Steven Madden (SHOO) 7 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q3 2024 Steve Madden Limited Earnings Conference Call. [Operator Instructions] After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

morning, good and Krista, everyone. Thanks, joining Thank call quarter earnings third webcast. you for and XXXX our

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

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

and of apparel for another review performance and and outstanding good exceptional capability joining in mini with strategy an footwear, demand robust we product on-trend key sneakers apparel and are Steve tall-shaft for accessories shoulder small strong, that and trend-right bags soccer-inspired we're speed-to-market denim. materials a on-trend revenue gains including This teams the Thanks, that Janes. us quilting Madden's driven with in industry-leading to priority with In expectations. are quarter strategy, test the the accessories satchels in which for and to are delivered quarter and you contribution accessories are like in exceeding and Steve assortments led the bodies patchwork styling by international This animal fall, long-term us cross results. strategy of boots, same consumers successfully third create of markets channels, seeing our to a utilizing trends, Danielle, and response seeing newly In and to remain great and and earnings we team's We across our resonating interpretation bags, success XXXX to Almost results handbags talented line accustomed model, particular [indiscernible] of-the-moment and a top win we in including growth and our getting getting by strong and our from are in react categories, morning, also categories consumers. satin Madden shoes thank everyone, structured handbags, product. acquired Steve, quarter performance is that third design our Madden Steve was Famous direct-to-consumer from earnings with top demonstrating print, continued our proven Mary and are they robust our suede, for suede. And and execution and and offering apparel, footwear, strong growth. Within we combines leather,

world and letter the as our New experiential with campaign brand, marketing positive hometown revenue we investment. fall the across to a and channels, iconic stores Madden product came our search season throughout which and around Heart, In strategy our social an We marketing global the campaign Steve positive is the digital integrated of featured called cameos our the of the mail, love connection kicked life consumer drove outdoor NYC drivers. foundation media Deee-Lite are York and Groove Never organic creators combination served including It A our song, and worked. The figures and X Miss for Featuring journey, campaign direct in increased the the of City. Together, to Is and from increased in to activations funnel it retail cultural the great impact Steve consumers, also social supporting for off this full brand, flagship sentiment and outstanding gains. this key enabler product Beat. with effective our our serves business with marketing deepen our Madden

on business of mid-teens full Our remain revenue be markets. the compared growth. in third international growth driver year period region EMEA International to biggest the and year. The the the first prior our key revenue driver quarter achieve percentage in in is grew to the continues track expanding we XX% same for to

Canada our expect also gaining traction We region, brand with Africa bottom Americas are on strong new and more to the we share in our up on top healthy new America, and In South XX XXXX growth which continue up our XX% Europe, a directly to in the our contribution region, outperform XXXX. JV venture start. in be gains Mexico for We're at of challenging year. our than start Latin the joint line in joint track venture exceptional owned as in to in growth year In stores that the take a drive heat outstanding revenue XX and EMEA lines. from we to and from as in Middle to continues with end retail in with East in the double-digit competition expect and off And the market. is subsidiaries top the well

the apparel outside rose Almost Famous. and XX%, or excluding of growing accessories XX% is revenue key third second Our driver footwear. In business business overall quarter, our

year-to-date, highlight in same on on prior in Madden the increasing plans XXXX also grow based top again apparel on which XX% business of the growth growth we customers strong the Our XXXX Madden for gain with doors and more and at than performance there resulting XX% additional sell-through forward. going of well Steve handbag another the XX% is pace Steve positioned Revenue in in expanded for assortments robust to key year. in continues in wholesale quarter are traction. revenue year to is the was period

Turning to Almost Famous.

contributed $XX million quarter. the in outpaced with for of acquisition overall. Almost season that overall operating the Kohl's The and Girl we realizing very launch sell-through the back-to-school at performance department apparel new ahead margin schedule the successful in in was revenue Famous division at Our improvement of are Madden

our X% X% business a business third the comp grew by driver digital. revenue basis. a Our DTC expanding increase key direct-to-consumer quarter, in third including is led on

remain achieve our high the XX% grew year. Our in single-digit e-commerce business DTC plan track and July in for quarter. increased quarter. Brick-and-mortar on in growth to of We meaningfully by accelerated revenue revenue the X% beginning the for

this strengthening key driver business fourth footwear Our is declined business core X% quarter. business. the in Revenue U.S. in wholesale our

business private Our strong, but label first on growth compared slowed to remained the comparisons. tougher half

pushed this Our of down of our wholesale to customers and branded to back boots deliveries approach as many take continue year cautious overall. a remained business orders

Finally, is strategy Real goals social recently which a We strategy Sustainability critical our objectives. our our going published and forward. Get we on Report, sustainability XXXX advancing of component our outlines our responsibility have progress Let's corporate made the

our to section You and Based to check we can was and will execute create for and to of guidance third quarter stevemadden.com, further, to confident long-term all provide results on And detail report review for and quarter find our Zine you our are turn our consistently encourage third that, remain and the XXXX. sustainability performance another to we over more XXXX the proof team revenue ability earnings. outlook on in for strategy stakeholders in it raising drive looking I over growth out our it updated third growth point. financial for our results, term. With continues our quarter the value out. Overall, long our the I in

Thanks, XXXX. the third was Ed, our In $XXX.X increase third million, quarter and to good XX% consolidated morning, quarter, of revenue compared the a everyone.

to period year. Almost consolidated in revenue the prior compared Excluding grew the same X.X% Famous,

Our wholesale million, XXXX. revenue to third up was of XX.X% quarter the compared $XXX.X

million, Steve increase up year by same Excluding business or in year. $XXX.X prior last year. period growth accessories XXXX, strong private revenue same in period decrease revenue prior In handbag our in was third more to segment, the Wholesale business with the decline of compared was the Famous, the XX.X%, with Madden X.X% driven growth third Almost a direct-to-consumer in from a the $XXX.X and a our branded the X.X% excluding apparel quarter in X.X% revenue the XX.X% offset compared in despite the Almost revenue by wholesale period comparable than million, the footwear Famous, quarter to was XXXX. million, label increased difficult comparisons $XXX.X business. Wholesale to

concessions in including As We XX company-operated ended markets. was stronger X brick-and-mortar e-commerce channel. company-operated and than e-commerce the Ed mentioned, quarter XXX with the websites stores, in XX outlets, performance retail international brick-and-mortar

to our Licensing segment. Turning

million in the $X.X in Almost XX.X% licensing compared versus in Our of the to XXXX was quarter of Famous. the was the $X.X quarter third Consolidated XXXX. due royalty comparable million income the impact gross to margin period in of XX.X% quarter

Excluding the XX.X% promotional XXXX, the Almost Wholesale due quarter to from third supply by chain impact points The offset impact Famous, Almost margin activity. disruption gross in was Famous. XX XX.X% consolidated freight margin the of basis also year-over-year. of increased lower was compared gross to

the were a expenses increased e-commerce, quarter XX.X% a from million of gross XX Almost Operating period in of as activity. higher prior investment, was mix in XXXX. million and period reduction compared within promotional the XX.X% XXXX, $XX.X to the The the incentive to marketing in the revenue for higher gross DTC revenue third basis compared for the XX.X% percentage expense. tax points the from points variable was to margin margin which comparable wholesale was effective revenue, quarter in XX.X% Operating rate XX year. the a in or quarter increased or up shift by third XX.X% by up basis has of driven driven Excluding comparable XX%, of income of quarter Famous, $XX.X year-over-year. Direct-to-consumer XXXX, compensation XX% in

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

Moving to the balance sheet.

foundation strong. remained Our financial

cash days XX, at million $XXX.X year. transport We of debt. origin of of to XXXX, end million million to of the compared quarter XX the inventory cash, September The warehouses. $XXX.X was result compared and prior an of the and from $XXX.X built to times. equivalents year short-term in majority of of Inventory average no approximately we As investments had countries last goods their the increase increased our to in the transit was

CapEx Our third [ ]. quarter was the in million $X.X

repurchases record the acquired Board company's quarter, our through third its stock, the of million year-to-date awards, of quarterly a payable on stockholders settlement be XX, $XX.X stock of per common of net dividend of the December million. The as spent approved on During the will $X.XX close Directors of December bringing employee $XX.X on dividend of XXXX. including to cash XXXX, company XX, business The shares share. total to

outlook. Turning to our

guidance. We be XXXX to are we diluted compared expect XX% raising $X.XX. EPS increase range the for of to XX% revenue to to annual now $X.XX We our to expect XXXX now and in

the to Now, for over turn the I call Krista? would operator like to questions.

we you. question-and-answer [Operator Our Thank of conduct the from Instructions] of comes line session. a time At this Paul question Lejuez will first Citi.

for This is Paul. on Kelly

Steve talk you in if of core one, on I Madden in believe And XQ. out the business in first going what us China how in secondly, about you were light thought versus your is expecting your could what exposure improvement more Just footwear sort the sourcing tariffs? channel? XQ address can footwear update and wholesale you that then you around wholesale the played potential of just a forward bit

So I it XQ. how in digits mid-single guess, believe was versus, trend I did that down

color So, would just any be there great.

Great. Yes. Kelly. Thanks,

around potential to have to question all, first with Look, for exposure. period we hard scenario respect multiyear in we Brazil, of potential out of sourcing develop and move base planning factory et our our would to first China cetera. We've a So like which Vietnam, capability your more in worked Cambodia, China goods tariff quickly. countries and been over Mexico, alternative have a

asked of expect are forward. And to into China of And should begin about the down as and percentage the just plan yesterday you rapidly China goods to morning, from see to that that exposure. motion we you some source we more to so putting give come you -- going

overall context to of U.S. you About imports. you here. in our give with done help Just is some X/X hopefully issue the -- frame business to

little bit imports U.S. of currently that, XX% our of China. X/X for overall So, And we of a than business. goods from account source about more those

be in words, under imports. of So our just tariffs business to on other half current potentially would Chinese subject

approximately on be XX% able that goods of year source to X/X our a the business at year we that China from to percentage do Our we be which XX% we're goods. goal over over tariffs that that we subject to next to would that it, the just looking if that would reduce and is achieve by from today, to we Chinese plan think have of potential means

business. think to the wholesale of question footwear part think branded probably to And second the specifically I I about our you're your referring business. was

again, We was QX. that So down improved in sequentially.

bit than of their did we they than In QX, hoped. boot to that get a think we the by year customers flat, QX, a about not that ago. smaller our month fact had been the did key took were deliveries the than a And I impacted look, later the the or was but in some So, in stickier was in particularly a so way we little little which our wholesale decline have channel, all was goal. dynamics challenging dynamics it

we've those delivered, lot success our when got had Now of boots. quite a we boots with

that we've I approach a continue to But the seen getting away banging outperformed are see wholesale is -- we not hitting are key reorders, those are some We've excuse keep cautious we're to QX outpacing the strong just and and sell-throughs competition. our at think there. QX. the the seeing good And it. reorders competition are overall, going QX of that look, we we getting me, from but And delivered sell-through products customers. that some news are

it. Got

in footwear that XQ on do that you So point, improve XQ? wholesale versus expect will

do. I

of BNP of Paribas. Aubrey question next Instructions] Tianello line Our from the comes [Operator

to start revenue for out updated the wanted XXXX. guidance I with

this organic I think mid-single-digit DTC. to guide for higher in wholesale in previously, expecting new thinking high singles how you're you're in and growth about growth low the then revenue. Curious between channels

Yes. Aubrey. Thanks,

the we So, our guidance channel. guidance have raised updated or revenue wholesale our in

And mid-teens seeing in increase X%, looking handbags. overall really to we're our is excluding that wholesale that from and we're accessories continued strength about X% be by business, for Famous. in the to continued Madden strength up coming So, but driven primarily now business apparel or Almost that the Steve

continue we we we be line high so where last in to the right were up DTC, For when year, at singles for with spoke.

And the impressive on handbag saw Great. really follow on to and it. just then Got up we that business this yes, growth Okay. quarter. the

compares you're driving just any you I is that just this that inflected now handbag quarter. business a on lot the starting I since straight this share think should fifth really lapping quarter growth And color forward? and can the business been how and guess think harder has in what's more we about growth going

also category our build of a our pleased this with The develop is Yes. the think engine fruit team to lot I the really of we're seeing journey. off. executed. with the strong in a and job labor anniversarying -- now We're updating that we're years great are a of over point, making to sure there and your also new to, really to of The growth. some a any biggest season to of new consistently kind still on -- team strong catching items life has trends in and of our their each extend to introducing very is done materials really seeing silhouettes number has We've seen really but product acceleration a position customer, a with that's team recently, this some colorways, paying consumer just and et been cetera. beyond how has tough and Again, comparisons growth this multiyear

we'll it. execution product So, on just and good keep focusing

Telsey Group. comes Telsey Our Instructions] question the Advisory [Operator of line next from Dana of

you of it outlets whether you or are And you in one full-price off-pricers you're seeing, merchants, the think business, what follow-up. then business, retail department it's differ And when about private seeing how think and you're type, what what the label mass seeing and by then business? in the stores? wholesale does As Ed, stores, just

I see retailers wholesale Look, continue the more are think in to Sure. strongly. the channel, we value-priced that performing

done And the is our off-price with label mass in say, again, clearly business relative strength is primarily the So, department to, merchants. the store label branded seeing private channel our our outpacing branded channel. business, And within business business. even we're private

we sell-through performance store good our point department again, about it's want outpacing closest channel, our the in we and competition. think to Although, I out feel

full-price been last of of about reversed full-price stores months. we've own the outlets terms over our fact, actually has months, in talking couple outperforming In seen DTC, stores. time some itself we've That outlets. outpacing in for And recent

then Got trends see or it. category, any And trends, by are styles? whether it's new holiday into sneakers, you that boots, whether demand driving just on what wholesale it's the you styles and footwear beyond? seeing season Any

right with about boots I'm shaft seeing tall really excited we're what now. our

right we we're category anything And items, suede, think engineer outperforming whether are I et really competition. it's think particularly boots, believe the boots, I with. in cetera, we think doing that's that suedes, where have a again, we a where, brown I the it's category stretch great

So really that's thing I'm one excited about.

some new sneakers seeing them space, are platforms well. consumer. very also on those that in by and updating And taking lot performing good sort We up those also the we're those introduced of this now and from a soccer-inspired fall, demand are

So, we some Mary feel that. et then We've some And also out that other the casual categories, Janes being of cetera, loafers are on good. and about we very called performing. the got as good casuals,

positioned a the So, product with good side there. really good and has feel footwear the the how on team job done we're about

Instructions] [Operator Loop. Laura the question next Our from line comes of of Champine

plans can for you impact the do in think any you to on got were being the cost change production move? so customers? there to thanks margin Or gross a of for likely you reason. pass specific Obviously, out What's your just And move about you've that China. of

are potential the in wide-ranging sorts tariffs if from. implications, on supply going demand policy the quantify in a impact it's that's new be we sourcing where have only countries not we all but And China, there economy, supply think significant these of chain, where difficult to the overall all here. impacts and to I contemplating are would really especially,

it's early So, the impact will little be. too about a I what think to speculate

next Our Stichter comes question line from of BTIG. of Janine the

marketing in those think in on hoping what are could a any September. And was saw from just initial investments we the bit campaign elaborate been stores. your And Where learnings some you reads with I on Just making you've tests? you that? Any there? then

Sure. excited there. campaign the with saw that the really marketing Yes, results we were and we

some the the time best searching in brand. across results. the We talked a we think for our in saw again, big that off-line more we lift activations and in I it focused about folks saw a with resonated area significant York saw searching lift of our was and really consumer. We York. a drove United campaign much for And lot lift in New States, and we the our New us,

that our lift we worked. for saw YouTube, partners, revenue. et of great excuse course, from That's really marketing cetera, saw consideration, It some activities of So, wholesale from those the really on media we example, awareness, that folks important. And in some our saw of me, we data also, some -- that got ad. drove critically the

felt really we good also there. got our work one it dollars it. saw performance harder thing made nice and saw about top-of-funnel better and we We returns the And very marketing about we it worked. So, is that this doing marketing

we'll do more So look campaign overall, a going of that successful forward. to and

are Is one That I In talked open Friday. the about know that right? the right call to Times before part Those terms is stores, before. going that of the we've ongoing. this Square Yes. question? investments in second Black on was of

refresh and fleet continue So, open the excited there flagship that now, get super right forward. we're to store going to and under we'll construction we're

further I'm back would remarks. At call the Rosenfeld questions. Ed this like closing I over showing to no turn now time, for to

of season to day. today. Great. everybody, us your you Well, holiday for speak will great thanks, rest and Enjoy Have we soon. a the joining

Thank in you your concludes participation today's This conference. program. for the

disconnect. now may You