Steve Madden reported first-quarter net sales increased 25.9 percent to $165.8 million. Retail comparable store sales increased 12.0 percent in the period. Net income increased 16.0 percent to $17.9 million, or 63 cents per share, compared to $15.4 million, or 55 cents, a year ago.

Operating margin was 16.6 percent in the first quarter of 2011, compared with operating margin of 18.9 percent in the same period of 2010.

Edward Rosenfeld, chairman and chief executive officer, commented, “We are pleased with the strong start to 2011, as the trend-right merchandise assortment created by Steve and his design team enabled us to deliver solid top and bottom line gains in both wholesale and retail. Our new brands also continued to gain traction and made meaningful contributions to growth in the quarter. Looking ahead, we believe we are well-positioned to drive sales and profitability growth through our increasingly diversified business model.”

First Quarter 2011 Results

First quarter net sales totaled $165.8 million compared to $131.6 million in the comparable period of 2010, an increase of 25.9 percent. Net sales from the wholesale business were $134.3 million compared to $103.1 million in the first quarter of 2010, driven by strong gains in both the wholesale footwear and wholesale accessories divisions as well as the transition of the Company’s Target private label and Olsenboye footwear businesses from the buying agency model to the wholesale model. Retail net sales grew 10.5 percent to $31.5 million compared to $28.5 million in the first quarter of the prior year. Same store sales increased 12.0 percent following a 13.6 percent increase in the prior year’s first quarter. The Company opened three outlet stores and closed four full price stores during the first quarter.

Gross margin was 41.7 percent in the first quarter of 2011 as compared to 45.5 percent in the same period last year. Gross margin in the wholesale business was 37.9 percent compared to 42.5 percent in the prior year’s first quarter, driven primarily by changes in sales mix as a result of (i) the inclusion of the company’s Target private label and Olsenboye footwear businesses in the net sales line; (ii) the strong growth of the private label accessories business and (iii) the strong growth of the international business. Retail gross margin increased to 58.1 percent from 56.7 percent in the comparable period of the prior year as a result of less discounting.

Operating expenses as a percent of sales were 27.9 percent compared to 31.4 percent in the same period of the prior year, due to leverage on higher sales.

Operating income for the first quarter increased to $27.5 million, or 16.6 percent of net sales, compared with operating income of $24.9 million, or 18.9 percent of net sales, in the same period of 2010.

Net income for the quarter increased 16.0 percent to $17.9 million, or $0.63 per diluted share, compared to $15.4 million, or $0.55 per diluted share in the first quarter of 2010.

The company ended the quarter with 83 retail locations, including 4 outlets and one Internet store.

At the end of the first quarter, cash, cash equivalents, and current and non-current marketable securities totaled $188.8 million.

Three-for-Two Stock Split

The company’s Board of Directors has declared a three-for-two stock split, in the form of a stock dividend, of the company’s outstanding shares of common stock. The stock split will entitle all stockholders of record at the close of business on May 20, 2011 to receive one additional share of Steve Madden common stock for every two shares of common stock held on that date. The additional shares are expected to be distributed to stockholders on or about May 31, 2011 by the company’s transfer agent. As a result of the stock split, the number of outstanding shares of the company’s common stock will increase to approximately 42.5 million shares from approximately 28.2 million shares outstanding prior to the split.

Company Outlook

For fiscal 2011, the company continues to expect net sales to increase 20 percent – 22 percent. Diluted EPS is now expected to be in the range of $2.03 – $2.10, compared to previous guidance of diluted EPS in the range of $2.00 – $2.07 on an adjusted basis to address the 3-for-2 stock split.