Profits at Steven Madden, Ltd. fell 48.8 percent in the first quarter ended March 31 on an adjusted basis as sales declined 17.1 percent on lower wholesale shipments and challenging year-ago comparisons. The trendy footwear maker reiterated its guidance for the year.

Adjusted EPS of 50 cents was slightly below Wall Street’s consensus estimate of 52 cents. Sales of $463.8 million topped analyst’s average estimate of $463.8 million.

First Quarter 2023 Results

  • Revenue decreased 17.1 percent to $463.8 million compared to $559.7 million in the same period of 2022.
  • Gross profit as a percentage of revenue was 42.1 percent compared to 40.7 percent in the same period of 2022.
  • Operating expenses as a percentage of revenue were 32.0 percent compared to 23.2 percent in the same period of 2022. Adjusted operating expenses as a percentage of revenue were 31.8 percent compared to 23.8 percent in the same period of 2022.
  • Income from operations totaled $46.5 million, or 10.0 percent of revenue, compared to $97.9 million, or 17.5 percent of revenue, in the same period of 2022. Adjusted income from operations totaled $47.7 million, or 10.3 percent of revenue, compared to $94.4 million, or 16.9 percent of revenue, in the same period of 2022.
  • Net income attributable to Steven Madden, Ltd. was $36.7 million, or $0.48 per diluted share, compared to $74.5 million, or $0.94 per diluted share, in the same period of 2022. Adjusted net income attributable to Steven Madden, Ltd. was $37.6 million, or $0.50 per diluted share, compared to $73.4 million, or $0.92 per diluted share, in the same period of 2022.

Edward Rosenfeld, chairman and CEO, commented, “In light of the challenging setup we faced in the first quarter, including a choppy retail environment, conservative order patterns from our wholesale customers, and difficult comparisons with the prior year, we were pleased to deliver revenue and earnings slightly ahead of expectations. We also further reduced our inventory levels while driving strong gross margin performance despite a promotional retail landscape, demonstrating the benefits and durability of our business model in challenging operating environments. As we move forward, we remain focused on executing our strategic initiatives, most importantly, utilizing our proven model to create trend-right products and bring them to market quickly, and we are confident that we can drive sustainable growth and value creation over the long term.”

First Quarter 2023 Channel Results
Revenue for the wholesale business was $362.1 million, a 19.3 percent decrease compared to the first quarter of 2022 when wholesale revenue experienced outsized growth of 29.0 percent versus the pre-COVID first quarter of 2019. 

Wholesale footwear revenue decreased 18.6 percent compared to the first quarter of 2022 when wholesale footwear revenue increased 25.4 percent versus the pre-COVID first quarter of 2019. 

Wholesale accessories/apparel revenue decreased 22.0 percent compared to the first quarter of 2022 when wholesale accessories/apparel revenue increased 43.0 percent versus the pre-COVID first quarter of 2019. Gross profit as a percentage of wholesale revenue increased to 37.0 percent compared to 35.2 percent in the first quarter of 2022 driven by margin improvement in the wholesale accessories/apparel business.

Direct-to-consumer revenue was $99.6 million, an 8.1 percent decrease compared to the first quarter of 2022, driven by declines in brick-and-mortar and e-commerce businesses. 

Gross profit, as a percentage of direct-to-consumer revenue, was 59.2 percent compared to 62.3 percent in the first quarter of 2022, driven by increased promotional activity.

The company ended the quarter with 235 brick-and-mortar retail stores, five e-commerce websites, and 21 company-operated concessions in international markets.

Balance Sheet and Cash Flow Highlights
As of March 31, 2023, cash, cash equivalents and short-term investments totaled $223.7 million.

During the first quarter of 2023, the company repurchased approximately $38.5 million of the company’s common stock, which includes shares acquired through the net settlement of employees’ stock awards. On May 8, 2023, the Board of Directors approved an increase in the company’s share repurchase authorization of $189.9 million, bringing the total authorization up to $250.0 million as of that date.

Quarterly Cash Dividend
The company’s Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend is payable on June 23, 2023, to stockholders of record as of the close of business on June 12, 2023.

2023 Outlook
For 2023, the company expects revenue to decrease 6.5 percent to 8.0 percent compared to 2022. The company expects diluted EPS will be in the range of $2.39 to $2.49. The company continues to expect that Adjusted diluted EPS will be in the range of $2.40 to $2.50.

Photo courtesy Steve Madden