Steve Madden (Nasdaq: SHOO), a leading designer and marketer of fashion footwear and accessories for women, men and children, today announced financial results for the fourth quarter and full year ended December 31, 2018, and provided initial fiscal year 2019 sales and EPS guidance.
For the Fourth Quarter 2018:
- Net sales increased 12.6% to $410.4 million compared to $364.4 million in the same period of 2017.
- Gross margin was 37.1%. Gross margin in the fourth quarter of 2017 was 38.4%. Adjusted gross margin in the fourth quarter of 2017 was 38.1%.
- Operating expenses as a percentage of net sales were 29.7% compared to 30.3% of net sales, in the same period of 2017. Adjusted operating expenses as a percentage of net sales were 28.6% compared to 29.0% of net sales, in the same period of 2017.
- Income from operations totaled $25.0 million, or 6.1% of net sales, compared to $31.7 million, or 8.7% of net sales, in the same period of 2017. Adjusted income from operations was $37.9 million, or 9.2% of net sales, compared to Adjusted income from operations of $36.3 million, or 10.0% of net sales, in the same period of 2017.
- Net income attributable to Steven Madden, Ltd. was $12.5 million, or $0.15 per diluted share, compared to $24.6 million, or $0.28 per diluted share, in the prior year’s fourth quarter. Adjusted net income attributable to Steven Madden, Ltd. was $35.7 million, or $0.42 per diluted share, compared to $27.5 million, or $0.32 per diluted share, in the prior year’s fourth quarter.
Edward Rosenfeld, Chairman and Chief Executive Officer, commented, “We are pleased to have delivered a strong fourth quarter, with net sales growing 13% and Adjusted diluted EPS increasing 31% compared to the prior year period. The trend-right product assortments created by Steve and his design team drove robust gains in our flagship Steve Madden brand in both footwear and handbags. We also saw outstanding growth in Blondo and in our private label accessories business. As we look ahead, we are encouraged by the strong momentum in our core business and the progress we are making on our key strategic initiatives. While we face a near-term headwind due to the bankruptcy of Payless ShoeSource, a significant private label customer for the Company, we are confident that our diversified business model positions us for long-term growth and value creation going forward.”
Fourth Quarter 2018 Segment Results
Net sales for the wholesale business increased 14.1% to $317.4 million in the fourth quarter of 2018, driven by strong growth in both wholesale footwear and wholesale accessories. Gross margin in the wholesale business decreased to 30.1% compared to 31.0% in last year’s fourth quarter due to a decline in wholesale accessories driven by sales mix, as well as the impact of the 10% tariff on handbags and certain other accessory categories implemented on September 24, 2018 and increased ocean freight costs.
Retail net sales in the fourth quarter rose 7.9% to $93.0 million compared to $86.2 million in the fourth quarter of the prior year. Same store sales increased 4.0% in the quarter driven by strong performance in the Company’s e-commerce business. Retail gross margin rose to 61.0% in the fourth quarter of 2018, up 20 basis points compared to 60.8% in the fourth quarter of the prior year due to improved gross margin in the Company’s e-commerce business.
The Company ended the quarter with 229 company-operated retail locations, including seven Internet stores, as well as 42 company-operated concessions in international markets.
The Company’s effective tax rate for the fourth quarter of 2018 was 52.7% compared to 23.2% in the fourth quarter of 2017 driven by $11.1 million in tax expense resulting from the Tax Cuts and Jobs Act transition tax and prepaid tax adjustments related to prior years. On an Adjusted basis, the effective tax rate was 9.2% compared to 24.9% in the fourth quarter of the prior year due primarily to the impact of the Tax Cuts and Jobs Act.
Full Year Ended December 31, 2018
For the full year ended December 31, 2018, net sales increased 7.0% to $1.65 billion from $1.55 billion in the prior year.
Net income was $129.1 million, or $1.50 per diluted share, for the year ended December 31, 2018 compared to net income of $117.9 million, or $1.36 per diluted share, for the year ended December 31, 2017. On an Adjusted basis, net income was $157.7 million, or $1.83 per diluted share, for the year ended December 31, 2018 compared to net income of $129.3 million, or $1.49 per diluted share, for the year ended December 31, 2017.
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