Steve Madden reported first quarter net sales increased 22.5% to $131.6 million. Retail comparable store sales increased 13.6% for the first quarter. First quarter net income increased 134% to $15.4 million, or 55 cents per
diluted share, compared to $6.6 million, or 24 cents per diluted share
adjusted for stock split, in the prior year’s first quarter.
Operating margin reached 18.9% of sales in the first quarter 2010, compared with operating margin of 9.6% in the same period of 2009.
Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are extremely pleased with the continued momentum in our core business as well as with the initial success of our recent initiatives. Steve and the design team continue to capitalize on the latest trends with fresh, fashion-forward product, leading to strong demand for our existing brands. At the same time, our new business ventures — including Big Buddha, Elizabeth and James, Olsenboye and Madden — are off to a great start and are expected to contribute nicely to our sales and earnings growth in 2010 and beyond.”
First Quarter 2010 Results
First quarter net sales were $131.6 million compared to $107.4 million reported in the comparable period of 2009. Net sales from the wholesale business were $103.1 million compared to $81.3 million in the first quarter of 2009, driven by strong gains in the Company’s existing wholesale footwear divisions as well as contributions from our new license for the Elizabeth and James brand and our recent acquisitions, Madden Zone and Big Buddha. Retail net sales grew 9.1% to $28.5 million compared to $26.1 million in the first quarter of the prior year despite a smaller store base. Same store sales increased 13.6%.
Gross margin improved to 45.5% from 40.5%, reflecting margin improvement in both the wholesale and retail divisions. Gross margin in the wholesale business increased to 42.5% from 38.1% in the prior year’s first quarter due primarily to higher initial mark-ups and more full-price selling. Retail gross margin increased to 56.7% from 47.8% in the comparable period of the prior year as a result of less discounting and higher initial mark-ups.
Operating expenses as a percent of sales were 31.4% compared to 33.6% in the same period of the prior year, due to leverage on increased sales.
Operating income for the first quarter increased to $24.9 million, or 18.9% of net sales, compared with operating income of $10.3 million, or 9.6% of net sales, in the same period of 2009.
Net income increased 134% to $15.4 million, or $0.55 per diluted share, compared to $6.6 million, or $0.24 per diluted share adjusted for the 3-for-2 stock split, in the prior year’s first quarter.
During the first quarter of 2010, the Company closed five stores and opened one, ending the quarter with 85 retail locations, including the Internet store.
At the end of the first quarter, cash, cash equivalents and marketable securities totaled $157.4 million.
Arvind Dharia, Chief Financial Officer, commented, “We maintained a healthy balance sheet during the first quarter of 2010 supported by strong operating cash flow and prudent capital management.”
Company Outlook
For fiscal 2010, the Company now expects sales to increase 17% — 19%. Diluted EPS is now expected to be in the range of $2.30 — $2.40, compared to previous guidance of diluted EPS in the range of $2.07 — $2.20 on an adjusted basis to address our recently effected 3-for-2 stock split in the form of a stock dividend on the Company’s outstanding common stock.
