Steve Madden reported sales in the third quarter increased 70.5 percent to $313.9 million, bolstered by acquisitions and double-digit organic growth. Net income increased 39.3 percent to $31.9 million, or 74 cents per share, compared to $22.9 million, or 54 cents, in the prior year's third quarter. The company also increased fiscal 2011 diluted EPS guidance to a range of $2.20 to $2.25 from the previous range of $2.15 to $2.20.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented,”Our third quarter results reflect broad-based strength across our business. In addition to the significant sales contributions in the quarter from Topline and Cejon, which we acquired in May 2011, we delivered double-digit organic sales growth in each of our wholesale footwear, wholesale accessories and retail segments. Our flagship Steve Madden brand was particularly strong, as the on-trend merchandise assortment created by Steve and his design team drove robust gains with Steve Madden women's footwear and handbags in both wholesale and retail. The ongoing momentum in our core business, combined with the opportunities for growth in our new brands, categories and geographies, gives us confidence that we are well-positioned to continue to deliver strong sales and earnings growth as we move ahead.”

Third Quarter 2011 Results

Third quarter net sales were $313.9 million compared to $184.1 million reported in the comparable period of 2010. Net sales from the wholesale business grew 81.8 percent to $278.3 million compared to $153.1 million in the third quarter of 2010. The increase reflects the net sales contributions from Topline and Cejon, acquired in May of 2011, and the transition of the company's Target private label and Olsenboye footwear businesses from the buying agency model to the wholesale model, as well as strong growth in the existing wholesale footwear and wholesale accessories businesses.

Retail net sales grew 14.7 percent to $35.6 million from $31.1 million in the third quarter of the prior year. Same store sales increased 13.2 percent following a 15.7 percent increase in the prior year's third quarter. The company opened one full-price store and closed two stores during the quarter. The company ended the quarter with 82 retail locations, including the Internet store.

Gross margin was 34.9 percent in the third quarter as compared to 42.1 percent in the comparable period of 2010, with the decrease due to sales mix shifts as a result of the addition of the Topline and Cejon businesses and the inclusion of the company's Target private label and Olsenboye footwear businesses in net sales. Excluding these businesses, consolidated gross margin would have been flat compared with the prior year's third quarter. Gross margin in the wholesale business decreased to 31.9 percent in the third quarter from 38.8 percent in the prior year's third quarter due primarily to the aforementioned sales mix shifts. Retail gross margin increased to 58.4 percent for the third quarter from 58.1 percent in the comparable period of the prior year as a result of reduced promotional activity.

Operating expenses as a percent of sales declined to 20.6 percent for the third quarter compared to 25.4 percent in the same period of the prior year, due to leverage on higher sales and the aforementioned sales mix shifts.

Operating income for the third quarter increased to $50.5 million, or 16.1 percent of net sales, compared with operating income of $37.4 million, or 20.3 percent of net sales, in the same period of 2010.

Third quarter net income increased 39.3 percent to $31.9 million, or $0.74 per diluted share, compared to $22.9 million, or $0.54 per diluted share in the prior year's third quarter.

Nine-Month 2011 Results

For the first nine months of 2011, net sales were $688.8 million compared to $474.4 million in the comparable period last year.

Operating income for the first nine months increased 22.1 percent to $115.2 million, or 16.7 percent of net sales, compared with operating income of $94.3 million, or 19.9 percent of net sales, in the same period of 2010.

Net income was $73.5 million, or $1.70 per diluted share, for the first nine months of 2011, compared to $58.1 million, or $1.37 per diluted share, in the first nine months of 2010.

At the end of the third quarter, cash, cash equivalents and marketable securities totaled $111.8 million.

company Outlook

For fiscal 2011, the company now expects net sales will increase 49 percent — 50 percent compared to fiscal 2010. Diluted EPS is expected to be in the range of $2.20 — $2.25. This compares to previous guidance of diluted EPS in the range of $2.15 — $2.20.