Steven Madden, Ltd 10-Q for FY2020 Q3

Steven Madden, Ltd. (SHOO)

10-Q 2020-11-06 For: 2020-09-30

Added on April 04, 2026

About this 10-Q

Steven Madden, Ltd filed this 10-Q on November 6, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $346.87M; down 30.9% from $502.11M a year earlier
Net loss: $6.95M; compared with net income of $52.46M a year earlier
Diluted EPS: -$0.09; compared with $0.63 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 $.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 (Loss)/Income	2

	Condensed Consolidated Statements of Comprehensive (Loss)/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	26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35

ITEM 4.	Controls and Procedures	35

PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	36

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

ITEM 6.	Exhibits	37

	Signatures	38


	September 30, 2020		December 31, 2019		September 30, 2019
	(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	223,820	$	264,101	$	167,492
Accounts receivable, net of allowances of $10,214, $11,066 and $12,706	33,526		38,166		37,781
Factor accounts receivable	232,876		216,471		297,722
Inventories	109,683		136,896		148,053
Short-term investments	33,332		40,521		27,452
Prepaid expenses and other current assets	13,477		22,066		28,586
Prepaid taxes	1,120		658		—

Total current assets	647,834		718,879		707,086

Note receivable – related party	1,274		1,558		1,650
Property and equipment, net	43,130		65,504		60,662
Operating lease right-of-use asset	111,732		155,700		162,385
Deposits and other	2,660		2,948		2,695

Deferred taxes	14,686		—		13,646
Goodwill – net	166,794		171,349		171,412
Intangibles – net	116,300		162,709		162,929
Total Assets	$	1,104,410	$	1,278,647	$	1,282,465
LIABILITIES
Current liabilities:
Accounts payable	$	65,666	$	61,706	$	90,278
Accrued expenses	112,579		169,895		112,385

Operating leases - current portion	36,212		38,624		38,068

Income taxes payable	—		—		952

Accrued incentive compensation	3,615		11,046		11,019
Total current liabilities	218,072		281,271		252,702
Contingent payment liability	1,420		9,124		9,770

Operating leases - long-term portion	107,973		133,172		139,704
Deferred taxes	3,054		5,877		17,117
Other liabilities	6,151		7,979		12,936
Total Liabilities	336,670		437,423		432,229
Commitments, contingencies and other (Note Q)
STOCKHOLDERS’ EQUITY
Preferred stock – $.0001 par value, 5,000 shares authorized; none issued; Series A Junior Participating preferred stock – $.0001 par value, 60 shares authorized; none issued	—		—		—
Common stock – $.0001 par value, 245,000 shares authorized, 133,173, 132,754 and 132,685 shares issued, 83,030, 83,520 and 84,040 shares outstanding	6		6		6
Additional paid-in capital	472,116		454,217		445,077
Retained earnings	1,256,959		1,310,406		1,305,276
Accumulated other comprehensive loss	(37,477)		(30,440)		(31,196)
Treasury stock – 50,143, 49,234 and 48,645 shares at cost	(935,484)		(905,688)		(880,425)
Total Steven Madden, Ltd. stockholders’ equity	756,120		828,501		838,738
Noncontrolling interest	11,620		12,723		11,498
Total stockholders’ equity	767,740		841,224		850,236
Total Liabilities and Stockholders’ Equity	$	1,104,410	$	1,278,647	$	1,282,465


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales	$	342,830	$	497,308	$	839,877	$	1,353,222
Commission and licensing fee income	4,037		4,806		8,970		14,309
Total revenue	346,867		502,114		848,847		1,367,531
Cost of sales	206,990		306,277		519,618		839,849
Gross profit	139,877		195,837		329,229		527,682
Operating expenses	109,865		127,796		339,649		366,298
Impairment of intangibles	33,010		—		42,528		4,050
(Loss)/income from operations	(2,998)		68,041		(52,948)		157,334
Interest and other income – net	88		961		1,491		3,415
(Loss)/income before provision for income taxes	(2,910)		69,002		(51,457)		160,749
Provision/(benefit) for income taxes (Note M)	4,236		15,886		(9,366)		36,257
Net (loss)/income	(7,146)		53,116		(42,091)		124,492
Less: net (loss)/income attributable to noncontrolling interest	(195)		653		(1,103)		932
Net (loss)/income attributable to Steven Madden, Ltd.	$	(6,951)	$	52,463	$	(40,988)	$	123,560


Basic net (loss)/income per share	$	(0.09)	$	0.66	$	(0.52)	$	1.55

Diluted net (loss)/income per share	$	(0.09)	$	0.63	$	(0.52)	$	1.48

Basic weighted average common shares outstanding	78,560		79,092		78,650		79,854
Effect of dilutive securities – options/restricted stock	—		4,014		—		3,886
Diluted weighted average common shares outstanding	78,560		83,106		78,650		83,740

Cash dividends declared per common share	$	—	$	0.14	$	0.15	$	0.42


	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	Pre-tax amounts		Tax benefit		After-tax amounts		Pre-tax amounts		Tax (expense)		After-tax amounts
Net (loss)					$	(7,146)					$	(42,091)
Other comprehensive income/(loss):
Foreign currency translation adjustment	$	2,630	$	—	2,630		$	(7,250)	$	—	(7,250)
(Loss)/gain on cash flow hedging derivatives	(674)		196		(478)		205		(53)		152

Total other comprehensive income/(loss)	$	1,956	$	196	2,152		$	(7,045)	$	(53)	(7,098)

Comprehensive (loss)					(4,994)						(49,189)
Less: comprehensive (loss) attributable to noncontrolling interests					(416)						(1,164)
Comprehensive (loss) attributable to Steven Madden, Ltd.					$	(4,578)					$	(48,025)

	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
	Pre-tax amounts		Tax (expense)		After-tax amounts		Pre-tax amounts		Tax benefit		After-tax amounts
Net income					$	53,116					$	124,492
Other comprehensive (loss)/income:
Foreign currency translation adjustment	$	(1,789)	$	—	(1,789)		$	1,828	$	—	1,828
Gain/(loss) on cash flow hedging derivatives	314		(75)		239		(501)		120		(381)
Unrealized gain on marketable securities	21		—		21		88		—		88
Total other comprehensive (loss)/income	$	(1,454)	$	(75)	(1,529)		$	1,415	$	120	1,535

Comprehensive income					51,587						126,027
Less: comprehensive income attributable to noncontrolling interests					871						1,035
Comprehensive income attributable to Steven Madden, Ltd.					$	50,716					$	124,992


	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, 2020	83,035	$	6	$	466,384	$	1,263,910	$	(39,850)	50,138	$	(935,366)	$	12,036	$	767,120
Share repurchases	(5)	—		—		—		—		5	(118)		—		(118)



Stock-based compensation	—	—		5,732		—		—		—	—		—		5,732
Foreign currency translation adjustment	—	—		—		—		2,851		—	—		(221)		2,630

Cash flow hedge (net of tax benefit of $196)	—	—		—		—		(478)		—	—		—		(478)




Net (loss)	—	—		—		(6,951)		—		—	—		(195)		(7,146)
Balance - September 30, 2020	83,030	$	6	$	472,116	$	1,256,959	$	(37,477)	50,143	$	(935,484)	$	11,620	$	767,740

	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, 2019	83,520	$	6	$	454,217	$	1,310,406	$	(30,440)	49,234	$	(905,688)	$	12,723	$	841,224
Share repurchases	(909)	—		—		—		—		909	(29,796)		—		(29,796)
Exercise of stock options	52	—		960		—		—		—	—		—		960

Issuance of restricted stock, net of forfeitures	367	—		—		—		—		—	—		—		—
Stock-based compensation	—	—		16,939		—		—		—	—		—		16,939
Foreign currency translation adjustment	—	—		—		—		(7,189)		—	—		(61)		(7,250)

Cash flow hedge (net of tax expense of $53)	—	—		—		—		152		—	—		—		152
Dividends on common stock ($0.15 per share)	—	—		—		(12,459)		—		—	—		—		(12,459)

Investment of noncontrolling interest	—	—		—		—		—		—	—		359		359
Acquisition adjustment of noncontrolling interest	—	—		—		—		—		—	—		(298)		(298)
Net (loss)	—	—		—		(40,988)		—		—	—		(1,103)		(42,091)
Balance - September 30, 2020	83,030	$	6	$	472,116	$	1,256,959	$	(37,477)	50,143	$	(935,484)	$	11,620	$	767,740


Cash	$	290
Accounts receivable	41
Inventory	1,387
Prepaid and other assets	6,447
Fixed assets	200
Trademark (1)	13,086
Customer relationships (2)	1,140
Accounts payable	(1,963)
Accrued expenses	(1,055)
Deferred tax liabilities long-term	(3,463)
Noncontrolling interest	(1,611)
Total fair value of assets acquired	$	14,499



(1) Trademark is indefinitely lived.
(2) Customer relationships will be amortized over 20 years.


Cash	$	353
Accounts receivable	4,419
Inventory	6,696
Prepaid and other assets	855
Fixed assets	382
Trademark (1)	9,670
Customer relationships (2)	2,530
Accounts payable	(2,885)
Accrued expenses	(2,893)
Deferred tax liabilities long-term	(2,735)
Total fair value excluding goodwill	16,392
Goodwill	13,365
Net assets acquired	$	29,757

(1) Trademark is indefinitely lived.
(2) Customer relationships will be amortized over 10 years.


	Maturities as of September 30, 2020				Maturities as of December 31, 2019
	1 Year or Less		1 to 4 Years		1 Year or Less		1 to 4 Years

Certificates of deposit	$	33,332	$	—	$	40,521	$	—
Total	$	33,332	$	—	$	40,521	$	—


			September 30, 2020
			Fair Value Measurements
	Fair value		Level 1		Level 2		Level 3






Liabilities:
Contingent consideration	$	1,420	$	—	$	—	$	1,420
Forward contracts	268		—		268		—
Total liabilities	$	1,688	$	—	$	268	$	1,420


			December 31, 2019
			Fair Value Measurements
	Fair value		Level 1		Level 2		Level 3



Liabilities:
Contingent consideration	$	9,124	$	—	$	—	$	9,124
Forward contracts	495		—		495		—
Total liabilities	$	9,619	$	—	$	495	$	9,124


	Balance at January 1,		Payments	Acquisitions	Adjustments (1)	Balance at September 30,
2020
Liabilities:
Contingent consideration	$	9,124	—	—	(7,704)	$	1,420

	Balance at January 1,		Payments	Acquisitions	Adjustments (2)	Balance at December 31,
2019
Liabilities:
Contingent consideration	$	3,000	—	9,124	(3,000)	$	9,124


	Classification on the Balance Sheet	September 30, 2020			December 31, 2019
Assets
Noncurrent (1) (2)	Operating lease right-of-use asset	$	111,732		$	155,700

Liabilities
Current	Operating leases - current portion	$	36,212		$	38,624
Noncurrent	Operating leases - long-term portion	107,973			133,172
Total operating lease liabilities		$	144,185		$	171,796

Weighted-average remaining lease term		5.1 years			5.5 years
Weighted-average discount rate		4.4		%	4.4		%


2020 (remaining three months)	$	11,274
2021	40,554
2022	31,683
2023	22,277
2024	18,509
Thereafter	36,691
Total minimum lease payments	160,988
Less: interest	16,803
Present value of lease liabilities	$	144,185


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	2,802,000	$	26.85
Granted	499,000	34.61
Exercised	(52,000)	20.58
Forfeited	(557,000)	34.74
Outstanding at September 30, 2020	2,692,000	$	26.77	3.4 years	$	—
Exercisable at September 30, 2020	1,888,000	$	26.88	3.2 years	$	—


	2020			2019
	Number of Shares	Weighted Average Fair Value at Grant Date		Number of Shares	Weighted Average Fair Value at Grant Date
Outstanding at January 1,	4,427,000	$	19.84	5,135,000	$	18.42
Granted	478,000	31.78		629,000	32.57
Vested	(326,000)	27.90		(311,000)	26.36
Forfeited	(111,000)	37.19		(52,000)	28.90
Outstanding at September 30,	4,468,000	$	20.10	5,401,000	$	19.49


	Wholesale						Net Carrying Amount
	Footwear		Accessories/ Apparel		Retail
Balance at January 1, 2020	$	91,572	$	62,688	$	17,089	$	171,349

Purchase accounting adjustment	—		—		(2,591)		(2,591)
Translation and other	(1,100)		—		(864)		(1,964)
Balance at September 30, 2020	$	90,472	$	62,688	$	13,634	$	166,794


	Estimated Lives	Cost Basis		Accumulated Amortization (1)		Impairment (2) (3)		Net Carrying Amount
Trade names	6–10 years	$	8,770	$	8,770	$	—	$	—
Customer relationships	10–20 years	38,980		21,901		—		17,079




		47,750		30,671		—		17,079
Re-acquired right	indefinite	35,200		9,088		—		26,112
Trademarks	indefinite	115,481		(156)		42,528		73,109
		$	198,431	$	39,603	$	42,528	$	116,300


Common stock authorized			11,000,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled awards			(1,977,921)
Common stock available for grant of stock-based awards as of September 30, 2020			9,022,079


2020 (remaining three months)	$	689
2021	2,167
2022	1,746
2023	1,746
2024	1,746
Thereafter	8,985
Total	$	17,079


As of and for the three months ended,	Wholesale Footwear		Wholesale Accessories/Apparel		Total Wholesale		Retail		First Cost		Licensing		Consolidated
September 30, 2020
Total revenue	$	213,327	$	70,516	$	283,843	$	58,987	$	1,479	$	2,558	$	346,867
Gross profit	73,139		25,065		98,204		37,636		1,479		2,558		139,877
Income/(loss) from operations	22,085		(7,974)		14,111		(19,560)		515		1,936		(2,998)
Segment assets	$	780,752	$	107,239	887,991		201,026		8,952		6,441		1,104,410
Capital expenditures					$	751	$	425	$	—	$	—	$	1,176
September 30, 2019
Total revenue	$	315,899	$	105,661	$	421,560	$	75,748	$	1,922	$	2,884	$	502,114
Gross profit	111,655		31,459		143,114		47,917		1,922		2,884		195,837
Income/(loss) from operations	58,065		10,869		68,934		(3,050)		635		1,522		68,041
Segment assets	$	863,802	$	122,243	986,045		277,355		11,364		7,701		1,282,465
Capital expenditures					$	2,251	$	746	$	—	$	—	$	2,997

As of and for the nine months ended,	Wholesale Footwear		Wholesale Accessories/Apparel		Total Wholesale		Retail		First Cost		Licensing		Consolidated
September 30, 2020
Total revenue	$	526,362	$	160,206	$	686,568	$	153,309	$	2,981	$	5,989	$	848,847
Gross profit	174,667		48,383		223,050		97,209		2,981		5,989		329,229
Income/(loss) from operations	40,477		(22,999)		17,478		(74,296)		491		3,379		(52,948)
Segment assets	$	780,752	$	107,239	887,991		201,026		8,952		6,441		1,104,410
Capital expenditures					$	4,168	$	1,328	$	—	$	—	$	5,496
September 30, 2019
Total revenue	$	878,725	$	254,432	$	1,133,157	$	220,065	$	5,856	$	8,453	$	1,367,531
Gross profit	304,635		75,386		380,021		133,352		5,856		8,453		527,682
Income/(loss) from operations	144,766		20,487		165,253		(14,450)		1,170		5,361		157,334
Segment assets	$	863,802	$	122,243	986,045		277,355		11,364		7,701		1,282,465
Capital expenditures					$	5,216	$	3,995	$	—	$	—	$	9,211


	2020				2019
CONSOLIDATED:
Net sales	$	342,830	98.8	%	$	497,308	99.0	%
Commission and licensing fee income	4,037		1.2	%	4,806		1.0	%
Total revenue	346,867		100.0	%	502,114		100.0	%
Cost of sales	206,990		59.7	%	306,277		61.0	%
Gross profit	139,877		40.3	%	195,837		39.0	%
Operating expenses	109,865		31.7	%	127,796		25.5	%
Impairment charges	33,010		9.5	%	—		—	%
(Loss)/income from operations	(2,998)		(0.9)	%	68,041		13.6	%
Interest and other income – net	88		—	%	961		0.2	%
(Loss)/income before income taxes	(2,910)		(0.8)	%	69,002		13.7	%
Net (loss)/income attributable to Steven Madden, Ltd.	$	(6,951)	(2.0)	%	$	52,463	10.4	%

By Segment:
WHOLESALE FOOTWEAR SEGMENT:
Net sales	$	213,327	100.0	%	$	315,899	100.0	%
Cost of sales	140,188		65.7	%	204,244		64.7	%
Gross profit	73,139		34.3	%	111,655		35.3	%
Operating expenses	36,454		17.1	%	53,590		17.0	%
Impairment charges	14,600		6.8	%	—		—	%
Income from operations	$	22,085	10.4	%	$	58,065	18.4	%

WHOLESALE ACCESSORIES/APPAREL SEGMENT:
Net sales	$	70,516	100.0	%	$	105,661	100.0	%
Cost of sales	45,451		64.5	%	74,202		70.2	%
Gross profit	25,065		35.5	%	31,459		29.8	%
Operating expenses	14,629		20.7	%	20,590		19.5	%
Impairment charges	18,410		26.1	%	—		—	%
(Loss)/income from operations	$	(7,974)	(11.3)	%	$	10,869	10.3	%

RETAIL SEGMENT:
Net sales	$	58,987	100.0	%	$	75,748	100.0	%
Cost of sales	21,351		36.2	%	27,831		36.7	%
Gross profit	37,636		63.8	%	47,917		63.3	%
Operating expenses	57,196		97.0	%	50,967		67.3	%

(Loss) from operations	$	(19,560)	(33.2)	%	$	(3,050)	(4.0)	%
Number of stores	220				227

FIRST COST SEGMENT:
Commission fee income	$	1,479	100.0	%	$	1,922	100.0	%
Gross profit	1,479		100.0	%	1,922		100.0	%
Operating expenses	964		65.2	%	1,287		67.0	%
Income from operations	$	515	34.8	%	$	635	33.0	%

LICENSING SEGMENT:
Licensing fee income	$	2,558	100.0	%	$	2,884	100.0	%
Gross profit	2,558		100.0	%	2,884		100.0	%
Operating expenses	622		24.3	%	1,362		47.2	%
Income from operations	$	1,936	75.7	%	$	1,522	52.8	%


	Payment due by period
Contractual Obligations	Total		Remainder of 2020		2021-2022		2023-2024		2025 and after
Operating lease obligations	$	160,988	$	11,274	$	72,237	$	40,786	$	36,691
Purchase obligations	74,649		74,649		—		—		—

Future minimum royalty and advertising payments	22,038		—		16,600		5,438		—
Transition tax	16,410		1,563		3,126		6,837		4,884
Total	$	274,085	$	87,486	$	91,963	$	53,061	$	41,575


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Plans or Programs




7/1/2020 - 7/31/2020	3,796	$	23.82	$	111,590
8/1/2020 - 8/31/2020	—	—		111,590
9/1/2020 - 9/30/2020	1,319	21.21		111,590
Total	5,115	$	23.14


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, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of (Loss)/Income, (iii) the Condensed Consolidated Statements of Comprehensive (Loss)/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).*



†			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.


STEVEN MADDEN, LTD.

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

/s/ ARVIND DHARIA
Arvind Dharia
Chief Financial Officer