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 Steve Madden Announces Second Quarter 2017 Results
   Tuesday, August 01, 2017 6:59:00 AM ET

Steve Madden (SHOO ), a leading designer and marketer of fashion footwear and accessories for women, men and children, today announced financial results for the second quarter ended June 30, 2017.

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

For the Second Quarter 2017:

-- Net sales increased 15.0% to $374.1 million compared to $325.4 million in the same period of 2016.

-- Gross margin was 37.3%. Adjusted gross margin was 37.4% as compared to 37.2% in the same period last year, an increase of 20 basis points.

-- Operating expenses as a percentage of sales were 26.6%. Adjusted operating expenses as a percentage of sales were 26.4% as compared to 27.0% of sales in the same period of 2016.

-- Operating income totaled $41.9 million, or 11.2% of net sales. Adjusted operating income was $43.1 million, or 11.5% of net sales, compared with operating income of $35.9 million, or 11.0% of net sales, in the same period of 2016.

-- Net income was $29.0 million, or $0.50 per diluted share. Adjusted net income was $29.7 million, or $0.51 per diluted share, compared to $24.7 million, or $0.41 per diluted share, in the prior year’s second quarter.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "The strong momentum in our business continued into the second quarter, as we delivered another quarter of robust sales and earnings growth despite the challenging retail environment. Once again, we saw outstanding performance in our core Steve Madden Women’s wholesale footwear division, where our trend-right product assortment continues to resonate with consumers and drive market share gains. As we look ahead to the balance of the year, we are taking a prudent approach to planning our business in light of industry headwinds. That said, the strength of our brands and our business model gives us confidence that we are well-positioned to navigate the uncertain environment."

Second Quarter 2017 Segment Results

Net sales for the wholesale business increased 16.3% to $305.6 million in the second quarter of 2017. Excluding the results of the recently acquired Schwartz & Benjamin, wholesale net sales increased 8.4% to $284.9 million from $262.9 million in the second quarter of 2016, driven by a strong increase in the wholesale footwear business. Gross margin in the wholesale business was 31.6%. Excluding the non-cash expense associated with the purchase accounting fair value adjustment of inventory acquired in the Schwartz & Benjamin acquisition, Adjusted gross margin in the wholesale business was 31.7% compared to 31.1% in last year’s second quarter, driven by strong margin improvement in the Steve Madden Women’s wholesale footwear division.

Retail net sales in the second quarter increased 9.6% to $68.5 million compared to $62.5 million in the second quarter of the prior year. Same store sales increased 2.2% in the quarter compared to a 5.4% same store sales increase in the second quarter of 2016. Retail gross margin decreased slightly to 62.6% in the second quarter of 2017 as compared to 62.8% in the second quarter of the prior year.

During the second quarter, the Company opened one full price store and one outlet store in the U.S. as well as one full price store in Canada, and converted one U.S. full price store to an outlet location. The Company ended the quarter with 193 company-operated retail locations, including four Internet stores.

The Company’s effective tax rate for the second quarter of 2017 was 31.9%. Excluding the tax impact of the non-cash expense associated with the purchase accounting fair value adjustment of inventory acquired in the Schwartz & Benjamin acquisition and the expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, the Adjusted effective tax rate was 32.0% compared to 31.8% in the second quarter of the prior year.

Balance Sheet and Cash Flow

During the second quarter of 2017, the Company repurchased 820,848 shares of the Company’s common stock for approximately $30.8 million, which includes shares acquired through the net settlement of employee stock awards.

As of June 30, 2017, cash, cash equivalents, and current and non-current marketable securities totaled $198.6 million.

Company Outlook

The Company now expects that net sales in fiscal year 2017 will increase 9% to 11% over net sales in 2016. The Company now expects that diluted EPS on a GAAP basis for fiscal year 2017 will be in the range of $2.03 to $2.09. The Company now expects that Adjusted diluted EPS for fiscal year 2017 will be in the range of $2.18 to $2.24.

Non-GAAP Adjustments

Amounts referred to as "Adjusted" exclude the items below.

For the second quarter 2017:

-- $0.4 million pre-tax ($0.3 million after-tax) in non-cash expense associated with the purchase accounting fair value adjustment of inventory acquired in the Schwartz & Benjamin acquisition, included in cost of sales.

-- $0.8 million pre-tax ($0.5 million after-tax) in expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, included in operating expenses.

For the fiscal year 2017:

-- $1.7 million pre-tax ($1.1 million after-tax) in non-cash expense associated with the purchase accounting fair value adjustment of inventory acquired in the Schwartz & Benjamin acquisition, included in cost of sales.

-- $1.5 million pre-tax ($1.0 million after-tax) in expense incurred in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, included in operating expenses.

-- $7.5 million pre-tax ($6.5 million after-tax) in estimated bad debt expense associated with the Payless ShoeSource bankruptcy, included in operating expenses.

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, August 1, 2017, at 8:30 a.m. Eastern Time. The call will be broadcast live over the Internet and can be accessed by logging onto http://www.stevemadden.com . An online archive of the broadcast will be available within one hour of the conclusion of the call and will be accessible for a period of 30 days following the call. Additionally, a replay of the call can be accessed by dialing 1-844-512-2921 (U.S.) and 1-412-317-6671 (international), passcode 2298337, and will be available until September 1, 2017.

About Steve Madden

Steve Madden designs, sources and markets fashion-forward footwear and accessories for women, men and children. In addition to marketing products under its own brands including Steve Madden(R), Dolce Vita(R), Betsey Johnson(R), Report(R), Big Buddha(R), Brian Atwood(R), Cejon(R), Blondo(R) and Mad Love(R), Steve Madden is a licensee of various brands, including Kate Spade(R), Superga(R) and Avec Les Filles(R). Steve Madden also designs and sources products under private label brand names for various retailers. Steve Madden’s wholesale distribution includes department stores, specialty stores, luxury retailers, national chains and mass merchants. Steve Madden also operates 193 retail stores (including Steve Madden’s four Internet stores). Steve Madden licenses certain of its brands to third parties for the marketing and sale of certain products, including for ready-to-wear, outerwear, intimate apparel, eyewear, hosiery, jewelry, fragrance, luggage and bedding and bath products. For local store information and the latest Steve Madden booties, pumps, men’s and women’s boots, dress shoes, sandals and more, visit http://www.stevemadden.com /

Safe Harbor

This press release and oral statements made from time to time by representatives of the Company contain certain "forward looking statements" as that term is defined in the federal securities laws. The events described in forward looking statements may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of the Company’s plans or strategies, projected or anticipated benefits from acquisitions to be made by the Company, or projections involving anticipated revenues, earnings or other aspects of the Company’s operating results. The words "may," "will," "expect," "believe," "anticipate," "project," "plan," "intend," "estimate," and "continue," and their opposites and similar expressions are intended to identify forward looking statements. The Company cautions you that these statements concern current expectations about the Company’s future results and condition and are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projections upon which the statements are based. Factors which may affect the Company’s results include, but are not limited to, the risks and uncertainties discussed in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission. Any one or more of these uncertainties, risks and other influences could materially affect the Company’s results of operations and financial condition and whether forward looking statements made by the Company ultimately prove to be accurate and, as such, the Company’s actual results, performance and achievements could differ materially from those expressed or implied in these forward looking statements. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

                                                                                                                                                         
                                                                                                                                                            STEVEN MADDEN, LTD. AND SUBSIDIARIES
                                                                                                                                                            CONDENSED CONSOLIDATED STATEMENTS OF
                                                                                                                                                                       OPERATIONS DATA
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                          (In thousands, except per share amounts)
                                                                                                                                                                         (Unaudited)
                                                                                                                                                                                                                                                                                                                   
                                                                                                                                      Three Months Ended                                                                                                                                   Six Months Ended
                                                                                                     June 30, 2017                                                          June 30, 2016                                                          June 30, 2017                                                                 June 30, 2016
                                                                                             -----------------------------                                          -----------------------------                                          -----------------------------                                          ------------------------------------------
                                                                                                                                                                                                                                                                                                                   
Net sales                                                                                                       $ 374,148                                                              $ 325,402                                                              $ 740,535                                                              $              654,759
Cost of sales                                                                                  234,751                                             204,357                                             468,420                                                          417,512
                                                                                             -------------------- -------                                           -------------------- -------                                           -------------------- -------                                           -------------------- --------------------
Gross profit                                                                                                      139,397                                                                121,045                                                                272,115                                                                             237,247
Commission and licensing fee income, net                                                                            2,166                                                                  2,784                                                                  6,092                                                                               4,955
Operating expenses                                                                              99,666                                              87,939                                             205,531                                                          176,432
                                                                                             -------------------- -------                                           -------------------- -------                                           -------------------- -------                                           -------------------- --------------------
Income from operations                                                                                             41,897                                                                 35,890                                                                 72,676                                                                              65,770
Interest and other income, net                                                                     708                                                 546                                               1,392                                                              370
                                                                                             -------------------- -------                                           -------------------- -------                                           -------------------- -------                                           -------------------- --------------------
Income before provision for income taxes                                                                           42,605                                                                 36,436                                                                 74,068                                                                              66,140
Provision for income taxes                                                                      13,582                                              11,594                                              24,523                                                           17,402
                                                                                             -------------------- -------                                           -------------------- -------                                           -------------------- -------                                           -------------------- --------------------
Net income                                                                                                         29,023                                                                 24,842                                                                 49,545                                                                              48,738
Net income attributable to noncontrolling interest                                                  59                                                 105                                                 423                                                              342
                                                                                             -------------------- -------                                           -------------------- -------                                           -------------------- -------                                           -------------------- --------------------
Net income attributable to Steven Madden, Ltd.                                                                  $  28,964                                                              $  24,737                                                              $  49,122                                                              $               48,396
                                                                                             ==================== =======                                           ==================== =======                                           ==================== =======                                           ==================== ====================
                                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                   
Basic income per share                                                                                          $    0.53                                                              $    0.43                                                              $    0.89                                                              $                 0.84
Diluted income per share                                                                                        $    0.50                                                              $    0.41                                                              $    0.85                                                              $                 0.81
                                                                                                                                                                                                                                                                                                                   
Basic weighted average common shares
outstanding                                                                                                        55,161                                                                 57,430                                                                 55,487                                                                              57,572
Diluted weighted average common shares
outstanding                                                                                                        57,750                                                                 59,739                                                                 57,969                                                                              59,998
                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                   
                                                                                                                           STEVEN MADDEN, LTD. AND SUBSIDIARIES
                                                                                                                         CONDENSED CONSOLIDATED BALANCE SHEET DATA
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      (In thousands)
                                                        
                                                                                                                                                                                          As of
                                                                                                        June 30, 2017                                                          December 31, 2016                                                               June 30, 2016
                                                                                               -------------------------------                                          ------------------------------                                          ------------------------------------------
                                                                                                         (Unaudited)                                                                                                                                            (Unaudited)
Cash and cash equivalents                                                                                         $    99,411                                                              $  126,115                                                              $               76,271
Marketable securities (current & non current)                                                                          99,195                                                                 110,054                                                                             122,690
Accounts receivables, net                                                                                             255,260                                                                 200,958                                                                             216,564
Inventories                                                                                                           121,213                                                                 119,824                                                                             116,369
Other current assets                                                                                                   49,209                                                                  42,279                                                                              41,255
Property and equipment, net                                                                                            74,129                                                                  72,381                                                                              73,485
Goodwill and intangibles, net                                                                                         305,155                                                                 280,097                                                                             286,187
Other assets                                                                                         9,091                                                9,167                                                            8,366
                                                                                               -------------------- ---------                                           -------------------- --------                                           -------------------- --------------------
Total assets                                                                                                      $ 1,012,663                                                              $  960,875                                                              $              941,187
                                                                                               ==================== =========                                           ==================== ========                                           ==================== ====================
                                                                                                                                                                                                                                                 
Accounts payable                                                                                                  $   101,447                                                              $   80,584                                                              $              101,473
Contingent payment liability (current & non current)                                                                   24,923                                                                   7,948                                                                              20,012
Other current liabilities                                                                                              99,372                                                                  94,595                                                                              79,199
Other long term liabilities                                                                                            37,191                                                                  36,676                                                                              39,725
Total Steven Madden, Ltd. stockholders’ equity                                                                        748,036                                                                 740,867                                                                             700,437
Noncontrolling interest                                                                              1,694                                                  205                                                              341
                                                                                               -------------------- ---------                                           -------------------- --------                                           -------------------- --------------------
Total liabilities and stockholders’ equity                                                                        $ 1,012,663                                                              $  960,875                                                              $              941,187
                                                                                               ==================== =========                                           ==================== ========                                           ==================== ====================
                                                                                                                                                                                                                                                                      
                                                                                                                      
                                                                                                        STEVEN MADDEN, LTD. AND SUBSIDIARIES
                                                                                                        CONDENSED CONSOLIDATED CASH FLOW DATA
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   (In thousands)
                                                                                                                     (Unaudited)
                                                                                                        
                                                                                                                                                                      Six Months Ended
                                                                                                                          June 30, 2017                                                                               June 30, 2016
                                                                                                       --------------------------------------------------                                          --------------------------------------------------
                                                                                                                                                                                                    
                                                                                                                                                                                                    
Net cash provided by operating activities                                                                                 $  49,474                                                                                   $  58,491
                                                                                                                                                                                                    
Investing Activities
------------------------------------------------------------
Purchases of property and equipment                                                                                          (7,672 )                                                                                    (8,402 )
Sales of marketable securities, net                                                                                          11,641                                                                                         842
Repayment of notes receivable                                                                                                   221                                                                                           -
Acquisition, net of cash acquired                                                                        (17,396 )                                                                      -  
                                                                                                       -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net cash used in investing activities                                                                                       (13,206 )                                                                                    (7,560 )
                                         
Financing Activities
------------------------------------------------------------
Common stock share repurchases for treasury                                                                                 (63,941 )                                                                                   (41,070 )
Purchase of noncontrolling interest                                                                                               -                                                                                      (3,759 )
Payment of contingent liability                                                                                              (5,321 )                                                                                    (6,281 )
Proceeds from exercise of stock options                                                                    5,649                                                 3,708  
                                                                                                       -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net cash used in financing activities                                                                                       (63,613 )                                                                                   (47,402 )
                                                                                                                                                                                                    
Effect of exchange rate changes on cash and cash equivalents                                                                    641                                                                                         328
                                                                                                                                                                                                    
Net (decrease) increase in cash and cash equivalents                                                                        (26,704 )                                                                                     3,857
                                                                                                                                                                                                    
Cash and cash equivalents - beginning of period                                                                             126,115                                                                                      72,414
                                                                                                                                                                                 
                                                                                                       --------------------------------------------------                                          --------------------------------------------------
Cash and cash equivalents - end of period                                                                                 $  99,411                                                                $  76,271  
                                                                                                       ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                 

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 Company’s 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 Company’s reported results prepared in accordance with GAAP.

                                                                                                   
Table 1 - Reconciliation of GAAP gross
profit to Adjusted gross profit
---------------------------------------------------------------------
                                                                                                                  Three Months Ended                                                    Six Months Ended
                                                                                                                     June 30, 2017                                                        June 30, 2017
                                                                                                                ----------------------                                          --------------------------------
Consolidated
---------------------------------------------------------------------
GAAP gross profit                                                                                                        $    139,397                                                    $              272,115
                                                                                                                                                                                 
Non-cash expense associated with the purchase accounting fair value
adjustment of inventory acquired in the Schwartz & Benjamin                                                                       413                                                                     1,653
acquisition
                                                                                                                                                                                 
Adjusted gross profit                                                                                                    $    139,810                                                    $              273,768
                                                                                                                                                                                 
Wholesale
---------------------------------------------------------------------
GAAP gross profit                                                                                                        $     96,519                                                    $              197,950
                                                                                                                                                                                 
Non-cash expense associated with the purchase accounting fair value
adjustment
adjustment of inventory acquired in the Schwartz & Benjamin                                                                       413                                                                     1,653
acquisition
                                                                                                                                                                                 
Adjusted gross profit                                                              $     96,932              $              199,603
--------------------------------------------------------------------- -------------------- -------------------- ---------- ---------- -------------------- -------------------- ---------- --------------------
                                                               
--------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- --------------------------------
Table 2 - Reconciliation of GAAP operating
expenses to Adjusted operating expenses
---------------------------------------------------------------------
                                                                                                                  Three Months Ended                                                    Six Months Ended
                                                                                                                     June 30, 2017                                                        June 30, 2017
                                                                                                                ----------------------                                          --------------------------------
                                                                                                                                                                                 
GAAP operating expenses                                                                                                  $     99,666                                                    $              205,531
                                                                                                                                                                                 
Expense incurred in connection with the integration of the Schwartz                                                               767                                                                       767
& Benjamin
acquisition and the related restructuring
                                                                                                                                                                                 
Bad debt expense associated with the Payless ShoeSource bankruptcy                                                                  -                                                                     7,500
                                                                                                                                                                                 
Adjusted operating expenses                                                        $     98,899              $              197,264
--------------------------------------------------------------------- -------------------- -------------------- ---------- ---------- -------------------- -------------------- ---------- --------------------
                                                               
--------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- --------------------------------
Table 3 - Reconciliation of GAAP operating
income to Adjusted operating income
---------------------------------------------------------------------
                                                                                                                  Three Months Ended                                                    Six Months Ended
                                                                                                                     June 30, 2017                                                        June 30, 2017
                                                                                                                ----------------------                                          --------------------------------
                                                                                                                                                                                 
GAAP operating income                                                                                                    $     41,897                                                    $               72,676
                                                                                                                                                                                 
Non-cash expense associated with the purchase accounting fair value
adjustment of inventory acquired in the Schwartz & Benjamin                                                                       413                                                                     1,653
acquisition
                                                                                                                                                                                 
Expense incurred in connection with the integration of the Schwartz                                                               767                                                                       767
& Benjamin
acquisition and the related restructuring
                                                                                                                                                                                 
Bad debt expense associated with the Payless ShoeSource bankruptcy                                                                  -                                                                     7,500
                                                                                                                                                                                 
Adjusted operating income                                                          $     43,077              $               82,596
--------------------------------------------------------------------- -------------------- -------------------- ---------- ---------- -------------------- -------------------- ---------- --------------------
                                                               
--------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- --------------------------------
Table 4 - Reconciliation of GAAP provision
for income taxes to Adjusted provision for income taxes
---------------------------------------------------------------------
                                                                                                                  Three Months Ended                                                    Six Months Ended
                                                                                                                     June 30, 2017                                                        June 30, 2017
                                                                                                                ----------------------                                          --------------------------------
                                                                                                                                                                                 
GAAP provision for income taxes                                                                                          $     13,582                                                    $               24,523
                                                                                                                                                                                 
Tax effect of non-cash expense associated with the purchase
accounting fair
value adjustment of inventory acquired in the Schwartz & Benjamin                                                                 153                                                                       578
acquisition
                                                                                                                                                                                 
Tax effect of expense incurred in connection with the integration of                                                              284                                                                       284
the
Schwartz & Benjamin acquisition and the related restructuring
                                                                                                                                                                                 
Tax effect of bad debt expense associated with the Payless ShoeSource
bankruptcy                                                                                                                          -                                                                       964
                                                                                                                                                                                 
Adjusted provision for income taxes                                                $     14,019              $               26,349
--------------------------------------------------------------------- -------------------- -------------------- ---------- ---------- -------------------- -------------------- ---------- --------------------
                                                               
--------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- --------------------------------
Table 5 - Reconciliation of GAAP net income
to Adjusted net income
---------------------------------------------------------------------
                                                                                                                  Three Months Ended                                                    Six Months Ended
                                                                                                                     June 30, 2017                                                        June 30, 2017
                                                                                                                ----------------------                                          --------------------------------
                                                                                                                                                                                 
GAAP net income attributable to Steven Madden, Ltd.                                                                      $     28,964                                                    $               49,122
                                                                                                                                                                                 
After-tax impact of non-cash expense associated with the purchase
accounting fair value adjustment of inventory acquired in the
Schwartz &
Benjamin acquisition                                                                                                              260                                                                     1,075
                                                                                                                                                                                 
After-tax impact of expense incurred in connection with the                                                                       483                                                                       483
integration of the
Schwartz & Benjamin acquisition and the related restructuring
                                                                                                                                                                                 
After-tax impact of bad debt expense associated with the Payless
ShoeSource bankruptcy                                                                                                               -                                                                     6,536
                                                                                                                                                                                 
Adjusted net income attributable to Steven Madden, Ltd.                                                                  $     29,707                                                    $               57,216
                                                                                                                                                                                 
GAAP diluted income per share                                                                                            $       0.50                                                    $                 0.85
Adjusted diluted income per share                                                  $       0.51              $                 0.99
--------------------------------------------------------------------- -------------------- -------------------- ---------- ---------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                            

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170801005288r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170801005288/en/

SOURCE: Steve Madden

ICR, Inc. 
Investor Relations 
Jean Fontana/Megan Crudele 
203-682-8200 
www.icrinc.com


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