Steve Madden reported second quarter net sales increased 6.5% to $116.5 million. Net income jumped 59.1% to $12.1 million, or 66 cents a share, from $7.6 million, or 43 cents, a year ago.
   
Operating margin rose to 16.6% in the second quarter 2009, compared with operating margin of 11.1% in the same period of 2008.

Edward Rosenfeld, chairman and chief executive officer commented, “We are pleased to have recorded healthy earnings growth in the second quarter despite the difficult economic environment. Our design team, led by Steve, continues to create compelling product that resonates well with consumers. In addition to the strong performance in our core Steve Madden Women’s and Madden Girl wholesale divisions, we are encouraged by the results in our new licensed businesses, l.e.i., Fabulosity and Elizabeth and James. As we look ahead, we will remain focused on carefully managing our inventory and controlling costs while continuing to deliver trend-right product at attractive price points.”

Second Quarter 2009 Results:

Second quarter net sales were $116.5 million compared to $109.3 million reported in the comparable period of 2008. Net sales from the wholesale business grew 11.0% to $88.2 million compared to $79.4 million in the second quarter of 2008, driven by strength in the Steve Madden Women’s, Kids’ and Madden Girl wholesale footwear divisions. Retail net sales totaled $28.3 million compared to $29.9 million in the second quarter of the prior year. Same store sales decreased 5.4% in the second quarter of 2009.

Gross margin improved to 42.6% as compared to 41.7% in the second quarter of 2008. For the wholesale business, gross margin was 36.8% as compared to 34.7% in the prior year's second quarter, with the increase driven primarily by lower markdown allowances as sell-through at retail continued to be strong. Retail gross margin was 60.4% as compared to 60.3% for the comparable period last year, with the benefit of reduced freight costs mostly offset by the impact of a highly promotional environment.

Operating expenses as a percent of sales for the second quarter of 2009 were 32.2% as compared to 33.5% in the same period of the prior year. The improvement was driven by leverage on higher sales as well as cost control initiatives.

Net income for the second quarter of 2009 totaled $12.1 million, or $0.66 per diluted share as compared to net income of $7.6 million, or $0.43 per diluted share, in the same period of 2008.

The company did not open any stores and closed two stores during the second quarter of 2009, ending the quarter with 92 retail locations, including the Internet store.

Six-Month 2009 Results:

For the first six months of 2009, net sales were $223.9 million compared to $209.9 million in the comparable period last year.

Net income totaled $18.7 million, or $1.03 per diluted share, for the first six months of 2009 compared to $9.7 million or $0.51 per diluted share in the first six months of 2008. Net income for the first quarter of 2008 included a charge totaling $3.0 million post-tax, or $0.16 per diluted share related to the resignation of the company’s former CEO.

At the end of the second fiscal quarter, cash, cash equivalents and marketable securities totaled $111.6 million.

Arvind Dharia, chief financial officer, commented, “We continue to generate solid cash flow and maintain a strong balance sheet attributable to the growth of our business and our conservative capital management.”

Company Outlook

The company has updated its fiscal 2009 guidance.

For fiscal 2009, the company now expects net sales to increase 2% to 4% compared to fiscal 2008. The company previously expected net sales to range from flat to a decline of 2% as compared to fiscal 2008.

Diluted EPS for fiscal 2009 is now expected to be in the range of $2.05 to $2.15 as compared to previous guidance in the range of $1.85 to $1.95.