Steve Madden reported third quarter net sales increased 31.4% to $184.1 million. Earnings increased 28.5% to $22.9 million, or 81 cents per share, compared to $17.8 million, or 64 cents, a year ago.
Operating margin was 20.3% of sales in the third quarter of 2010, compared with operating margin of 20.2% in the same period of 2009.
“We are pleased to once again report the highest quarterly sales and earnings in our company's history. Our results for the third quarter of 2010 were driven by the ongoing strength of our core business, continued momentum in our international segment and meaningful contributions from a number of our newer brands including Big Buddha and Madden,” commented Edward Rosenfeld, chairman and chief executive officer. “In addition, our recently acquired Betsey Johnson brand offers tremendous growth potential and is a great complement to our current brand portfolio. Looking ahead, we are excited about the initiatives we have in place and feel confident that we can continue to drive top and bottom line growth.”
Third Quarter 2010 Results
Third quarter net sales were $184.1 million compared to $140.1 million reported in the comparable period of 2009. Net sales from the wholesale business were $153.1 million compared to $112.0 million in the third quarter of 2009, a 36.7% increase driven by strong gains in Madden Girl, Steve Madden Men's, and the international business, as well as by the sales contributions from Big Buddha and Madden. Sales also benefited from the transition of one of the Company's mass merchant customers from a buying agency model to a selling agency model. Retail net sales grew 10.2% to $31.1 million from $28.2 million in the third quarter of the prior year. Sales were driven by an increase in same store sales of 15.7%, partially offset by six net store closings since the third quarter of 2009.
Gross margin was 42.1% in the third quarter as compared to 44.0% in the comparable period of 2009, reflecting a decline in the wholesale segment gross margin partially offset by margin improvement in the retail segment. Gross margin in the wholesale business decreased to 38.8% in the third quarter from 41.2% in the prior year's third quarter driven by (i) mix shifts, including the growth of the international business and the inclusion of the results of the Company's footwear business with one its mass merchant customers in the sales line and (ii) an increase in off-price sales. Retail gross margin increased to 58.1% for the third quarter from 55.2% in the comparable period of the prior year as a result of strong full-price selling and reduced discounting.
Operating expenses as a percent of sales declined to 25.4% for the third quarter compared to 27.9% in the same period of the prior year, due to leverage on higher sales.
Operating income for the third quarter increased to $37.4 million, or 20.3% of net sales, compared with operating income of $28.3 million, or 20.2% of net sales, in the same period of 2009.
Third quarter net income increased 28.5% to $22.9 million, or $0.81 per diluted share, compared to $17.8 million, or $0.64 per diluted share in the prior year's third quarter.
During the third quarter of 2010, the Company closed 2 stores, ending the quarter with 82 retail locations, including the Internet store.
Nine-Month 2010 Results
For the first nine months of 2010, net sales were $474.4 million compared to $364.0 million in the comparable period last year.
Operating income for the first nine months increased 62.6% to $94.3 million, or 19.9% of net sales, compared with operating income of $58.0 million, or 15.9% of net sales, in the same period of 2009.
Net income was $58.1 million, or $2.06 per diluted share, for the first nine months of 2010, compared to $36.6 million, or $1.34 per diluted share, in the first nine months of 2009.
At the end of the third quarter, cash, cash equivalents and marketable securities totaled $152.6 million.
Company Outlook
For fiscal 2010, the Company now expects net sales will increase 24% – 25% compared to fiscal 2009. Diluted EPS is expected to be in the range of $2.57 – $2.62. This compares to previous guidance of diluted EPS in the range of $2.45 – $2.55.
