Steven Madden, Ltd 10-Q for FY2023 Q3

Steven Madden, Ltd. (SHOO)

10-Q 2023-11-09 For: 2023-09-30

Added on April 04, 2026

About this 10-Q

Steven Madden, Ltd filed this 10-Q on November 9, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $552.73M; down 0.7% from $556.64M a year earlier
Net income: $65.11M; up 5.4% from net income of $61.76M a year earlier
Diluted EPS: $0.87; up 10.1% from $0.79 a year earlier

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Delaware						13-3588231
(State or other jurisdiction of						(I.R.S. Employer Identification No.)
incorporation or organization)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	SHOO	The NASDAQ Stock Market LLC


PART I – FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Income	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Changes in Stockholder' Equity	4

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements - Unaudited	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	32

ITEM 4.	Controls and Procedures	33

PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	34

ITEM 1A.	Risk Factors	34

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

ITEM 5.	Other Information	35

ITEM 6.	Exhibits	36

	Signatures	37


	September 30, 2023		December 31, 2022		September 30, 2022
(in thousands, except par value)	(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	191,804	$	274,713	$	139,194
Short-term investments	14,641		15,085		9,051
Accounts receivable, net of allowances of $4,513, $7,721 and $8,636	58,538		37,937		48,601
Factor accounts receivable	342,871		248,228		341,141
Inventories	205,693		228,752		244,315
Prepaid expenses and other current assets	24,334		22,989		25,531
Income tax receivable and prepaid income taxes	15,702		15,853		9,416

Total current assets	853,583		843,557		817,249

Note receivable – related party	100		401		499
Property and equipment, net	44,920		40,664		36,861
Operating lease right-of-use asset	113,058		90,264		90,407
Deposits and other	10,567		12,070		3,655

Deferred taxes	1,570		1,755		6,945
Goodwill – net	168,612		168,085		167,652
Intangibles – net	99,817		101,192		102,967
Total Assets	$	1,292,227	$	1,257,988	$	1,226,235
LIABILITIES
Current liabilities:
Accounts payable	$	140,623	$	130,542	$	99,173
Accrued expenses	129,754		138,523		119,650

Operating leases – current portion	36,521		29,499		30,234
Income taxes payable	13,519		9,403		19,161
Contingent payment liability	1,153		1,153		440
Accrued incentive compensation	10,190		11,788		11,423
Total current liabilities	331,760		320,908		280,081


Operating leases – long-term portion	91,916		79,128		79,906
Deferred tax liabilities	3,923		3,923		3,378
Other liabilities	10,914		10,166		10,930
Total Liabilities	438,513		414,125		374,295
Commitments, contingencies and other (Note M)
STOCKHOLDERS’ EQUITY
Preferred stock – $0.0001 par value, 5,000 shares authorized; none issued; Series A Junior Participating preferred stock – $0.0001 par value, 60 shares authorized; none issued	—		—		—
Common stock – $0.0001 par value, 245,000 shares authorized,136,430, 134,456 and 134,443 shares issued, 74,610, 76,796 and 77,906 shares outstanding	8		8		8
Additional paid-in capital	579,473		520,441		514,156
Retained earnings	1,659,202		1,571,123		1,555,563
Accumulated other comprehensive loss	(33,428)		(35,709)		(39,887)
Treasury stock – 61,820, 57,660 and 56,537 shares at cost	(1,368,217)		(1,224,310)		(1,187,537)
Total Steven Madden, Ltd. stockholders’ equity	837,038		831,553		842,303
Noncontrolling interest	16,676		12,310		9,637
Total stockholders’ equity	853,714		843,863		851,940
Total Liabilities and Stockholders’ Equity	$	1,292,227	$	1,257,988	$	1,226,235


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Net sales	$	549,846	$	553,120	$	1,454,420	$	1,643,144
Commission and licensing fee income	2,886		3,523		7,448		8,222
Total revenue	552,732		556,643		1,461,868		1,651,366
Cost of sales (exclusive of depreciation and amortization)	320,107		327,167		844,281		976,227
Gross profit	232,625		229,476		617,587		675,139
Operating expenses	149,887		150,724		444,298		433,252


Income from operations	82,738		78,752		173,289		241,887
Interest and other income – net	1,922		1,340		5,898		106
Income before provision for income taxes	84,660		80,092		179,187		241,993
Provision for income taxes	19,552		18,335		42,219		56,728
Net income	65,108		61,757		136,968		185,265
Less: net income attributable to noncontrolling interest	695		460		1,295		995
Net income attributable to Steven Madden, Ltd.	$	64,413	$	61,297	$	135,673	$	184,270


Basic net income per share	$	0.88	$	0.81	$	1.84	$	2.41

Diluted net income per share	$	0.87	$	0.79	$	1.81	$	2.35

Basic weighted average common shares outstanding	72,943		75,598		73,679		76,463
Effect of dilutive securities – options/restricted stock	1,128		1,798		1,238		2,116
Diluted weighted average common shares outstanding	74,071		77,396		74,917		78,579

Cash dividends declared per common share	$	0.21	$	0.21	$	0.63	$	0.63


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
(in thousands)	Pre-tax amounts		Tax expense		After-tax amounts		Pre-tax amounts		Tax expense		After-tax amounts
Net income					$	65,108					$	136,968
Other comprehensive income/(loss):
Foreign currency translation adjustment	$	(3,897)	$	—	(3,897)		$	1,182	$	—	1,182
Loss on cash flow hedging derivatives	2,104		(769)		1,335		1,087		(398)		690

Total other comprehensive income/(loss)	$	(1,793)	$	(769)	(2,562)		$	2,269	$	(398)	1,872

Comprehensive income					62,546						138,840
Less: comprehensive income attributable to noncontrolling interests					577						886
Comprehensive income attributable to Steven Madden, Ltd.					$	61,969					$	137,954

	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
(in thousands)	Pre-tax amounts		Tax benefit		After-tax amounts		Pre-tax amounts		Tax expense		After-tax amounts
Net income					$	61,757					$	185,265
Other comprehensive income/(loss):
Foreign currency translation adjustment	$	(7,712)	$	—	(7,712)		$	(12,145)	$	—	(12,145)
(Loss)/gain on cash flow hedging derivatives	(148)		40		(108)		591		(160)		431

Total other comprehensive loss	$	(7,860)	$	40	(7,820)		$	(11,554)	$	(160)	(11,714)

Comprehensive income					53,937						173,551
Less: comprehensive loss attributable to noncontrolling interests					(202)						(376)
Comprehensive income attributable to Steven Madden, Ltd.					$	54,139					$	173,927


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - June 30, 2023	75,303	$	8	$	533,550	$	1,610,487	$	(30,984)	59,523	$	(1,288,545)	$	17,201	$	841,717
Common stock repurchased and net settlements of restricted stock awards	(920)	—		—		—		—		920	(31,441)		—		(31,441)
Exercise of stock options	214	—		39,992		—		—		1,377	(48,231)		—		(8,239)
Issuance of restricted stock, net of forfeitures	13	—		—		—		—		—	—		—		—

Stock-based compensation	—	—		5,931		—		—		—	—		—		5,931
Foreign currency translation adjustment	—	—		—		—		(3,779)		—	—		(118)		(3,897)
Cash flow hedge (net of tax expense of $769)	—	—		—		—		1,335		—	—		—		1,335
Dividends on common stock ($0.21 per share)	—	—		—		(15,698)		—		—	—		—		(15,698)


Distributions to noncontrolling interests, net	—	—		—		—		—		—	—		(1,102)		(1,102)
Net income	—	—		—		64,413		—		—	—		695		65,108
Balance - September 30, 2023	74,610	8		579,473		1,659,202		(33,428)		61,820	(1,368,217)		16,676		853,714

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - December 31, 2022	76,796	$	8	$	520,441	$	1,571,123	$	(35,709)	57,660	$	(1,224,310)	$	12,310	$	843,863
Common stock repurchased and net settlements of restricted stock awards	(2,781)	—		—		—		—		2,781	(95,591)		—		(95,591)
Exercise of stock options	248	—		40,863		—		—		1,379	(48,316)		—		(7,453)
Issuance of restricted stock, net of forfeitures	347	—		—		—		—		—	—		—		—

Stock-based compensation	—	—		18,169		—		—		—	—		—		18,169
Foreign currency translation adjustment	—	—		—		—		1,591		—	—		(409)		1,182
Cash flow hedge (net of tax expense of $398)	—	—		—		—		690		—	—		—		690
Dividends on common stock ($0.63 per share)	—	—		—		(47,594)		—		—	—		—		(47,594)
Distributions to noncontrolling interests, net	—	—		—		—		—		—	—		(1,102)		(1,102)
Investment of noncontrolling interest	—	—		—		—		—		—	—		4,582		4,582
Net income	—	—		—		135,673		—		—	—		1,295		136,968
Balance - September 30, 2023	74,610	$	8	$	579,473	$	1,659,202	$	(33,428)	61,820	$	(1,368,217)	$	16,676	$	853,714


	September 30, 2023								December 31, 2022
	Fair value		Level 1		Level 2		Level 3		Fair value		Level 1		Level 2		Level 3
Assets:



Forward contracts	1,418		—		1,418		—		916		—		916		—
Total assets	$	1,418	$	—	$	1,418	$	—	$	916	$	—	$	916	$	—
Liabilities:

Forward contracts	839		—		839		—		1,241		—		1,241		—
Total liabilities	$	839	$	—	$	839	$	—	$	1,241	$	—	$	1,241	$	—







	Balance at January 1, 2022		Adjustments(1)	Transfer out of Level 3(2)	Balance at December 31, 2022

Liabilities:
Contingent consideration	$	6,960	(5,807)	(1,153)	$	—


	Classification on the Balance Sheet	September 30, 2023			December 31, 2022
Assets
Noncurrent(1)	Operating lease right-of-use asset	$	113,058		$	90,264

Liabilities
Current	Operating leases – current portion	$	36,521		$	29,499
Noncurrent	Operating leases – long-term portion	91,916			79,128
Total operating lease liabilities		$	128,437		$	108,627

Weighted-average remaining lease term		4.1 years			4.6 years
Weighted-average discount rate		4.9		%	4.4		%


2023 (remaining three months)	$	11,101
2024	40,109
2025	34,281
2026	24,818
2027	15,150
Thereafter	16,704
Total minimum lease payments	142,163
Less: interest	13,726
Total lease liabilities	$	128,437


Common stock authorized			11,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled awards			(6,341)
Common stock available for grant of stock-based awards as of September 30, 2023			4,659


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2023	2,766	$	29.82
Granted	235	30.72
Exercised	(1,627)	25.11
Forfeited	(2)	46.28
Expired	(229)	36.01
Outstanding at September 30, 2023	1,143	$	35.43	3.4 years	$	833
Exercisable at September 30, 2023	893	$	35.99	3.1 years	$	610


	Wholesale						Net Carrying Amount
	Footwear		Accessories/ Apparel		Direct-to-Consumer
Balance at January 1, 2023	$	90,173	$	62,688	$	15,224	$	168,085


Translation	230		—		297		527
Balance at September 30, 2023	$	90,403	$	62,688	$	15,521	$	168,612



	Estimated Lives	Cost Basis		Accumulated Amortization		Impairment & Other(1)		Net Carrying Amount
Trade names	1–10 years	$	18,695	$	(16,075)	$	(2,620)	$	—
Customer relationships	10–20 years	38,680		(26,481)		(1,511)		10,688




		57,375		(42,556)		(4,131)		10,688
Re-acquired right	indefinite	35,200		—		(9,493)		25,707
Trademarks	indefinite	63,283		—		139		63,422
		$	155,858	$	(42,556)	$	(13,485)	$	99,817


For the three months ended,	Wholesale Footwear		Wholesale Accessories/Apparel		Total Wholesale		Direct-to-Consumer		First Cost		Licensing		Corporate (1)		Consolidated
September 30, 2023
Total revenue	$	306,058	$	127,395	$	433,453	$	116,393	$	—	$	2,886	$	—	$	552,732
Gross profit	112,288		43,366		155,654		74,085		—		2,886		—		232,625
Income/(loss) from operations	$	68,291	$	24,164	$	92,455	$	9,741	$	—	$	2,157	$	(21,615)	$	82,738
Capital expenditures	$	1,577	$	39	$	1,616	$	3,520	$	—	$	—	$	970	$	6,106
September 30, 2022
Total revenue	$	330,775	$	103,851	$	434,626	$	118,494	$	1	$	3,522	$	—	$	556,643
Gross profit	124,355		29,054		153,409		72,544		1		3,522		—		229,476
Income/(loss) from operations	$	78,577	$	8,974	$	87,551	$	9,885	$	(60)	$	3,268	$	(21,892)	$	78,752
Capital expenditures	$	146	$	144	$	290	$	2,128	$	—	$	—	$	2,434	$	4,852

For the nine months ended,	Wholesale Footwear		Wholesale Accessories/Apparel		Total Wholesale		Direct-to-Consumer		First Cost		Licensing		Corporate (1)		Consolidated
September 30, 2023
Total revenue	$	823,288	$	286,935	$	1,110,223	$	344,197	$	—	$	7,448	$	—	$	1,461,868
Gross profit	298,856		96,590		395,446		214,693		—		7,448		—		$	617,587
Income/(loss) from operations	$	174,072	$	44,983	$	219,055	$	15,823	$	—	$	5,247	$	(66,836)	$	173,289
Capital expenditures	$	2,271	$	130	$	2,401	$	7,633	$	—	$	—	$	3,865	$	13,899
September 30, 2022
Total revenue	$	968,886	$	311,877	$	1,280,763	$	362,381	$	914	$	7,308	$	—	$	1,651,366
Gross profit	360,296		76,616		436,912		230,005		914		7,308		—		$	675,139
Income/(loss) from operations	$	232,669	$	25,470	$	258,139	$	42,667	$	710	$	5,875	$	(65,504)	$	241,887
Capital expenditures	$	344	$	234	$	578	$	4,268	$	—	$	—	$	5,269	$	10,115


	Payment due by period
Contractual Obligations	Total		Remainder of 2023		2024-2025		2026-2027		2028 and after
Operating lease obligations(1)	$	142,163	$	11,101	$	74,390	$	39,968	$	16,704
Purchase obligations	217,670		152,355		65,260		55		—

Future minimum royalty and advertising payments	18,000		—		12,000		6,000		—
Transition tax	11,721		2,930		8,791		—		—
Total	$	389,554	$	166,386	$	160,441	$	46,023	$	16,704


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
7/1/2023 - 7/31/2023	4	$	32.79	—	$	224,769
8/1/2023 - 8/31/2023	1,927	$	35.01	549	$	205,716
9/1/2023 - 9/30/2023	366	$	33.00	365	$	193,676
Total	2,297	$	34.69	914



†			Filed herewith
*			This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference.



	Estimated Lives	Cost Basis(1)		Accumulated Amortization		Impairment & Other(2)		Net Carrying Amount
Trade names	1–10 years	$	18,695	$	(16,075)	$	(2,620)	$	—
Customer relationships	10–20 years	38,680		(25,059)		(1,574)		12,047




		57,375		(41,134)		(4,194)		12,047
Re-acquired right	indefinite	35,200		—		(9,432)		25,768
Trademarks	indefinite	63,283		—		94		63,377
		$	155,858	$	(41,134)	$	(13,532)	$	101,192


2023 (remaining three months)	$	416
2024	1,664
2025	1,664
2026	1,664
2027	1,438
Thereafter	3,842
Total	$	10,688


	Three Months Ended September 30,
(in thousands, except for number of stores)	2023				2022
CONSOLIDATED:
Net sales	$	549,846	99.5	%	$	553,120	99.4	%
Commission and licensing income	2,886		0.5	%	3,523		0.6	%
Total revenue	552,732		100.0	%	556,643		100.0	%
Cost of sales (exclusive of depreciation and amortization)	320,107		57.9	%	327,167		58.8	%
Gross profit	232,625		42.1	%	229,476		41.2	%
Operating expenses	149,887		27.1	%	150,724		27.1	%


Income from operations	82,738		15.0	%	78,752		14.1	%
Interest and other income – net	1,922		0.3	%	1,340		0.2	%
Income before provision for income taxes	$	84,660	15.3	%	$	80,092	14.4	%
Net income attributable to Steven Madden, Ltd.	$	64,413	11.7	%	$	61,297	11.0	%

BY SEGMENT:
WHOLESALE FOOTWEAR SEGMENT:
Total Revenue	$	306,058	100.0	%	$	330,775	100.0	%
Cost of sales (exclusive of depreciation and amortization)	193,770		63.3	%	206,420		62.4	%
Gross profit	112,288		36.7	%	124,355		37.6	%
Operating expenses	43,997		14.4	%	45,778		13.8	%

Income from operations	$	68,291	22.3	%	$	78,577	23.8	%

WHOLESALE ACCESSORIES/APPAREL SEGMENT:
Total Revenue	$	127,395	100.0	%	$	103,851	100.0	%
Cost of sales (exclusive of depreciation and amortization)	84,029		66.0	%	74,797		72.0	%
Gross profit	43,366		34.0	%	29,054		28.0	%
Operating expenses	19,202		15.1	%	20,080		19.3	%


Income from operations	$	24,164	19.0	%	$	8,974	8.6	%

DIRECT-TO-CONSUMER SEGMENT:
Total Revenue	$	116,393	100.0	%	$	118,494	100.0	%
Cost of sales (exclusive of depreciation and amortization)	42,308		36.3	%	45,950		38.8	%
Gross profit	74,085		63.7	%	72,544		61.2	%
Operating expenses	64,344		55.3	%	62,659		52.9	%


Income from operations	$	9,741	8.4	%	$	9,885	8.3	%
Number of stores	256				222

FIRST COST SEGMENT:
Commission income	$	—	—	%	$	1	100.0	%
Gross profit	—		—	%	1		100.0	%
Operating expenses	—		—	%	61		6,100.0	%
Loss from operations	$	—	—	%	$	(60)	(6,000.0	%)

LICENSING SEGMENT:
Licensing income	$	2,886	100.0	%	$	3,522	100.0	%
Gross profit	2,886		100.0	%	3,522		100.0	%
Operating expenses	729		25.3	%	254		7.2	%
Income from operations	$	2,157	74.7	%	$	3,268	92.8	%

Corporate:
Operating expenses	$	21,615	—	%	$	21,892	—	%
Loss from operations	$	(21,615)	—	%	$	(21,892)	—	%


10.1			Third Amendment to Credit Agreement, dated as of October 23, 2023, among Steven Madden, Ltd., the other loan parties party thereto, the lenders party thereto, and Citizen Bank, N.A., as administrative agent (which includes the marked Credit Agreement as Annex I thereto) (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on October 26, 2023).
10.2			Notification Factoring Rider to the Credit Approved Receivables Purchase Agreement, dated as of October 23, 2023, among Steven Madden, Ltd., Daniel M. Friedman & Associates, Inc., and The CIT Group/Commercial Services, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 26, 2023).
31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 †*
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 †*
101			The following materials from Steven Madden, Ltd.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text*
104			Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL) with applicable taxonomy extension information contained in Exhibit 101*


STEVEN MADDEN, LTD.

/s/ EDWARD R. ROSENFELD
Edward R. Rosenfeld
Chairman and Chief Executive Officer

/s/ ZINE MAZOUZI
Zine Mazouzi
Chief Financial Officer