Steven Madden (SHOO) 2 Aug 232023 Q2 Earnings call transcript

Good morning, everyone, and welcome to Steve Madden Earnings Conference for 2023. I will now turn the call over to Danielle McCoy.

Thanks, Savannah, and good morning, everyone. Thank you for joining our second quarter 2023 earnings call and webcast.

Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. subject differ that implied from forward-looking are results cause by statements statements. materially to those forward-looking to could risks actual such These expressed or our that include, we filings the have others, risks with issued matters These described today among make in press SEC. and release earlier we which quarterly disclaim call, earnings We statements, if obligation updated be at update to not any conference until forward-looking all. these may our next

reconciliation in unless to on discussed call on otherwise today's GAAP noted. basis, measure disclosures A release. most The other financial results financial the an are comparable our directly associated adjusted and are earnings contained

Ed. Joining Officer; is and me Ed With today Chief Executive Mazouzi, to Chief Officer. Financial and the Ed? on Zine turn call that, Rosenfeld, the I'll Chairman over call

and thank us and Danielle, thanks, you second XXXX everyone, morning, review to results. good joining quarter Madden's Steve for Well,

we and growth invest product at year; even and the challenging many cost in inventory faced drove of our the in our As and by orders the to a wholesale proud team prior managed end margin three, United in pleased market compared States, gross strong performance second in in falls light for cautious one, as while prior conditions, line And expenses difficult QX discipline, expected, quarter. operating engagement the in in particular, landscape; satisfied despite with XX% drove are were initiatives. our we to to I'm we; two, customers consumer in reduction results never how of of quarter. to promotional the what inventory as achieved financial of In year, the environment controlled we our controlled we what performance control deliver delivering efficiencies approach the innovation, long-term short we with the that quarter, expectations the we retail a of the can continue earnings with

four strategy trend-right of we which will driving for executing will effective with combination of engagement, and remain enable footwear categories long-term long-term growth, assortments and direct-to-consumer digital; handbags focused connections four, our driving growing move apparel; foundation our by consistently which of is and in product on outside U.S. two, international turn the three, the closer we forward, success in consumer business our As drivers: through key like consumers expanding business strengthening footwear markets; wholesale with our one, core business. led in

wholesale, the of Now XX% our In revenue turning declining in quarter to by under second performance versus channel pressure, QX. remained XXXX.

have top again a categories. as As expected, our line business levels inventory the mass effort on significant right-size merchant in label our an our was drag in private to customers reduced overall orders

was also as customers dramatically branded business conservative branded Our approach continue a though to our private orders. take label to also not as down, as

business our styles, those significantly than way several sell-through see key styles not environment. did strong retail we in reorders chase were normally they the Despite in in lower customers more wholesale typical a would, would and

revenue similar significant close the to be to our to first while year's from half. wholesale half. can flat spring, fall, remain wholesale last customers we of improvement still in wholesale see ahead, if balance see in expect we believe relative business to Looking Even year or cautious, flat chase the we limited the we the back to in customers

in quarter both In e-commerce channels. X% the the the in in year, and declined compared second brick-and-mortar the our decreases to business, period with direct-to-consumer prior revenue same

comparisons back of months half. seen While the as last choppy, consumer have have performance return demand the we in we trends in expect revenue to DTC and eased, growth the couple year-over-year in to remain over year-over-year improvement

half first our be in remain the near QX. see the team significant year. coming proud financial to would choppy operating improvement our for of for planning term, Overall, we while beginning environment in are excited weathered poised the prospects to are performance the and and in We the about balance knew how year I'm the the tough, that our storm of into we

our significant positioned brands, to business that years growth strong model proven are Looking and gains and well to multiple we out further, opportunities, drive line confident bottom come. I'm with for top

Now to our it provide over turn review outlook quarter Zine financial for in and our more I'll to results second detail XXXX.

everyone. morning, good and Ed, Thanks,

Our of XX.X% a $XXX.X the XXXX. consolidated quarter revenue million, in the second compared second to quarter decrease was

period year. same wholesale million, XX.X% Our to $XXX.X revenue prior compared was down in the the

XX% same the discussed, decreased the business Ed soft. particularly year. versus was while to label label declined private branded private in last Wholesale the period in As revenue XXXX, revenue compared business XX% QX

outperformed Wholesale the year. down last XX.X% to footwear segment, States. was period million, revenue and from the XXXX. to revenue apparel $XX.X million, of quarter brick-and-mortar international accessories year. was $XXX.X decreasing last On decrease same direct-to-consumer second revenue United our compared was In period the outperformed million, Wholesale the e-commerce relative $XXX.X a X.X% basis, same and XX.X% a

retail with XX stores, as five concessions as XX websites brick-and-mortar markets. the ended XXX including We quarter international e-commerce outlets company-operated and well in

the $X.X $X.X segment, our million income In royalty million quarter in to licensing QX compared in was last year.

XXX-basis-point the gross margin same year, business. XXX last and driven in improvement the quarter, compared in margin. XX.X% gross basis Consolidated points wholesale by year. to period gross from apparel in the was margin XX.X%, same accessories expanding margin an Turning was Wholesale improvement last period gross a the to

gross the margin private margin from the wholesale gross drove businesses. and both While branded branded also improvement mix like-for-like in label a business, benefited to we shift

XX.X% was last year, the margin gross period Direct-to-consumer driven comparable activity. promotional XX.X% in increased by versus

to to the of in marketing costs to X.X% continuing invest Operating expenses quarter while control our and growth in initiatives. the other long-term $XXX.X a ability second quarter second reflecting XXXX, compared were million, decrease

XX% for of revenue of same million XX.X% income compared was or in year. $XX.X the $XX or last period quarter million to Operating the revenue

of tax effective for QX rate quarter in to compared XX.X% XX.X% the Our was XXXX.

XXXX. million attributable $XX.X diluted or Madden $XX.X of the per Steve versus income share $X.XX to per net $X.XX quarter share for was in Limited or Finally, the second quarter million diluted

to balance Moving sheet. the

strong. Inventory compared of million as XXXX, remains cash, and or to June equivalents a million And the $XXX.X $XXX.X of second and million of we $XXX.X foundation $XX.X no investments in the quarter cash XX.X%. totaled end at XX, short-term of million XXXX, reduction very financial Our had debt.

Our the was $X CapEx in million. quarter

During we employee share for the repurchases of includes stock, the company's on on of million first common of spent half shares awards, bringing million $XX.X the $XX.X stock settlement which total the quarter, acquired spend through repurchases XXXX. to net the

of a XX, close of quarterly Board of Our business on as of The will Directors share. XX, stockholders approved be September dividend $X.XX per the dividend cash XXXX, record the to September XXXX. on payable of

outlook. our Turning to

reiterating guidance. earnings share and We per our revenue are

of to expect decrease to to $X.XX. expect to diluted to XXXX be for the X% $X.XX to we continue We continue revenue in to compared X.X% XXXX, range and EPS

Now I'd operator the like the Savanna? over turn for questions. call to to

[Operator Instructions] question Aubrey Our first comes from BNP. from Tianello

Wanted revenue first guidance. to with the off start

revenues versus X% just whether the the there guide to Within quarter? last and you to down DTC what X.X% for curious that's for embedding you're be that updated year, changed reiterated, for wholesale

Yes.

For low low and double have embedded down wholesale, up where we digits, single for digits. DTC

Great. Got it.

I the if DTC could side. then And follow up just on Okay.

call, through the then it trending about mentioned last and in the April kind in similar that down think was of was March, DTC into I you and X% May.

you're then month-to-month far, progressed that XQ of how so and XQ kind what through curious into on seeing Just DTC?

running improve that's had year-over-year quarter. It to we've trends see modestly as flat. Yes. revenue as to We throughout adjusted me, and we compared improvement. anticipated, quarter quite the improve move didn't as quarter. did revenue much seen this date we the last why this we -- about we guidance excuse what we're date, month forecasting But have were to And or DTC

Williams from Poser Samuel from Trading comes question Company. next Our

I think a record of then broader that and thank minutes, details of prepared remarks so Couple at just a question. you. have I was XX

-- what revenue the give what and domestic us Ed, just So decreases? can international growth growth revenue mentioned you was was or the you

top grew domestic International don't overall. the bit my but X% the little the a the I worse Yes. than ahead... of head, have Go quarter. in off

about the of talked retailers. sort You of appetite the

you're let's some we thinking -- variance context as kind private expecting And we worse, year. or happen we're that more the you get into the than Can second through of, less, you the in are the two out to math, of better branded? your the a between versus in what out when quarter? department there stores So -- going are you expecting say, us was give things quarter of -- to proceed it are as label

Yes. Sure.

So I label think branded Zine versus and private the provided wholesale.

So a label branded quarter was private was quarter down and down XX% the the in wholesale basis. in XX% on

drag clearly, much So private from label. bigger

We're I from are that want half, We back clear. improvement cautious. be significant not wholesale to overall the approach in assuming they into assume still the customers. any really go the we As

compared improvement of really, comparisons. We expecting here to in haven't just QX, business half is that first what for built But the in seeing we're an big a instance. the easing you're because chase

get you'll we And easier the where private if label we the pullback recall, much where first. in felt comparisons because big is that place was,

once we so into in we some And big get declines anniversary business. really that QX,

to then around about of margin at that numbers a margin, gross margin the XX.X% margin you in over I talked in just you remain or gross the little higher. the the XX% -- want operating piece just Those And other the is and year verify, earlier place? for operating

some DTC were margin, bit mix and XX%, a just revised little and in reflected our pressure XX Yes. that bps, fall down we that pressure Sam, down gross of retail. a for in so the reflecting about just to lower in promo also potential forecast and

at And then what margin, close looking to say, for XX% op is we're now. I would

being for to kind that because there SG&A the with is And thing? that DTC of it requirement in support the sort won't less, that of there range be just of keep slightly business

Yes.

growth that SG&A, be the for we'll against and X% that is dollars QX have QX. year assumption from dollar For last we the at

Sam, top for point, not particularly -- line other back other initiatives. wherever our on or yes, and looked But the we've given bit. marketing tightened obviously DTC, And to have find on have can we've we long-term pulling them, or our belt while your a little seen growth in we -- we savings what

clean your lastly, levels then are forward on basis. a And inventory

a not how through lot of a activity with by if you XX, going that mid-October, September respond that come like back-to-school of still you see people somebody call fair... to to expecting came acceleration in You you're going orders quickly can though that. guys there's even you could to lot change to post we're mean a it, and -- holiday, to next, a be Is the outlooks. because I if necessarily of lot

the basically for Mexico basically are our back more and Mid-October times good would the our fall. We news be are to have Mexico and overall capability, -- normal. we use lead times is, in do transit late that. But back

but get get So certainly are over wouldn't customers we month for if mid-October, say up, still that the quarter. can still chase yes, next step into we we I two. to the reads way -- goods or and willing all until fourth

then are brought -- the we has anniversary up Nordstrom nobody And sale.

in we're think What passed. I that? you it have seen or from just

Yes.

I saw think we in with we pleased event. were the what

a we essentially ago, line encouraging on reads think environment I win. was fall. got and what early percentage is year with right is us sell-through Our it REBOOTED going into particularly good confidence in And in which this category, fall just importantly, which as was a some I think in gives product,

next Capital. question Loop Our comes from from Champine Laura

branded the Meaning, story? And where private half in improved talk is about you mix also expect how about most prebooking more much that? versus easier you comps. on of really in about you maybe the see how It's I driving works is to an visibility label that's that trend replenishment? improvement. revenue do decline. it But this since hear Or back have

wholesale in XX% QX of terms look, business, we've XX% or our booked. got So

customers almost this We in as I QX business already essentially aggressive bit mentioned, all given a is little just than reorder have QX, chase booked. booked. or sitting far not into our we behavior probably year. wholesale of have In that's built less of half And QX the of QX at an so

we've So all where we to. work the do, all, know but lot in numbers still quite There's about wholesale I guided we're a that to fall. obviously towards will think, tracking

private versus obviously further label And books your branded label, much question out. about to private

is in more business variance to the based lot where and So there's does what on label from looking up back going a half. end Chase is we look the here know Branded what Reorders like. about like private

Tom Nikic from Our comes next Securities. Wedbush from question

you quarter. gross on want QX by get the channel Marina] can mix margin gross driven much I about for Tom comment was in factors How for a idea freight as compared Nikic. the expand year the [Austin of the And other to like just mix? such regarding improvement quick margins full activity to on your back margin half? upon product guide gross promotional in

Yes.

it's think retail. So it as is concerned, as I versus margin best the gross wholesale to far look at

a of improvement we and bit wholesale, was in XXX-basis-point than related. So had more margin mix that half little a in

we I from terms where how in the much in built think, promo And for I can change half a We bit have elaborate. activity, the activity of into more more the know then we back in promo DTC, before. modest don't were plan -- we relatively little

question comes from UBS. Sole next Our with Jay

Great. curious sneakers the I'm business. just about

channel. in and your sneaker So how holiday? you there's a year about impacting this our talk excess the Is do percentage lot the that's something business? a big be of back-to-school in sneaker to of much sneakers expect inventory that And business

that quite about Look, sneaker overall we're the players. has for optimistic the some sneaker that that we category few we're The reads excess much and going that actually we to feeling sneaker going us over to early actually how moving we're from that but new good forward. big upswing in it's sneaker forward. say down in the of the delivering good sneakers hard We've sneakers very very some be last on think some we're about, category quarters, fashion feel category, been inventory got

business? Got broadly you new trends. the of This little more obviously about like the work talk if 'XX and you return half of trends return events the seeing could in for of to the year, emerge trends, seeing sort just you 'XX. a address seems Are to fashion are it. in And in side it bit low. year, first then the Are

In business dress overall? in the shoes specifically or

business overall. the in business the guess overall. Yes, I Well,

we've things as see are Yes, on well -- the -- feeling got out new that Yes. good as we're good some we've some early for got fall. some I I what reads called delivering booties excitement mentioned, sneakers as we and about want -- But boot don't the about to newness, don't trends are. get we those too I want which specific get the specific around about. we're some do category. this season in to excited early

for me. maybe And it. one just Got last

Just on initiatives you growth the some that about. about the top talked of of you're excited the call,

you're behind just top it continued not that for or just apparel, sounds invest to you see, or some maybe those. remind -- on just focused what going international growth You Can of some you list continuing whether you DTC and mean to the XXXX? or it's growth like whatever, you're is rank opportunities order you to what drive just think nice people beyond

Yes, absolutely.

well. APAC around will years, and have that seeing fastest-growing over lot we world. places the we're I the list growing been what region the years. in that, the Obviously, fastest-growing top Americas really has the the And been most next the is that the will in the first, years. of international. of as I momentum of drive the one the that in the think excited over us, fastest in That's think the excited about would markets we a put last just business part at the business of the we're part over anticipate few probably and few next other for EMEA And the about be few growth but we

#X tremendous a the say DTC. we is bit over growth as DTC as an obviously north growth next first We're to continuing here, the direct-to-consumer, much would see led years. digital the going to international, we've more that XX% that growth in penetrated related last because of by we a business few the driver international heading forward. seen see of is years. I but still well it's quarters important over about And in and Obviously, already little that over pullback few couple --

and then in business tremendous and X the we're that all to have real but was That's bright and channels, business. us QX, Steve wholesale, and that the put obviously businesses accessories And few we're there we in very And of that particularly international days apparel. in for been DTC handbags. start that -- off term, grew Madden with in That about well. in apparel, that opportunity it's would We've markets as after early longer good feel we're then spot. runway the got perform the momentum seeing a and that, I really

would So sort how rank drivers. that's I the X top growth of

actually Our Williams from oh, from we're next Same comes with back question -- Company. Poser Trading

quick sorry. any Are one, on have early back-to-school? you Just reads a

It's worth would I this that nothing pretty early, out think moment. be I at Sam. mean calling

Tarlowe Our next question comes from Jefferies. with Corey

on handbag that to be wanted just segment growth I what's little color double-click the driving as made. that commentary the a Would you to in get specifically? bit curious more to really

Yes.

journey really progress. in channels of the we've think what's across it nice a team domestic And multiyear here and upgrading Madden been I category. there. feel different as on Handbags. customer And a that we've I about made responding. And We've delivering is in is we're what Steve think is think operate, good and And the the which lot growth wholesale just invested perform in that businesses the lot design a and we product I both about I all international. really seeing said, both DTC, in

handbags Madden that's Steve really it's driving that. So

apparel. sounds where do Great. upon double-click then execute expanding and continue What Or how to you And growing just It anticipate? that's an opportunity. profitably do it you also that ahead? on expect more area see you like segment to

look, Well, to we're started a -- just very good but it's start. getting there, off we're Yes.

significant best and we fall want line we even feel like Steve apparel really really We the spring what had the Madden that to products. product pleased think what step-up about we And et exceeded like the spring the my Bloomingdale's, had in about in key frankly, performance, of terms cetera. even We're Macy's, I performance expectations fall a sell-through. represents is from feel very Dillard's, customers the is in some better we be.

with that about us, look, that's the but starts And products. like. what really it for to going look so But, excited we're now, just we're always out getting

to important is get to continuing growth. obviously products Madden to And better initiative right DNA. even we distribution make most and drive if out that just reflects now channels the the Steve that do more have the accurately we market products that, of and to a lot brand So

Citi.. next from comes from Paul Our question

Paul. the XQ? maybe And about down on look versus XQ how terms on back sales on question. Could This XQ to I is versus Kelly first of sales just by that for wholesale talk versus then should drill wanted total in growth? in my half XQ guidance. That's DTC elaborate you

Yes.

little bit should on think a basis. that grow That's QX. I overall, faster than a QX consolidated

driven In doing little terms bit little that's well, faster we QX the better and wholesale -- half. the seeing a I little have a of better growing or wholesale, by, And that's in think, mix of in a QX, also growth higher wholesale back which in in DTC than bit QX. primarily than

in business, wholesale looking you're So just to saying XQ, the in the clarify see comparison your you're growth that, significantly one-year at I quarter, going that much that a bit consistent more a side of on what step-up basis? in little eased in but XQ of fourth guess than the comparison not it's a versus to we're

is And a quarter. our customers reorder And because is we've got have wholesale of approaching and quarter, QX chase QX -- cautious a of more that's that. sell-in Yes. there forecast in QX, how more a given been relatively

on of your the little after are saw those be consumer feeling the for into are the guess mean how with in retail they partners? frees that really broad channel? saw within about are chase actually, a the wholesale on how March. year? could I bit that inventory back chance And business? the there retail opportunities kind I branded better saying back note, to conversations so there levels product I going the mean, And a half you up consumer some is that partners there Is looking we your a -- you -- the in slowdown reorders of

overall the opportunity still I how cautious very conversations that very could mean still we're is, and could chase? approach still I But cautious. going, Yes. is answer and that, an there sentiment are better is that think -- of is Yes. get the overall terms in the they those

that's So forecast. built our we've -- how we're

think We of terms In though, too in low. the channel, low. levels they're they're our inventory

and get those should they And so them be. back levels encouraging certainly step inventory we're to where up

And be fair? lastly I in year? going to label, it. Got the half label the to guess the of brand that mean me, first on then maybe the -- the is the private then And business up from year. Is is of similar still private I the just back half I down guess

No.

of I said will close we've similar which relatively flat overall think be them what about is both wholesale, to or the flat. to

back with Tom Wedbush. are And from we Nikic

are those split the QX, in periods, confirm, seeing for Just the to correct, wanted wholesale you're how and to on you seeing half, revenue similar based the between the half? like QX back dynamics in back guys

understand I the sure not you... question. Could I'm

correct? the guess, seeing like major compared thing -- I SG&A, you're any like like like Like, in not QX deleverage to QX,

again, growth, the X%. I about SG&A for goes really QX, QX that provided -- Zine That and both if think really The SG&A is helps? that

questions, further the turn no are I call there Rosenfeld. will If back Ed to over

on Great. for for rest speaking the you today's Enjoy thank joining forward summer. call. very Well, call. with look We next of us the you your to much

the concludes meeting. This

disconnect. may You now