GlobeNewswire Inc | Oct 27, 2020 06:59AM EDT

October 27, 2020

LONG ISLAND CITY, N.Y., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Steve Madden (Nasdaq: SHOO), a leading designer and marketer of fashion-forward footwear, accessories and apparel for women, men and children, today announced financial results for the third quarter ended September30, 2020.

Amounts referred to as Adjusted exclude the items that are described under the heading Non-GAAP Adjustments.

The Company reclassified commission and licensing fee income to Total Revenue and reclassified its respective expenses into Operating Expenses from previously labeled Commission and Licensing Fee Income - Net on the Company's Consolidated Statement of Operations for each period provided.

Third Quarter 2020 Review

-- Revenue decreased 30.9% to $346.9million compared to $502.1 million in the same period of 2019. -- Gross margin increased 130 basis points to 40.3% compared to 39.0% in the same period of 2019. -- Operating expenses as a percentage of revenue were 31.7% compared to 25.5% in the same period of 2019. Adjusted operating expenses as a percentage of revenue were 27.0% compared to 24.6% in the same period of 2019. -- Loss from operations totaled ($3.0) million, or (0.9%) of revenue, compared to income from operations of $68.0 million, or 13.6% of revenue, in the same period of 2019. Adjusted income from operations was $46.2 million, or 13.3% of revenue, compared to Adjusted income from operations of $72.3 million, or 14.4% of revenue, in the same period of 2019. -- Net loss attributable to Steven Madden, Ltd. was ($6.9) million, or ($0.09) per diluted share, compared to net income attributable to Steven Madden, Ltd. of $52.5 million, or $0.63 per diluted share, in the same period of 2019. Adjusted net income attributable to Steven Madden, Ltd. was $31.8 million, or $0.39 per diluted share, compared to Adjusted net income attributable to Steven Madden, Ltd. of $56.0 million, or $0.67 per diluted share, in the same period of 2019.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "While the COVID-19 pandemic continues to have a negative impact on our business, we were pleased to deliver third quarter revenue and earnings that significantly exceeded our expectations. The swift actions we took to address the rapidly changing marketplace adjusting our merchandise mix, accelerating our digital commerce initiatives and right-sizing our expense structure have positioned us to continue to navigate the crisis and also to capitalize on market share opportunities going forward. We remain confident that our strong brands, pristine balance sheet and proven business model will enable us to drive sustainable revenue and earnings growth as conditions normalize."

ThirdQuarter 2020 Segment Results

Revenue for the wholesale business decreased 32.7% to $283.8 million in the third quarter of 2020, including a 32.5% decline in wholesale footwear and a 33.3% decline in wholesale accessories/apparel. Gross margin in the wholesale business increased 70 basis points to 34.6% compared to 33.9% in the third quarter of 2019.

Retail revenue decreased 22.1% to $59.0 million in the third quarter of 2020 due to a significant decline in the brick-and-mortar business, partially offset by strong growth in the e-commerce business. Retail gross margin rose 50 basis points to 63.8% compared to 63.3% in the third quarter of 2019.

The Company ended the quarter with 221 company-operated retail stores, including eight internet stores, as well as 17 company-operated concessions in international markets.

The Companys effective tax rate for the third quarter of 2020 was (145.6%) compared to 23.0% in the third quarter of 2019. On an Adjusted basis, the effective tax rate for the third quarter of 2020 was 29.3% compared to 22.6% in the third quarter of 2019.

Balance Sheet

As of September30, 2020, cash, cash equivalents and short-term investments totaled $257.2 million, and the Company had no outstanding borrowings.

Fiscal Year 2020 Outlook

Given the continued disruption and uncertainty related to the COVID-19 pandemic, the Company is not providing guidance at this time.

Non-GAAP Adjustments

Amounts referred to as Adjusted exclude the items below.

For the third quarter 2020:

-- $8.7 million pre-tax ($6.7 million after-tax) expense in connection with payments and a provision for early lease termination charges, included in operating expenses. -- $4.6 million pre-tax ($3.5 million after-tax) expense associated with the impairment of store fixed assets, included in operating expenses. -- $2.3 million pre-tax ($1.7 million after-tax) expense in connection with the impairment of lease right-of-use assets, included in operating expenses. -- $1.0 million pre-tax ($0.7 million after-tax) expense in connection with restructuring and related charges, included in operating expenses. -- $0.4 million pre-tax ($0.3 million after-tax) benefit in connection with the change in valuation of contingent considerations, included in operating expenses. -- $33.0 million pre-tax ($25.2 million after-tax) expense associated with the impairment of certain trademarks. -- $1.2 million loss in connection with the impairment of store fixed assets, impairment of lease right-of-use assets, restructuring and related charges attributable to noncontrolling interest. -- $2.4 million tax expense in connection with deferred and foreign uncertain tax position adjustments.

For the third quarter 2019:

-- $3.1 million pre-tax ($2.3 million after-tax) expense in connection with a provision for early lease termination charges, included in operating expenses. -- $1.1 million pre-tax ($0.8 million after-tax) expense in connection with the acquisitions of GREATS and BB Dakota, included in operating expenses. -- $0.4 million tax expense in connection with deferred adjustments.

Reconciliations of amounts on a GAAP basis to Adjusted amounts are presented in the Non-GAAP Reconciliation tables at the end of this release and identify and quantify all excluded items.

Conference Call Information

Interested stockholders are invited to listen to the third quarter earnings conference call scheduled for today, October 27, 2020, at 8:30 a.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed by logging onto https://investor.stevemadden.com. An online archive of the broadcast will be available within two hours of the conclusion of the call and will remain available for 12 months following the live call.

About Steve Madden

Steve Madden designs, sources and markets fashion-forward footwear, accessories and apparel for women, men and children. In addition to marketing products under its own brands including Steve Madden, Dolce Vita, Betsey Johnson, Blondo, Report, Brian Atwood, Cejon, GREATS, BB Dakota, Mad Love and Big Buddha, Steve Madden is a licensee of various brands, including Anne Klein, Superga and DKNY. Steve Madden also designs and sources products under private label brand names for various retailers. Steve Maddens wholesale distribution includes department stores, specialty stores, luxury retailers, national chains, mass merchants and online retailers. Steve Madden also operates 221 retail stores (including eight internet stores). Steve Madden licenses certain of its brands to third parties for the marketing and sale of certain products, including ready-to-wear, outerwear, eyewear, hosiery, jewelry, fragrance, luggage and bedding and bath products. For local store information and the latest Steve Madden booties, pumps, mens and womens boots, fashion sneakers, slippers, dress shoes, sandals and more, visit http://www.stevemadden.com.

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, among others, statements regarding revenue and earnings guidance, plans, strategies, objectives, expectations and intentions. Forward-looking statements can be identified by words such as: may, will, expect, believe, should, anticipate, project, predict, plan, intend, or estimate, and similar expressions or the negative of these expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent the Companys current beliefs, expectations and assumptions regarding anticipated events and trends affecting its business and industry based on information available as of the time such statements are made. Investors are cautioned that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which may be outside of the Companys control. The Companys actual results and financial condition may differ materially from those indicated in these forward-looking statements. As such, investors should not rely upon them. Important risk factors include:

-- the Company's ability to maintain adequate liquidity when negatively impacted by unforeseen events such as an epidemic or pandemic (COVID-19), which may cause disruption to the Company's business operations and temporary closure of Company-operated and wholesale partner retail stores, resulting in a significant reduction in revenue for an indeterminable period of time; -- the Companys ability to accurately anticipate fashion trends and promptly respond to consumer demand; -- the Companys ability to compete effectively in a highly competitive market; -- the Companys ability to adapt its business model to rapid changes in the retail industry; -- the Companys dependence on the retention and hiring of key personnel; -- the Companys ability to successfully implement growth strategies and integrate acquired businesses; -- the Companys reliance on independent manufacturers to produce and deliver products in a timely manner, especially when faced with adversities such as work stoppages, transportation delays, public health emergencies, social unrest, changes in local economic conditions, and political upheavals as well as meet the Companys quality standards; -- changes in trade policies and tariffs imposed by the United States government and the governments of other nations in which the Company manufactures and sells products; -- disruptions to product delivery systems and the Companys ability to properly manage inventory; -- the Companys ability to adequately protect its trademarks and other intellectual property rights; -- legal, regulatory, political and economic risks that may affect the Companys sales in international markets; -- changes in U.S. and foreign tax laws that could have an adverse effect on the Companys financial results; -- additional tax liabilities resulting from audits by various taxing authorities; -- the Companys ability to achieve operating results that are consistent with prior financial guidance; and -- other risks and uncertainties indicated from time to time in the Companys filings with the Securities and Exchange Commission.

The Company does not undertake any obligation to publicly update any forward-looking statement, including, without limitation, any guidance regarding revenue or earnings, whether as a result of new information, future developments or otherwise.

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended Nine Months Ended September September September September 30, 30, 2020 30, 2019 30, 2020 2019 Net sales $ 342,830 $ 497,308 $ 839,877 $ 1,353,222 Commission and 4,037 4,806 8,970 14,309 licensing fee incomeTotal revenue 346,867 502,114 848,847 1,367,531 Cost of sales 206,990 306,277 519,618 839,849 Gross profit 139,877 195,837 329,229 527,682 Operating expenses 109,865 127,796 339,649 366,298 Impairment of 33,010 ? 42,528 4,050 intangibles(Loss) / income from (2,998 ) 68,041 (52,948 ) 157,334 operationsInterest and other 88 961 1,491 3,415 income, net(Loss) / income beforeprovision for income (2,910 ) 69,002 (51,457 ) 160,749 taxesProvision / (benefit) 4,236 15,886 (9,366 ) 36,257 for income taxesNet (loss) / income (7,146 ) 53,116 (42,091 ) 124,492 Less: net (loss) /income attributable to (195 ) 653 (1,103 ) 932 noncontrolling interestNet (loss) / incomeattributable to Steven $ (6,951 ) $ 52,463 $ (40,988 ) $ 123,560 Madden, Ltd. Basic net (loss) / $ (0.09 ) $ 0.66 $ (0.52 ) $ 1.55 income per share Diluted net (loss) / $ (0.09 ) $ 0.63 $ (0.52 ) $ 1.48 income per share Basic weighted averagecommon shares 78,560 79,092 78,650 79,854 outstanding Diluted weightedaverage common shares 78,560 83,106 78,650 83,740 outstanding Cash dividends declared $ ? $ 0.14 $ 0.15 $ 0.42 per common share

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

As of September 30, December 31, September 30, 2020 2019 2019 (Unaudited) (Unaudited) Cash and cash equivalents $ 223,820 $ 264,101 $ 167,492 Short-term investments 33,332 40,521 27,452 Accounts receivable, net 266,402 254,637 335,503 Inventories 109,683 136,896 148,053 Other current assets 14,597 22,724 28,586 Property and equipment, net 43,130 65,504 60,662 Operating lease right-of-use 111,732 155,700 162,385 assetsGoodwill and intangibles, net 283,094 334,058 334,341 Other assets 18,620 4,506 17,991 Total assets $ 1,104,410 $ 1,278,647 $ 1,282,465 Accounts payable $ 65,666 $ 61,706 $ 90,278 Operating leases (current & 144,185 171,796 177,772 non-current)Other current liabilities 116,194 180,941 124,356 Contingent payment liability 1,420 9,124 9,770 Other long-term liabilities 9,205 13,856 30,053 Total Steven Madden, Ltd. 756,120 828,501 838,738 stockholders? equityNoncontrolling interest 11,620 12,723 11,498 Total liabilities and $ 1,104,410 $ 1,278,647 $ 1,282,465 stockholders? equity

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

(Unaudited)

Nine Months Ended September 30, September 30, 2020 2019 Net cash provided by operating activities $ 607 $ 83,158 Investing Activities Capital expenditures (5,496 ) (9,211 )Maturity / sale of marketable securities and 6,020 40,331 short-term investments, netAcquisitions, net of cash acquired ? (36,753 )Net cash provided by / (used in) investing 524 (5,633 )activities Financing Activities Common stock purchased for treasury (29,796 ) (76,505 )Investment of noncontrolling interest 359 1,283 Distribution of noncontrolling interest earnings ? (1,113 )Proceeds from exercise of stock options 960 2,606 Cash dividends paid (12,459 ) (35,805 )Net cash (used in) financing activities (40,936 ) (109,534 ) Effect of exchange rate changes on cash and cash (476 ) (530 )equivalents Net (decrease) in cash and cash equivalents (40,281 ) (32,539 ) Cash and cash equivalents - beginning of period 264,101 200,031 Cash and cash equivalents - end of period $ 223,820 $ 167,492

STEVEN MADDEN, LTD. AND SUBSIDIARIES

NON-GAAP RECONCILIATION

(In thousands, except per share amounts)

(Unaudited)

The Company uses non-GAAP financial information to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. Additionally, the Company believes the information assists investors in comparing the Companys performance across reporting periods on a consistent basis by excluding items that are not indicative of its core business. The non-GAAP financial information is provided in addition to, and not as an alternative to, the Companys reported results prepared in accordance with GAAP.

Table 1 - Reconciliation of GAAP operating expenses to Adjusted operating expenses Three Months Ended Nine Months Ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019 GAAP operating expenses $ 109,865 $ 127,796 339,649 $ 366,298 Expense in connectionwith payments / provision (8,746 ) (3,131 ) (8,888 ) (5,424 )for early leasetermination charges Expense in connectionwith impairment of store (4,585 ) ? (16,597 ) ? fixed assets Expense in connectionwith impairment of lease (2,312 ) ? (20,299 ) ? right-of-use assets Expense in connectionwith restructuring and (978 ) ? (6,392 ) ? related charges Benefit in connectionwith the change in 409 ? 5,020 ? valuation of contingentconsiderations Expense in connectionwith benefits provided to ? ? (1,991 ) ? furloughed employees Expense in connection ? ? (697 ) ? with loan receivable Net benefit in connectionwith the change in acontingent liability andthe acceleration of ? ? ? 1,868 amortization related tothe termination of theKate Spade licenseagreement Expense in connectionwith the acquisitions of ? (1,078 ) ? (1,078 )GREATS and BB Dakota Net recovery inconnection with the ? ? ? 259 Payless ShoeSourcebankruptcy Expense in connectionwith a divisional ? ? ? (669 )headquarters relocation Adjusted operating $ 93,653 $ 123,587 $ 289,805 $ 361,254 expenses

Table 2 - Reconciliation of GAAP (loss) / income from operations to Adjustedincome from operations Three Months Ended Nine Months Ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019 GAAP (loss) / income from $ (2,998 ) $ 68,041 $ (52,948 ) $ 157,334 operations Expense in connection withpayments / provision for 8,746 3,131 8,888 5,424 early lease terminationcharges Expense in connection withimpairment of store fixed 4,585 ? 16,597 ? assets Expense in connection withimpairment of lease 2,312 ? 20,298 ? right-of-use assets Expense in connection withrestructuring and related 978 ? 6,391 ? charges Benefit in connection withthe change in valuation of (409 ) ? (5,020 ) ? contingent considerations Expense in connection withbenefits provided to ? ? 1,991 ? furloughed employees Expense in connection with ? ? 697 ? loan receivable Net benefit in connectionwith the change in acontingent liability andthe acceleration of ? ? ? (1,868 )amortization related to thetermination of the KateSpade license agreement Expense in connection withthe acquisitions of GREATS ? 1,078 ? 1,078 and BB Dakota Net recovery in connectionwith the Payless ShoeSource ? ? ? (259 )bankruptcy Expense in connection witha divisional headquarters ? ? ? 669 relocation Impairment of certain 33,010 ? 42,528 4,050 trademarks Adjusted income from $ 46,224 $ 72,250 $ 39,422 $ 166,428 operations

Table 3 - Reconciliation of GAAP provision / (benefit) for income taxes toAdjusted provision for income taxes Three Months Ended Nine Months Ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019 GAAP provision / (benefit) $ 4,236 $ 15,886 $ (9,366 ) $ 36,257 for income taxes Tax effect of expense inconnection with payments / 2,071 786 2,105 1,361 provision for early leasetermination charges Tax effect of expense inconnection with impairment of 1,128 ? 4,038 ? store fixed assets Tax effect of expense inconnection with impairment of 574 ? 4,907 ? lease right-of-use assets Tax effect of expense inconnection with restructuring 232 ? 1,284 ? and related charges Tax effect of benefit inconnection with the change in (97 ) ? (1,189 ) ? valuation of contingentconsiderations Tax effect of expense inconnection with benefits ? ? 472 ? provided to furloughedemployees Tax effect of expense inconnection with provision for ? ? 165 ? loan receivable Tax effect of net benefit inconnection with the change ina contingent liability andthe acceleration of ? ? ? (469 )amortization related to thetermination of the Kate Spadelicense agreement Tax effect of expense inconnection with the ? 271 ? 271 acquisitions of GREATS and BBDakota Tax effect of net recovery inconnection with the Payless ? ? ? 85 ShoeSource bankruptcy Tax effect of expense inconnection with a divisional ? ? ? 168 headquarters relocation Tax effect of impairment of 7,817 ? 10,071 1,017 certain trademarks Tax expense in connectionwith deferred and foreign (2,393 ) (383 ) (2,393 ) (383 )uncertain tax positionadjustments Adjusted provision for income $ 13,568 $ 16,560 $ 10,094 $ 38,307 taxes

Table 4 - Reconciliation of GAAP net (loss) / incomeattributable to noncontrolling interest to Adjusted net income attributable to noncontrolling interest Three Months Ended Nine Months Ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019 GAAP net (loss) / incomeattributable to noncontrolling $ (195 ) $ 653 $ (1,103 ) $ 932 interest Net loss in connection withimpairment of store fixedassets, impairment of lease 1,161 ? 1,631 ? right-of-use assets,restructuring and relatedcharges Adjusted net income attributable $ 966 $ 653 $ 923 $ 932 to noncontrolling interest

Table 5 - Reconciliation of GAAP (loss) / income attributable to Steven Madden,Ltd. to Adjusted net income attributable to Steven Madden, Ltd. Three Months Ended Nine Months Ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019 GAAP net (loss) / incomeattributable to Steven $ (6,951 ) $ 52,463 $ (40,988 ) $ 123,560 Madden, Ltd. After-tax impact ofexpense in connectionwith payments / 6,675 2,345 6,784 4,062 provision for earlylease terminationcharges After-tax impact ofexpense in connection 3,457 ? 12,559 ? with impairment of storefixed assets After-tax impact ofexpense in connection 1,737 ? 15,390 ? with impairment of leaseright-of-use assets After-tax impact ofexpense in connection 746 ? 4,876 ? with restructuring andrelated charges After-tax impact ofbenefit in connectionwith the change in (312 ) ? (3,831 ) ? valuation of contingentconsiderations After-tax impact ofexpense in connection ? ? 1,520 ? with benefits providedto furloughed employees After-tax impact ofexpense in connection ? ? 532 ? with provision for loanreceivable After-tax impact of netbenefit in connectionwith the change in acontingent liability andthe acceleration of ? ? ? (1,399 )amortization related tothe termination of theKate Spade licenseagreement After-tax impact ofexpense in connection ? 808 ? 808 with the acquisitions ofGREATS and BB Dakota After-tax impact of netrecovery in connection ? ? ? (344 )with the PaylessShoeSource bankruptcy After-tax impact ofexpense in connection ? ? ? 501 with a divisionalheadquarters relocation After-tax impact ofimpairment of certain 25,193 ? 32,458 3,033 trademarks Tax expense inconnection with deferred 2,393 383 2,393 383 and foreign uncertaintax position adjustments Less: Net loss inconnection withimpairment of storefixed assets, impairmentof lease right-of-use (1,161 ) ? (1,631 ) ? assets, restructuringand related chargesattributable tononcontrolling interest Adjusted net incomeattributable to Steven $ 31,777 $ 55,999 $ 30,062 $ 130,604 Madden, Ltd. GAAP diluted (loss) / $ (0.09 ) $ 0.63 $ (0.52 ) $ 1.48 income per share GAAP diluted weightedaverage shares 78,560 83,106 78,650 83,740 outstanding Adjusted diluted income $ 0.39 $ 0.67 $ 0.37 $ 1.56 per share Adjusted dilutedweighted average shares 80,701 83,106 81,047 83,740 outstanding

Contact

Steven Madden, Ltd.Director of Corporate Development & Investor RelationsDanielle McCoy718-308-2611InvestorRelations@stevemadden.com