GlobeNewswire Inc | Jul 29, 2020 06:59AM EDT

July 29, 2020

LONG ISLAND CITY, N.Y., July 29, 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 second quarter ended June30, 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.

Second Quarter 2020 Review

-- Revenue decreased 68.2% to $142.8million compared to $449.6 million in the same period of 2019. -- Gross margin was 39.1% compared to 37.8% in the same period last year. -- Operating expenses as a percentage of revenue were 55.7% compared to 27.0% of revenue in the same period of 2019. Adjusted operating expenses as a percentage of revenue were 53.8% compared to 26.9% of revenue in the same period of 2019. -- Loss from operations totaled ($23.7) million, or (16.6%) of revenue, compared to income from operations of $44.6 million, or 9.9% of revenue, in the same period of 2019. Adjusted loss from operations was ($21.0) million, or (14.7%) of revenue, compared to Adjusted income from operations of $49.1 million, or 10.9% of revenue, in the same period of 2019. -- Net loss attributable to Steven Madden, Ltd. was ($16.6) million, or ($0.21) per diluted share, compared to net income attributable to Steven Madden, Ltd. of $36.6 million, or $0.44 per diluted share, in the prior years second quarter. Adjusted net loss attributable to Steven Madden, Ltd. was ($14.7) million, or ($0.19) per diluted share, compared to Adjusted net income attributable to Steven Madden, Ltd. of $39.5 million, or $0.47 per diluted share, in the prior years second quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "The past few months have been challenging for all of us due to the COVID-19 pandemic. At Steve Madden, we have prioritized the health and safety of our employees, customers and communities while also moving quickly to adapt to the current retail environment, mitigate the impact to our business, preserve liquidity and enhance financial flexibility. We are encouraged by the strong performance we are seeing in digital commerce channels including 88% revenue growth on stevemadden.com in the second quarter which underscores the strength of our brands and the continued consumer demand for our products. We know the path forward will continue to be bumpy in the near-term, but we are confident that our strengths powerful brands, a fortress balance sheet, a proven business model and most of all, our talented and dedicated employees will enable us to successfully navigate this crisis and return to profitable growth once conditions normalize."

SecondQuarter 2020 Segment Results

Revenue for the wholesale business decreased 72.5% to $100.0 million in the second quarter of 2020, including a 72.8% decline in wholesale footwear and a 71.5% decline in wholesale accessories/apparel. The revenue decline was driven by significant order cancellations resulting from the COVID-19 pandemic. Gross margin in the wholesale business decreased to 26.6% compared to 32.1% in last years second quarter due primarily to a shift in sales mix to the lower-margin private label business.

Retail revenue in the second quarter decreased 49.2% to $41.4 million due to the closure of the vast majority of the Company's retail stores for most or all of the quarter as a result of the COVID-19 pandemic, partially offset by strong performance in the Company's e-commerce business. Retail gross margin increased to 67.4% in the second quarter of 2020 compared to 59.7% in the second quarter of the prior year due primarily to a shift in sales mix to the higher-margin e-commerce business.

The Company ended the quarter with 225 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 second quarter of 2020 was 26.6% compared to 21.3% in the second quarter of 2019. On an Adjusted basis, the effective tax rate for the second quarter of 2020 was 26.9% compared to 22.4% in the second quarter of 2019.

Balance Sheet and Cash Flow

As of June30, 2020, cash, cash equivalents and marketable securities totaled $356.9 million. Advances from factor totaled $42.7 million.

On July 22, 2020, the Company entered into a new $150 million, five-year asset-based revolving credit facility, which replaced the Companys previous credit facility with its factor.

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 second quarter 2020:

-- $5.4 million pre-tax ($4.1 million after-tax) expense in connection with restructuring and related charges, included in operating expenses. -- $4.6 million pre-tax ($3.5 million after-tax) benefit in connection with a change in valuation of contingent considerations, included in operating expenses. -- $1.2 million pre-tax ($0.9 million after-tax) expense in connection with the impairment of lease right-of-use assets, included in operating expenses. -- $0.7 million pre-tax ($0.6 million after-tax) expense in connection with benefits provided to furloughed employees, included in operating expenses. -- $0.02 million pre-tax ($0.01 million after-tax) expense associated with the impairment of store fixed assets, included in operating expenses. -- $0.2 million loss in connection with the impairment of lease right-of-use assets, trademark and other attributable to noncontrolling interest.

For the second quarter 2019:

-- $1.8 million pre-tax ($1.7 million after-tax) recovery associated with the Payless ShoeSource bankruptcy, included in operating expenses. -- $1.5 million pre-tax ($1.2 million after-tax) expense in connection with a provision for early lease termination charges, included in operating expenses. -- $0.7 million pre-tax ($0.5 million after-tax) expense in connection with a divisional headquarters relocation, included in operating expenses. -- $4.1 million pre-tax ($3.0 million after-tax) non-cash expense associated with the impairment of the Brian Atwood trademark.

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 second quarter earnings conference call scheduled for today, July 29, 2020, at 8:30 a.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed by logging onto http://stevemadden.gcs-web.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 and mass merchants. Steve Madden also operates 225 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, 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 Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 Net sales $ 141,363 $ 444,974 $ 497,047 $ 855,914 Commission and 1,449 4,655 4,933 9,503 licensing fee incomeTotal revenue 142,812 449,629 501,980 865,417 Cost of sales 86,924 279,629 312,628 533,572 Gross profit 55,888 170,000 189,352 331,845 Operating expenses 79,590 121,317 229,784 238,502 Trademark impairment ? 4,050 9,518 4,050 charges(Loss) / income from (23,702 ) 44,633 (49,950 ) 89,293 operationsInterest and other 357 1,262 1,403 2,454 income, net(Loss) / income beforeprovision for income (23,345 ) 45,895 (48,547 ) 91,747 taxes(Benefit) / provision (6,201 ) 9,784 (13,602 ) 20,371 for income taxesNet (loss) / income (17,144 ) 36,111 (34,945 ) 71,376 Less: net (loss) /income attributable to (558 ) (461 ) (908 ) 279 noncontrolling interestNet (loss) / incomeattributable to Steven $ (16,586 ) $ 36,572 $ (34,037 ) $ 71,097 Madden, Ltd. Basic net (loss) / $ (0.21 ) $ 0.46 $ (0.43 ) $ 0.89 income per share Diluted net (loss) / $ (0.21 ) $ 0.44 $ (0.43 ) $ 0.85 income per share Basic weighted averagecommon shares 78,517 79,951 78,696 80,241 outstanding Diluted weightedaverage common shares 78,517 83,869 78,696 84,064 outstanding Cash dividends declared $ ? $ 0.14 $ 0.15 $ 0.28 per common share

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

As of June 30, 2020 December 31, June 30, 2019 2019 (Unaudited) (Unaudited) Cash and cash equivalents $ 318,101 $ 264,101 $ 212,664 Marketable securities 38,837 40,521 36,096 Accounts receivable, net 143,679 254,637 306,636 Inventories 103,282 136,896 146,120 Other current assets 32,022 22,724 39,287 Property and equipment, net 49,594 65,504 61,654 Operating lease right-of-use assets 120,489 155,700 179,320 Goodwill and intangibles, net 315,742 334,058 286,129 Other assets 10,646 4,506 13,654 Total assets $ 1,132,392 $ 1,278,647 $ 1,281,560 Accounts payable $ 42,474 $ 61,706 $ 107,436 Operating leases (current & 151,520 171,796 193,295 non-current)Advances from factor 42,662 ? ? Other current liabilities 115,866 180,941 136,131 Contingent payment liability 1,829 9,124 ? Other long-term liabilities 10,921 13,856 17,142 Total Steven Madden, Ltd. 755,084 828,501 818,354 stockholders? equityNoncontrolling interest 12,036 12,723 9,202 Total liabilities and stockholders? $ 1,132,392 $ 1,278,647 $ 1,281,560 equity

STEVEN MADDEN, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW DATA

(In thousands)

(Unaudited)

SixMonths Ended June 30, June 30, 2020 2019 Net cash provided by operating activities $ 57,867 $ 59,761 Investing Activities Capital expenditures (4,320 ) (6,214 )(Purchases) / sales of marketable securities, net (162 ) 32,062 Net cash (used in) / provided by investing (4,482 ) 25,848 activities Financing Activities Common stock purchased for treasury (29,678 ) (51,156 )Investment of noncontrolling interest 359 1,283 Distribution of noncontrolling interest earnings ? (1,113 )Proceeds from exercise of stock options 960 1,799 Cash dividends paid (12,459 ) (23,987 )Advances from factor, net 42,662 ? Net cash provided by / (used in) financing 1,844 (73,174 )activities Effect of exchange rate changes on cash and cash (1,229 ) 198 equivalents Net increase in cash and cash equivalents 54,000 12,633 Cash and cash equivalents - beginning of period 264,101 200,031 Cash and cash equivalents - end of period $ 318,101 $ 212,664

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 Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 GAAP operating expenses $ 79,590 $ 121,317 229,784 $ 238,502 Expense in connectionwith restructuring and (5,414 ) ? (5,414 ) ? related charges Benefit in connectionwith a change in 4,611 ? 4,611 ? valuation of contingentconsiderations Expense in connectionwith impairment of lease (1,161 ) ? (17,987 ) ? right-of-use assets Expense in connectionwith impairment of store (17 ) ? (12,012 ) ? fixed assets Expense in connectionwith benefits provided (733 ) ? (1,991 ) ? to furloughed employees Expense in connection ? ? (697 ) ? with loan receivable Net benefit inconnection with thechange in a contingentliability and theacceleration of ? ? ? 1,868 amortization related tothe termination of theKate Spade licenseagreement Expense in connectionwith provision for early ? (1,543 ) (142 ) (2,292 )lease terminationcharges Net recovery inconnection with the ? 1,811 ? 259 Payless ShoeSourcebankruptcy Expense in connectionwith a divisional ? (669 ) ? (669 )headquarters relocation Adjusted operating $ 76,876 $ 120,916 $ 196,152 $ 237,668 expenses

Table 2 - Reconciliation of GAAP (loss) / income from operations to Adjusted(loss) / income from operations Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 GAAP (loss) / income from $ (23,702 ) $ 44,633 $ (49,950 ) $ 89,293 operations Expense in connectionwith restructuring and 5,414 ? 5,414 ? related charges Benefit in connectionwith a change in (4,611 ) ? (4,611 ) ? valuation of contingentconsiderations Expense in connectionwith impairment of lease 1,161 ? 17,987 ? right-of-use assets Expense in connectionwith impairment of store 17 ? 12,012 ? fixed assets Expense in connectionwith benefits provided to 733 ? 1,991 ? furloughed employees Expense in connectionwith provision for loan ? ? 697 ? 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 provision for early ? 1,543 142 2,292 lease termination charges Impairment of certain ? 4,050 9,518 4,050 trademarks Net recovery inconnection with the ? (1,811 ) ? (259 )Payless ShoeSourcebankruptcy Expense in connectionwith a divisional ? 669 ? 669 headquarters relocation Adjusted (loss) / income $ (20,988 ) $ 49,084 $ (6,800 ) $ 94,177 from operations

Table 3 - Reconciliation of GAAP (benefit) / provision for income taxes toAdjusted (benefit) / provision for income taxes Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 GAAP (benefit) / provision $ (6,201 ) $ 9,784 $ (13,602 ) $ 20,371 for income taxes Tax effect of expense inconnection with 1,284 ? 1,284 ? restructuring and relatedcharges Tax effect of benefit inconnection with a change (1,092 ) ? (1,092 ) ? in valuation of contingentconsiderations Tax effect of expense inconnection with impairment 273 ? 4,333 ? of lease right-of-useassets Tax effect of expense inconnection with impairment 4 ? 2,910 ? of store fixed assets Tax effect of expense inconnection with benefits 174 ? 472 ? provided to furloughedemployees Tax effect of expense inconnection with provision ? ? 165 ? for loan receivable Tax effect of net benefitin connection with thechange in a contingentliability and theacceleration of ? ? ? (469 )amortization related tothe termination of theKate Spade licenseagreement Tax effect of expense inconnection with provision ? 387 34 575 for early leasetermination charges Tax effect of impairment ? 1,017 2,254 1,017 of certain trademarks Tax effect of net recoveryin connection with the ? (85 ) ? 85 Payless ShoeSourcebankruptcy Tax effect of expense inconnection with a ? 168 ? 168 divisional headquartersrelocation Adjusted (benefit) / $ (5,558 ) $ 11,271 $ (3,242 ) $ 21,747 provision for income taxes

Table 4 - Reconciliation of GAAP net (loss) / incomeattributable to noncontrolling interest to Adjusted net (loss) / income attributable to noncontrolling interest Three Months Ended Six Months Ended June 30, June 30, June 30, June 2020 2019 2020 30, 2019 GAAP net (loss) / incomeattributable to noncontrolling $ (558 ) $ (461 ) $ (908 ) $ 279 interest Net loss in connection withimpairment of lease right-of-useassets, trademark and other 163 ? 470 ? attributable to noncontrollinginterest Adjusted net (loss) / incomeattributable to noncontrolling $ (395 ) $ (461 ) $ (438 ) $ 279 interest

Table 5 - Reconciliation of GAAP net (loss) / income attributable to StevenMadden, Ltd. to Adjusted net (loss) / income attributable to Steven Madden,Ltd. Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 GAAP net (loss) / incomeattributable to Steven $ (16,586 ) $ 36,572 $ (34,037 ) $ 71,097 Madden, Ltd. After-tax impact ofexpense in connection 4,130 ? 4,130 ? with restructuring andrelated charges After-tax impact ofbenefit in connectionwith a change in (3,519 ) ? (3,519 ) ? valuation of contingentconsiderations After-tax impact ofexpense in connection 887 ? 13,653 ? with impairment of leaseright-of-use assets After-tax impact ofexpense in connection 13 ? 9,102 ? with impairment of storefixed assets After-tax impact ofexpense in connection 560 ? 1,520 ? with benefits provided tofurloughed 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 ? 1,156 109 1,717 with provision for earlylease termination charges After-tax impact ofimpairment of certain ? 3,033 7,265 3,033 trademarks Less: Net loss inconnection withimpairment of leaseright-of-use assets, (163 ) ? (470 ) ? trademark and otherattributable tononcontrolling interest After-tax impact of netrecovery in connection ? (1,727 ) ? (344 )with the PaylessShoeSource bankruptcy After-tax impact ofexpense in connection ? 501 ? 501 with a divisionalheadquarters relocation Adjusted net (loss) /income attributable to $ (14,678 ) $ 39,535 $ (1,715 ) $ 74,605 Steven Madden, Ltd. GAAP diluted (loss) / $ (0.21 ) $ 0.44 $ (0.43 ) $ 0.85 income per share GAAP diluted weightedaverage shares 78,517 83,869 78,696 84,064 outstanding Adjusted diluted (loss) / $ (0.19 ) $ 0.47 $ (0.02 ) $ 0.89 income per share Adjusted diluted weightedaverage shares 78,517 83,869 78,696 84,064 outstanding

Contact

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