will the increase by penetration we this businesses important do overall become we each to But are time. step go penetration increasing it the and that those

Samuel Poser

to people in some -- I it great bigger take Does had it which a drive brand the mean, it I take is does mean to new past -- more with some you enticing maybe and the stepping doing. just campaign you've success coming overall out does it advertising, and mean, marketing? up really to of

Edward Rosenfeld

the over been years. we increasing significantly look, marketing investment last Well, have the several

go you we year go of and around think X.X% to years, and you've a seen that in and will back indicated number down were revenue after north. we now X% below continue of year, revenue, If of that rise marketing we've handful consistently we're

much or -- whether that we are marketing something What at. brands. whether enhanced to differently entails But in deploy that continually campaigns marketing investing those looking brands splashier in dollars bigger, we our investing for we're and the is committed

Operator

to time. no I'd Rosenfeld back I'm further showing questions at this like turn it closing to remarks. Ed for

Edward Rosenfeld

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

Operator

conference This concludes today's and call. participating, Thank you disconnect. for you may now

Steven Madden (SHOO) 1 May 242024 Q1 Earnings call transcript