Equity-based compensation is included in operating expenses on the Company’s Condensed Consolidated Statements of Income.
sleepwear, activewear, jewelry, watches, bedding, luggage, umbrellas and household goods. The Licensing segment also licenses the Dolce Vita® trademark for use in connection with the manufacture, marketing and sale of swimwear.
In August 2018, the FASB issued Accounting Standards Update No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new guidanceASU 2018-15 is effective for the Company on a prospective or retrospective basis beginning on January 1, 2020 with early adoption permitted. While the Company is currently assessing the impact of the new guidance, it isand did not expected to have a materialany significant impact on the Company’s consolidated financial statements.position or results of operations.
In August 2018, the FASB issued Accounting Standards Update No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidanceASU 2018-13 is effective for the Company beginning on January 1, 2020 with early adoption permitted. Certain disclosures in the new guidance will need to be applied on a retrospective basis and others on a prospective basis. While the Company is currently assessing the impact of the new guidance, it isdid not expected to have a materialany significant impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update 2016-13 ("ASU 2016-13"), "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The newASU 2016-13 is effective January 1, 2020 and did not have any significant impact on the Company’s financial position or results of operations.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations for the three and six month periods ended June 30, 20192020 should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
Steven Madden, Ltd. and its subsidiaries design, source, market and sell fashion-forward branded and private label footwear for women, men and children. In addition, we design, source, market and sell brandbranded fashion handbags, apparel and accessories, as well as private label fashion handbags and accessories. We market and sell our products through better department stores, major department stores, mid-tier department stores, specialty stores, luxury retailers, value priced retailers, national chains, mass merchants, online retailers, and catalogonline retailers, throughout the United States, Canada, Mexico, Italy and certain other European nations and Tunisia.nations. In addition, our products are marketed through our retail stores and our e-commerce websites within the United States, Canada and Mexico, our joint ventures in Europe, South Africa, China,Israel, Taiwan and Israel,China, and under special distribution arrangements in Asia, certain European nations, Australia, India,territories, the Middle East, South and Central America, Oceania and New Zealand and pursuant to a partnership agreementvarious countries in Singapore.Asia. Our product line includeslines include a broad range of contemporary styles designed to establish or capitalize on market trends, complemented by core product offerings. We have established a reputation for design creativity and our ability to offer quality products in popular styles at accessible price points, delivered in an efficient manner and time frame.
Company's stockholders on October 11, 2018. All share and per share data provided herein gives effect to this stock split, applied retroactively.
Key Performance Indicators and Statistics
The following measurements are among the key business indicators reviewed by various members of our management to measure our consolidated and segment results of the Company:results:
net sales•total revenue
•gross profit margin
•operating expenses
•(loss)/income from operations
•adjusted EBITDA
•adjusted EBIT
•inventory turnover
•accounts receivable average collection days
•cash flow and liquidity determined by the Company’sour working capital and free cash flow
•store metrics, such as same store sales, sales per square foot, average unit retail, conversion, average units per transaction, and contribution margin.
While not all of these metrics are disclosed due to the proprietary nature of the information, many of these metrics are disclosed and discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Non-GAAP Financial Measures
The Company’s reported results are presented in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company uses adjusted earnings before interest and taxes ("Adjusted EBIT") and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), as calculated in the table below, as non-GAAP measures, in internal management reporting and planning processes as well as in evaluating the performance of the Company. Management believes these measures are useful to investors in evaluating the Company’s ongoing operating and financial results. By providing these non-GAAP measures, as a supplement to GAAP information, we believe we are enhancing investors’ understanding of our business and our results of operations. The non-GAAP financial measures are limited in their usefulness and should be considered in addition to, and not in lieu of, U.S. GAAP financial measures. Further, these non-GAAP measures may be unique to the Company, as they may be different from non-GAAP measures used by other companies.
The table below reconciles these metrics to net income as presented in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018:
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
($ in thousands) | | | | | | | |
Net Income | $ | 36,111 |
| | $ | 32,445 |
| | $ | 71,376 |
| | $ | 61,643 |
|
Add back: | | | | | | | |
Provision for income taxes | 9,784 |
| | 10,172 |
| | 20,371 |
| | 18,128 |
|
Provision for legal charges | — |
| | — |
| | — |
| | 2,837 |
|
Provision for early lease termination charges | 1,543 |
| | 1,241 |
| | 2,292 |
| | 1,241 |
|
(Recovery) and provisions for bad debt expense, net of recovery related to the Payless ShoeSource bankruptcy (in First Cost segment) | (143 | ) | | — |
| | 1,409 |
| | — |
|
Recovery related to the Payless ShoeSource bankruptcy (in Wholesale Footwear segment) | (1,668 | ) | | — |
| | (1,668 | ) | | — |
|
Schwartz & Benjamin acquisition integration charges and related restructuring | — |
| | 1,131 |
| | — |
| | 1,381 |
|
Net benefit in connection with the reversal of a contingent liability partially offset by the acceleration of amortization related to the termination of the Kate Spade license agreement | — |
| | — |
| | (1,868 | ) | | — |
|
Impairment of the Brian Atwood trademark | 4,050 |
| | — |
| | 4,050 |
| | — |
|
Divisional headquarters relocation expenses | 669 |
| | — |
| | 669 |
| | — |
|
Deduct: | | | | | | | |
Interest and other income – net* | 1,262 |
| | 1,033 |
| | 2,454 |
| | 1,630 |
|
Adjusted EBIT | 49,084 |
| | 43,956 |
| | 94,177 |
| | 83,600 |
|
Add back: | | | | | | | |
Depreciation and amortization | 5,325 |
| | 5,385 |
| | 10,545 |
| | 10,727 |
|
Loss/(gain) on disposal of fixed assets | 412 |
| | (143 | ) | | 737 |
| | (14 | ) |
Adjusted EBITDA | $ | 54,821 |
| | $ | 49,198 |
| | $ | 105,459 |
| | $ | 94,313 |
|
(*) Includes realized (losses)/gains on marketable securities and foreign exchange (losses)/gains.
Executive Summary
Net salesIn December 2019, COVID-19 emerged and spread worldwide. The World Health Organization declared COVID-19 a pandemic in March 2020, resulting in federal, state and local governments and private entities mandating various restrictions, including the closure of non-essential businesses, travel restrictions, restrictions on public gatherings, stay-at-home orders and advisories and quarantining of people who may have been exposed to the virus. After closely monitoring and taking into consideration the guidance from federal, state and local governments, in March 2020, we temporarily closed all of our stores and our corporate offices in the U.S. and the vast majority of our stores and offices globally. As of July 2020, the vast majority of our stores and corporate offices in the U.S. and globally reopened. Effective April 1, 2020, we temporarily furloughed a significant number of our employees. Employees with medical benefits will continue to receive those benefits at no personal cost for a duration to be determined by us. Remaining employees worked and continue to work remotely. These and other factors have had and may continue to have a material impact on our business, results of operations, financial position and cash flow. In response to the COVID-19 pandemic, we took precautionary measures to maintain adequate liquidity and financial flexibility by suspending share repurchases and the quarterly cash dividend; suspending salaries of our Founder and Creative and Design Chief, Steve Madden, our Chairman and Chief Executive Officer, Edward Rosenfeld, and our Board of Directors; reducing salaries by 30% for our President, Chief Financial Officer, Chief Operating Officer and Chief Merchandising Officer; reducing salaries by graduated amounts for all other employees earning over $100 per year; significantly scaling back on non-essential operating expenses, capital expenditures and planned inventory purchases; and drawing down $42,662 on our newly amended credit facility agreement with Rosenthal & Rosenthal, Inc. We experienced other adverse impacts as a result of the COVID-19 pandemic, including, but not limited to, charges from adjustments to the carrying amount of certain trademarks, long-lived asset impairment charges and restructuring and other related charges.
Total revenue for the quarter ended June 30, 2019 increased 12.4%2020 decreased 68.2% to $444,974 from $395,753$142,812 as compared to $449,629 in the same period of last year. Net (loss)/income attributable to Steven Madden, Ltd. increased 12.8%decreased to $36,572a net loss of $16,586 in the second quarter of 20192020 compared to $32,410net income of $36,572 in the same period of last year. The effective tax rate for the second quarter of 2019 decreased2020 increased to 21.3%26.6% compared to 23.9%21.3% in the second quarter of last year primarily due to the tax benefit from the 2020 pre-tax loss in jurisdictions with higher tax rates and a change to a decreasethe valuation of contingent considerations, partially offset by an increase in the amount of Global Intangible Low-TaxedLow Taxed Income ("GILTI") tax incurred, a decreaseunder the 2017 Tax Cut and Jobs Act. Diluted loss was $0.21 per share on 78,517 diluted weighted average shares outstanding in the state taxes incurred and a partially offsetting increase in 2019 pre-taxsecond quarter of 2020 as compared to income in jurisdictions with high tax rates. Diluted earnings per share increased toof $0.44 per share on 83,869 diluted weighted average shares outstanding compared to $0.38 per share on 86,258 diluted weighted average shares outstanding in the second quarter of last year.
Our inventory turnover (calculated on a trailing twelve-month average) for the quarters ended June 30, 2020 and 2019 was 7.2 times and 2018 was 7.9 times, and 8.6 times, respectively. The change in our inventory turnover is primarily due to the impact of the COVID-19 pandemic on our second quarter sales. Our total company accounts receivable average collection decreasedcollection increased to 141 days in the second quarter of 2020 compared to 65 days in the second quarter of 2019 compared to 68 days in primarily as the second quarterresult of 2018 primarily due toour wholesale customers' cash preservation initiatives as a result of the results of improved collection efforts with respect to the accounts of certain major customers. AsCOVID-19 pandemic. As of June 30, 2019,2020, we had $248,760$356,938 in cash, cash equivalents and marketable securities, advances from factor of $42,662, no long-term debt and total stockholders’ equity of $827,556.$767,120. Working capital decreased to $458,584was $398,029 as of June 30, 2019,2020, as compared to $480,603$458,584 on June 30, 2018.2019. The decrease in working capital was primarily thedue to actions taken as a result of the addition of current operating lease liabilities of $38,652 in accordance with the Company’s adoption of ASU 2016-02, “Leases”.
COVID-19 pandemic.
The following tables set forth information on operations for the periods indicated:
Selected Financial Information
Three Months Ended June 30,
($ in thousands)
|
| | | | | | | | | | | | | | |
| | 2019 | | 2018 |
CONSOLIDATED: | | |
| | |
| | |
| | |
|
Net sales | | $ | 444,974 |
| | 100.0 | % | | $ | 395,753 |
| | 100.0 | % |
Cost of sales | | 279,629 |
| | 62.8 | % | | 247,979 |
| | 62.7 | % |
Gross profit | | 165,345 |
| | 37.2 | % | | 147,774 |
| | 37.3 | % |
Commission and licensing fee income – net of expenses | | 3,147 |
| | 0.7 | % | | 2,244 |
| | 0.6 | % |
Operating expenses | | 119,809 |
| | 26.9 | % | | 108,434 |
| | 27.4 | % |
Impairment charges | | 4,050 |
| | 0.9 | % | | — |
| | — | % |
Income from operations | | 44,633 |
| | 10.0 | % | | 41,584 |
| | 10.5 | % |
Interest and other income – net | | 1,262 |
| | 0.3 | % | | 1,033 |
| | 0.3 | % |
Income before income taxes | | 45,895 |
| | 10.3 | % | | 42,617 |
| | 10.8 | % |
Net income attributable to Steven Madden, Ltd. | | $ | 36,572 |
| | 8.2 | % | | $ | 32,410 |
| | 8.2 | % |
| | | | | | | | |
By Segment: | | | | |
| | | | |
|
WHOLESALE FOOTWEAR SEGMENT: | | | | |
| | | | |
|
Net sales | | $ | 286,237 |
| | 100.0 | % | | $ | 252,134 |
| | 100.0 | % |
Cost of sales | | 191,580 |
| | 66.9 | % | | 173,178 |
| | 68.7 | % |
Gross profit | | 94,657 |
| | 33.1 | % | | 78,956 |
| | 31.3 | % |
Operating expenses | | 52,178 |
| | 18.2 | % | | 50,040 |
| | 19.8 | % |
Impairment charges | | 4,050 |
| | 1.4 | % | | — |
| | — | % |
Income from operations | | $ | 38,429 |
| | 13.4 | % | | $ | 28,916 |
| | 11.5 | % |
| | | | | | | | |
WHOLESALE ACCESSORIES SEGMENT: | | | | |
| | | | |
|
Net sales | | $ | 77,265 |
| | 100.0 | % | | $ | 69,271 |
| | 100.0 | % |
Cost of sales | | 55,253 |
| | 71.5 | % | | 47,226 |
| | 68.2 | % |
Gross profit | | 22,012 |
| | 28.5 | % | | 22,045 |
| | 31.8 | % |
Operating expenses | | 17,262 |
| | 22.3 | % | | 15,528 |
| | 22.4 | % |
Income from operations | | $ | 4,750 |
| | 6.1 | % | | $ | 6,517 |
| | 9.4 | % |
| | | | | | | | |
RETAIL SEGMENT: | | | | |
| | | | |
|
Net sales | | $ | 81,472 |
| | 100.0 | % | | $ | 74,348 |
| | 100.0 | % |
Cost of sales | | 32,796 |
| | 40.3 | % | | 27,575 |
| | 37.1 | % |
Gross profit | | 48,676 |
| | 59.7 | % | | 46,773 |
| | 62.9 | % |
Operating expenses | | 50,369 |
| | 61.8 | % | | 42,866 |
| | 57.7 | % |
(Loss)/income from operations | | $ | (1,693 | ) | | (2.1 | )% | | $ | 3,907 |
| | 5.3 | % |
Number of stores | | 224 |
| | |
| | 208 |
| | |
|
| | | | | | | | |
FIRST COST SEGMENT: | | | | |
| | | | |
|
Other commission income – net of expenses | | $ | 951 |
| | 100.0 | % | | $ | 623 |
| | 100.0 | % |
| | | | | | | | |
LICENSING SEGMENT: | | | | |
| | | | |
|
Licensing income – net of expenses | | $ | 2,196 |
| | 100.0 | % | | $ | 1,621 |
| | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2020 | | | | 2019 | | |
CONSOLIDATED: | | | | | | | | |
Net sales | | $ | 141,363 | | | 99.0 | % | | $ | 444,974 | | | 99.0 | % |
Commission and licensing fee income | | 1,449 | | | 1.0 | % | | 4,655 | | | 1.0 | % |
Total revenue | | 142,812 | | | 100.0 | % | | 449,629 | | | 100.0 | % |
Cost of sales | | 86,924 | | | 60.9 | % | | 279,629 | | | 62.2 | % |
Gross profit | | 55,888 | | | 39.1 | % | | 170,000 | | | 37.8 | % |
Operating expenses | | 79,590 | | | 55.7 | % | | 121,317 | | | 27.0 | % |
Impairment charges | | — | | | — | % | | 4,050 | | | 0.9 | % |
(Loss)/income from operations | | (23,702) | | | (16.6) | % | | 44,633 | | | 9.9 | % |
Interest and other income – net | | 357 | | | 0.2 | % | | 1,262 | | | 0.3 | % |
(Loss)/income before income taxes | | (23,345) | | | (16.3) | % | | 45,895 | | | 10.2 | % |
Net (loss)/income attributable to Steven Madden, Ltd. | | $ | (16,586) | | | (11.6) | % | | $ | 36,572 | | | 8.1 | % |
| | | | | | | | |
By Segment: | | | | | | | | |
WHOLESALE FOOTWEAR SEGMENT: | | | | | | | | |
Net sales | | $ | 77,966 | | | 100.0 | % | | $ | 286,237 | | | 100.0 | % |
Cost of sales | | 56,222 | | | 72.1 | % | | 191,580 | | | 66.9 | % |
Gross profit | | 21,744 | | | 27.9 | % | | 94,657 | | | 33.1 | % |
Operating expenses | | 32,443 | | | 41.6 | % | | 52,178 | | | 18.2 | % |
Impairment charges | | — | | | — | % | | 4,050 | | | 1.4 | % |
(Loss)/income from operations | | $ | (10,699) | | | (13.7) | % | | $ | 38,429 | | | 13.4 | % |
| | | | | | | | |
WHOLESALE ACCESSORIES/APPAREL SEGMENT: | | | | | | | | |
Net sales | | $ | 22,018 | | | 100.0 | % | | $ | 77,265 | | | 100.0 | % |
Cost of sales | | 17,212 | | | 78.2 | % | | 55,253 | | | 71.5 | % |
Gross profit | | 4,806 | | | 21.8 | % | | 22,012 | | | 28.5 | % |
Operating expenses | | 9,210 | | | 41.8 | % | | 17,262 | | | 22.3 | % |
| | | | | | | | |
(Loss)/income from operations | | $ | (4,404) | | | (20.0) | % | | $ | 4,750 | | | 6.1 | % |
| | | | | | | | |
RETAIL SEGMENT: | | | | | | | | |
Net sales | | $ | 41,379 | | | 100.0 | % | | $ | 81,472 | | | 100.0 | % |
Cost of sales | | 13,490 | | | 32.6 | % | | 32,796 | | | 40.3 | % |
Gross profit | | 27,889 | | | 67.4 | % | | 48,676 | | | 59.7 | % |
Operating expenses | | 36,822 | | | 89.0 | % | | 50,369 | | | 61.8 | % |
| | | | | | | | |
(Loss) from operations | | $ | (8,933) | | | (21.6) | % | | $ | (1,693) | | | (2.1) | % |
Number of stores | | 225 | | | | | 224 | | | |
| | | | | | | | |
FIRST COST SEGMENT: | | | | | | | | |
Commission fee income | | $ | 252 | | | 100.0 | % | | $ | 1,576 | | | 100.0 | % |
Gross profit | | 252 | | | 100.0 | % | | 1,576 | | | 100.0 | % |
Operating expenses | | 424 | | | 168.3 | % | | 625 | | | 39.7 | % |
(Loss)/income from operations | | $ | (172) | | | (68.3) | % | | $ | 951 | | | 60.3 | % |
| | | | | | | | |
LICENSING SEGMENT: | | | | | | | | |
Licensing fee income | | $ | 1,197 | | | 100.0 | % | | $ | 3,079 | | | 100.0 | % |
Gross profit | | 1,197 | | | 100.0 | % | | 3,079 | | | 100.0 | % |
Operating expenses | | 691 | | | 57.7 | % | | 883 | | | 28.7 | % |
Income from operations | | $ | 506 | | | 42.3 | % | | $ | 2,196 | | | 71.3 | % |
Selected Financial Information
Six Months Ended June 30,
($ in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2020 | | | | 2019 | | |
CONSOLIDATED: | | | | | | | | |
Net sales | | $ | 497,047 | | | 99.0 | % | | $ | 855,914 | | | 98.9 | % |
Commission and licensing fee income | | 4,933 | | | 1.0 | % | | 9,503 | | | 1.1 | % |
Total revenue | | 501,980 | | | 100.0 | % | | 865,417 | | | 100.0 | % |
Cost of sales | | 312,628 | | | 62.3 | % | | 533,572 | | | 61.7 | % |
Gross profit | | 189,352 | | | 37.7 | % | | 331,845 | | | 38.3 | % |
Operating expenses | | 229,784 | | | 45.8 | % | | 238,502 | | | 27.6 | % |
Impairment charges | | 9,518 | | | 1.9 | % | | 4,050 | | | 0.5 | % |
(Loss)/income from operations | | (49,950) | | | (10.0) | % | | 89,293 | | | 10.3 | % |
Interest and other income – net | | 1,403 | | | 0.3 | % | | 2,454 | | | 0.3 | % |
(Loss)/income before income taxes | | (48,547) | | | (9.7) | % | | 91,747 | | | 10.6 | % |
Net (loss)/income attributable to Steven Madden, Ltd. | | $ | (34,037) | | | (6.8) | % | | $ | 71,097 | | | 8.2 | % |
| | | | | | | | |
By Segment: | | | | | | | | |
WHOLESALE FOOTWEAR SEGMENT: | | | | | | | | |
Net sales | | $ | 313,035 | | | 100.0 | % | | $ | 562,825 | | | 100.0 | % |
Cost of sales | | 211,507 | | | 67.6 | % | | 369,847 | | | 65.7 | % |
Gross profit | | 101,528 | | | 32.4 | % | | 192,978 | | | 34.3 | % |
Operating expenses | | 83,136 | | | 26.6 | % | | 102,227 | | | 18.2 | % |
Impairment charges | | — | | | — | % | | 4,050 | | | 0.7 | % |
Income from operations | | $ | 18,392 | | | 5.9 | % | | $ | 86,701 | | | 15.4 | % |
| | | | | | | | |
WHOLESALE ACCESSORIES/APPAREL SEGMENT: | | | | | | | | |
Net sales | | $ | 89,690 | | | 100.0 | % | | $ | 148,772 | | | 100.0 | % |
Cost of sales | | 66,372 | | | 74.0 | % | | 104,844 | | | 70.5 | % |
Gross profit | | 23,318 | | | 26.0 | % | | 43,928 | | | 29.5 | % |
Operating expenses | | 29,281 | | | 32.6 | % | | 34,311 | | | 23.1 | % |
Impairment charges | | 9,062 | | | 10.1 | % | | — | | | — | % |
(Loss)/income from operations | | $ | (15,025) | | | (16.8) | % | | $ | 9,617 | | | 6.5 | % |
| | | | | | | | |
RETAIL SEGMENT: | | | | | | | | |
Net sales | | $ | 94,322 | | | 100.0 | % | | $ | 144,317 | | | 100.0 | % |
Cost of sales | | 34,749 | | | 36.8 | % | | 58,881 | | | 40.8 | % |
Gross profit | | 59,573 | | | 63.2 | % | | 85,436 | | | 59.2 | % |
Operating expenses | | 113,853 | | | 120.7 | % | | 96,835 | | | 67.1 | % |
Impairment charges | | 456 | | | 0.5 | % | | — | | | — | % |
(Loss) from operations | | $ | (54,736) | | | (58.0) | % | | $ | (11,399) | | | (7.9) | % |
Number of stores | | 225 | | | | | 224 | | | |
| | | | | | | | |
FIRST COST SEGMENT: | | | | | | | | |
Commission fee income | | $ | 1,502 | | | 100.0 | % | | $ | 3,934 | | | 100.0 | % |
Gross profit | | 1,502 | | | 100.0 | % | | 3,934 | | | 100.0 | % |
Operating expenses | | 1,526 | | | 101.6 | % | | 3,399 | | | 86.4 | % |
(Loss)/income from operations | | $ | (24) | | | (1.6) | % | | $ | 535 | | | 13.6 | % |
| | | | | | | | |
LICENSING SEGMENT: | | | | | | | | |
Licensing fee income | | $ | 3,431 | | | 100.0 | % | | $ | 5,569 | | | 100.0 | % |
Gross profit | | 3,431 | | | 100.0 | % | | 5,569 | | | 100.0 | % |
Operating expenses | | 1,988 | | | 57.9 | % | | 1,730 | | | 31.1 | % |
Income from operations | | $ | 1,443 | | | 42.1 | % | | $ | 3,839 | | | 68.9 | % |
|
| | | | | | | | | | | | | | |
| | 2019 | | 2018 |
CONSOLIDATED: | | |
| | |
| | |
| | |
|
Net sales | | $ | 855,914 |
| | 100.0 | % | | $ | 784,767 |
| | 100.0 | % |
Cost of sales | | 533,572 |
| | 62.3 | % | | 496,260 |
| | 63.2 | % |
Gross profit | | 322,342 |
| | 37.7 | % | | 288,507 |
| | 36.8 | % |
Commission and licensing fee income – net of expenses | | 4,374 |
| | 0.5 | % | | 5,903 |
| | 0.8 | % |
Operating expenses | | 233,373 |
| | 27.3 | % | | 216,269 |
| | 27.6 | % |
Impairment charges | | 4,050 |
| | 0.5 | % | | — |
| | — | % |
Income from operations | | 89,293 |
| | 10.4 | % | | 78,141 |
| | 10.0 | % |
Interest and other income – net | | 2,454 |
| | 0.3 | % | | 1,630 |
| | 0.2 | % |
Income before income taxes | | 91,747 |
| | 10.7 | % | | 79,771 |
| | 10.2 | % |
Net income attributable to Steven Madden, Ltd. | | $ | 71,097 |
| | 8.3 | % | | $ | 61,083 |
| | 7.8 | % |
| | | | | | | | |
By Segment: | | | | |
| | | | |
|
WHOLESALE FOOTWEAR SEGMENT: | | | | |
| | | | |
|
Net sales | | $ | 562,825 |
| | 100.0 | % | | $ | 527,190 |
| | 100.0 | % |
Cost of sales | | 369,847 |
| | 65.7 | % | | 357,946 |
| | 67.9 | % |
Gross profit | | 192,978 |
| | 34.3 | % | | 169,244 |
| | 32.1 | % |
Operating expenses | | 102,227 |
| | 18.2 | % | | 101,951 |
| | 19.3 | % |
Impairment charges | | 4,050 |
| | 0.7 | % | | — |
| | — | % |
Income from operations | | $ | 86,701 |
| | 15.4 | % | | $ | 67,293 |
| | 12.8 | % |
| | | | | | | | |
WHOLESALE ACCESSORIES SEGMENT: | | | | |
| | | | |
|
Net sales | | $ | 148,772 |
| | 100.0 | % | | $ | 125,370 |
| | 100.0 | % |
Cost of sales | | 104,844 |
| | 70.5 | % | | 85,710 |
| | 68.4 | % |
Gross profit | | 43,928 |
| | 29.5 | % | | 39,660 |
| | 31.6 | % |
Operating expenses | | 34,311 |
| | 23.1 | % | | 30,734 |
| | 24.5 | % |
Income from operations | | $ | 9,617 |
| | 6.5 | % | | $ | 8,926 |
| | 7.1 | % |
| | | | | | | | |
RETAIL SEGMENT: | | | | |
| | | | |
|
Net sales | | $ | 144,317 |
| | 100.0 | % | | $ | 132,207 |
| | 100.0 | % |
Cost of sales | | 58,881 |
| | 40.8 | % | | 52,604 |
| | 39.8 | % |
Gross profit | | 85,436 |
| | 59.2 | % | | 79,603 |
| | 60.2 | % |
Operating expenses | | 96,835 |
| | 67.1 | % | | 83,584 |
| | 63.2 | % |
(Loss) from operations | | $ | (11,399 | ) | | (7.9 | )% | | $ | (3,981 | ) | | (3.0 | )% |
Number of stores | | 224 |
| | |
| | 208 |
| | |
|
| | | | | | | | |
FIRST COST SEGMENT: | | | | |
| | | | |
|
Other commission income – net of expenses | | $ | 535 |
| | 100.0 | % | | $ | 1,491 |
| | 100.0 | % |
| | | | | | | | |
LICENSING SEGMENT: | | | | |
| | | | |
|
Licensing income – net of expenses | | $ | 3,839 |
| | 100.0 | % | | $ | 4,412 |
| | 100.0 | % |
In February 2018,At the end of March 2020, in response to the COVID-19 pandemic, as a precautionary measure our Board of Directors temporarily suspended the payment of dividends and the Company approved the initiationrepurchase of the Company's quarterly cash dividend. The quarterly cash dividend of $0.14 per share on the Company's outstanding shares of common stock was approved on April 24, 2019 and paid on June 28, 2019, to stockholders of record as of the close of business on June 18, 2019. The aggregate cash dividends
paid for the quarter ended June 30, 2019 was $11,945. The aggregate cash dividends paid for the six months ended June 30, 2019 was $23,987.
In July 2019, the Board of Directors of the Company declared an additional quarterly cash dividend of $0.14 per share on the Company’s outstanding shares of common stock. The dividend will be paid on September 27, 2019 to stockholders of record as of the close of business on September 17, 2019.
RESULTS OF OPERATIONS
($ in thousands)
Three Months Ended June 30, 20192020 Compared to Three Months Ended June 30, 20182019
Consolidated:
Net sales
Total revenue for the three months ended June 30, 2019 increased 12.4%2020 decreased 68.2% to $444,974$142,812 compared to $395,753$449,629 in the same period of last year, with growthdecreases in the Wholesale Footwear, Wholesale AccessoriesAccessories/Apparel and Retail segments.segments as a result of the impact of the COVID-19 pandemic. Gross margin slightly decreasedprofit was $55,888, or 39.1% of total revenue, as compared to 37.2% from 37.3%$170,000, or 37.8% of total revenue, in the prior year period.prior-year period. The decrease of 10 basis pointsincrease in gross marginprofit as a percentage of total revenue was due to the shift in the current period was driven by decreases in gross margin primarily insales to our Wholesale Accessories and Retail segments. higher-margin e-commerce business. Operating expenses increased in the second quarter of this year2020 were $79,590, or 55.7% of total revenue, as compared to $119,809 from $108,434$121,317, or 27.0% of total revenue, in the second quarter of lastthe prior year. In the second quarter of 2019 and 2018 operating expenses included net charges of $544 and $2,372, respectively. (See "Non-GAAP Financial Measures" above for a description of the net benefit and charges.) Excluding these items, The increase in operating expenses as a percentage of total revenue was primarily attributable to a deleverage on a lower sales were 26.8% forbase, in addition to restructuring and other related charges related to the second quarter of 2019 compared to 26.8% in the second quarter of 2018. Excluding these items, theCOVID-19 pandemic, an increase in operatingcosts related to the growth to our e-commerce business and the inclusion of the GREATS and BB Dakota businesses, partially offset by reduced discretionary spending as a result from our initiatives to control expenses, primarily comprised of (i) higher payroll and related expenses, (ii) higher warehouse and distribution expenses, (iii) higher advertising and promotions, and (iv) higher legal charges. Commission and licensing fee income for the second quarter of 2019 increased to $3,147 compared to $2,244 in the second quarter of 2018. The second quarter 2019 Commission and licensing fee income included a $143 recovery associatedalong with the Payless ShoeSource bankruptcy. (See "Non-GAAP Financial Measures" above.)change in valuation of our contingent considerations. The effective tax rate for the second quarter of 2019 decreased2020 increased to 21.3%26.6% compared to 23.9%21.3% in the second quarter of last year. The decreaseincrease in effective tax rate iswas primarily due to a decrease in the amount of GILTI tax incurred, a decrease inbenefit from the state taxes incurred and a partially offsetting increase in 20192020 pre-tax incomeloss in jurisdictions with highhigher tax rates. Net income attributablerates and a change to the valuation of contingent considerations, partially offset by an increase in GILTI tax. Net loss attributable to Steven Madden, Ltd. for the second quarter of 2019 increased to $36,5722020 was $16,586 compared to net income for the second quarter of 20182019 of $32,410. Net income attributable to Steven Madden, Ltd. for the second quarter of 2019 increased to $39,536 (excluding (i) $1,727 after-tax benefit, net of bad debt expense associated with the Payless ShoeSource bankruptcy, (ii) $1,156 after-tax expense in connection with a provision for early lease termination charges, (iii) $501 after-tax expense associated with a divisional headquarters relocation, and (iv) $3,033 after-tax impact of an impairment of the Brian Atwood trademark), as compared to $35,185 (excluding (i) $1,028 tax expense related to an impairment to the preferred interest investment in Brian Atwood Italia Holding, LLC, (ii) $833 after-tax expense in connection with the integration of the Schwartz & Benjamin acquisition and the related restructuring, and (iii) $914 after-tax impact of an expense associated with a warehouse consolidation) for the same period last year.$36,572.
Wholesale Footwear Segment:
Net salesRevenue from the Wholesale Footwear segment in the second quarter of 2020 accounted for $77,966, or 54.6% of total revenue, as compared to $286,237, or 64.3%, and $252,134, or 63.7%, of our total net salesrevenue, for the second quarter of 2019 and 2018, respectively.2019. The increase72.8% decrease in net salesrevenue in the current period is primarily related to strong growth inorder cancellations due to the Steve Madden brand, the additionimpact of the Anne Klein brand, and an increase in the private label business whichCOVID-19 pandemic. Gross profit was mostly offset by no sales to Payless ShoeSource in the current period. Gross margin in the$21,744, or 27.9% of Wholesale Footwear segment was 33.1% for the second quarter of 2019 compared to 31.3% for the second quarter of 2018. Gross margin increased 1.8% primarily resulting from the elimination of sales to the low-margin Payless ShoeSource customer, as well as the strong growth in the Steve Madden brand. Operating expenses increased to $52,178revenue, in the second quarter of 20192020 as compared to $94,657, or 33.1% of Wholesale Footwear revenue, in the second quarter of 2019. The decrease in gross profit as a percentage of Wholesale Footwear revenue was due to a shift in sales mix to the lower-margin private label business. Operating expenses in the second quarter of 2020 were $32,443, or 41.6% of Wholesale Footwear revenue, as compared to $52,178, or 18.2% of Wholesale Footwear revenue, in the second quarter of the prior year. The increase in operating expenses as a percentage of Wholesale Footwear revenue was attributable to a deleverage on a lower sales base, in addition to restructuring and other related charges, partially offset by reduced discretionary spending as a result from $50,040our initiatives to control expenses. Income from operations decreased to a loss from operations of $10,699 in the second quarter of 2020 as compared to income from operations of $38,429 for the comparable period in the prior year.
Wholesale Accessories/Apparel Segment:
Revenue generated by the Wholesale Accessories/Apparel segment in the second quarter of 2020 accounted for $22,018, or 15.4% of total revenue, as compared to $77,265, or 17.2% of total revenue, in the second quarter of 2019. The 71.5% decrease in revenue in the current period is primarily related to order cancellations due to the impact of the COVID-19 pandemic. Gross profit was $4,806, or 21.8% of Wholesale Accessories/Apparel revenue, in the second quarter of 2020 as compared to $22,012, or 28.5% of Wholesale Accessories/Apparel revenue, in the second quarter of the prior year. The decrease in gross profit as a percentage of Wholesale Accessories/Apparel revenue was primarily due to a decline in our branded handbag and fashion accessories business. Operating expenses in the second quarter of 2020 were $9,210, or 41.8% of Wholesale Accessories/Apparel revenue, as compared to $17,262, or 22.3% of Wholesale Accessories/Apparel revenue, in the same period of last year. In the second quarter of 2019, operating expenses included a net benefit of $999, which was comprised of a recovery of $1,668 related to the Payless ShoeSource bankruptcy, partially offset by divisional headquarters relocation expenses of $669. Also recorded in the Wholesale Footwear segment was a $4,050 impairment charge for the Brian Atwood trademark impacting operating income. The impairment was triggered by the Company's decision to discontinue distribution of the brand as the Company explores alternatives. In the second quarter of 2018, operating expenses included a charge of $1,131 related to the integration of the Schwartz & Benjamin acquisition and related restructuring. Excluding these items, operating expenses for the second quarter of 2019 increased, however, as a percentage of sales decreased to 18.6% in the second quarter of 2019 compared to 19.4% in the same period of 2018.year. The increase in operating expenses primarily resulted from higher warehouse and distribution expenses and higher payroll and related expenses associated with higher sales and the addition of the Anne Klein footwear business. Income from
operations increased to $38,429 in the second quarter of 2019, compared to $28,916 for the comparable period in 2018. Income from operations, excluding the items mentioned above, increased to $41,479 in the second quarter of 2019 compared to $30,047 for the same period last year.
Wholesale Accessories Segment:
Net sales generated by the Wholesale Accessories segment accounted for $77,265, or 17.4%, and $69,271, or 17.5%, of total net sales for the Company in the second quarter of 2019 and 2018, respectively. The increase in net sales was primarily due to growth in our private label and Steve Madden branded handbags, as well as the addition of Anne Klein handbags. Gross margin in the Wholesale Accessories segment decreased to 28.5% in the second quarter of this year from 31.8% in the same period in 2018. Gross margin decreased 3.3%, resulting from tariffs imposed on accessories and an increase in low-margin private label sales, as well as the addition of Anne Klein handbags when compared to 2018. In the second quarter of 2019, operating expenses increased to $17,262 compared to $15,528 in the same period of last year. In the second quarter of 2018, operating expenses included a charge of $1,241 related to a warehouse consolidation. Excluding this item, operating expenses as a percentage of Wholesale Accessories/Apparel revenue was primarily attributable to a deleverage on a lower sales increasedbase in addition to 22.3%restructuring and other related charges, partially offset by reduced discretionary spending as a result from our initiatives to control expenses, along with a change in the second quartervaluation of 2019 compared to 20.6% in the same period of 2018. The increase in operating expenses in the second quarter of 2019 primarily resulted from higher warehouse and distribution expenses, and higher payroll related expenses associated with the increase in sales, as well as the addition of Anne Klein handbags. Incomea contingent consideration. Loss from operations for the Wholesale AccessoriesAccessories/Apparel segment for the second quarter of 20192020 was $4,750$4,404 as compared to $6,517income from operations of $4,750 for the samecomparable period of 2018. Income from operations, excluding the items mentioned above, decreased to $4,750 in the second quarter of 2019 compared to $7,758 for the same period lastprior year.
Retail Segment:
In the second quarter of 2019, net sales2020, revenue from the Retail segment accounted for $41,379, or 29.0% of total revenue, as compared to $81,472, or 18.3%,18.1% of our total net sales compared to $74,348, or 18.8%, of our total net salesrevenue, in the same period last year, which represents a $7,124, or 9.6%, increase.second quarter of 2019. The increase49.2% decrease in net sales isrevenue was primarily due to the net additionclosure of 16substantially all our retail stores fromfor most or all of the prior year period andquarter as a 6.2% increaseresult of the COVID-19 pandemic, partially offset by strong performance in comparable stores sales gain.our e-commerce business. We added 30three stores which included additional stores from the addition of our joint venture in Israel and closed 14two stores duringduring the twelvethree months ended June 30, 2019.2020. As a result,of June 30, 2020, we had 225 retail stores compared to 224 retail stores as of June 30, 2019 compared to 208 stores as of June 30, 2018.2019. The 224225 stores currently in operation include 149 146 Steve Madden® full-price stores, 6668 Steve Madden® outlet stores, 2one Steven® stores, 1store, one Superga® store, one GREATS® store and 6eight e-commerce websites. In addition, the Companyaddition, we operated 3117 concessions in international markets. As a result of the closure of the vast majority of our international markets. Comparablebrick-and-mortar stores for most or all of the quarter, we did not report comparable store sales (sales of those stores, includingfor the e-commerce websites, that were open throughoutquarter. Gross profit in the second quarter of 2019 and 2018) increased 6.2% when2020 was $27,889, or 67.4% of Retail revenue, as compared to the prior year period. The Company excludes new locations from the comparable store base for the first twelve months$48,676, or 59.7% of operations. Stores that are closed for renovations are removed from the comparable store base. InRetail revenue, in the second quarter of 2019,2019. The increase in gross margin decreased to 59.7% from 62.9% in the same periodprofit as a percentage of 2018Retail revenue was primarily due to inventory liquidation and markdownsa shift in connection withsales to the wind-down of the Company's joint venture relationshiphigher-margin e-commerce business. Operating expenses in China as well as aggressive liquidation of slow-moving inventory in the Company’s North American retail operations. In the second quarter of 2019, operating expenses increased2020 were $36,822, or 89.0% of Retail revenue, as compared to $50,369, or 61.8% of net sales, compared to $42,866, or 57.7% of net sales,Retail revenue, in the second quarter of last year,2019. The increase in operating expenses as a percentage of Retail revenue was primarily dueattributable to a deleverage on a lower sales base, an increase in costs related to the growth in the Company'sto our e-commerce business and the operationinclusion of additional stores. In addition,the GREATS business, partially offset by reduced discretionary spending as a result from our initiatives to control expenses, along with the change in the current period, operating expenses includedvaluation of a charge of $1,543 related to early lease terminations. contingent consideration.Loss fromfrom operations for the Retail segment was $1,693$8,933 in the second quarter of this year2020 as compared to a loss from operations of $1,693 in the comparable period last year.
First Cost Segment:
Commission fee income generated by the First Cost segment accounted for $252, or 0.2% of total revenue, in the second quarter of 2020 as compared to $1,576, or 0.4% of total revenue, for the first quarter of 2019. Operating expenses decreased to $424 in the current period as compared to $625 in the same period last year. Loss from operations was $172 in the second quarter of 2020 as compared to income from operations of $3,907$951 in the comparable period of last year.
Licensing Segment:
Licensing fee income generated by the Licensing segment accounted for $1,197, or 0.8% of total revenue, in the second quarter of 2020 as compared to $3,079, or 0.7% of total revenue, for the second quarter of 2019. Operating expenses decreased to $691 in the current period as compared to $883 in the same period of last year. Loss Income from operations, excluding the items mentioned above,Licensing segment was $150$506 as compared to $2,196 in the current period of 2019, compared to income from operations of $3,907 in the samecomparable period last year.
First Cost Segment
:
Income from the First Cost segment, which includes net commission income and fees, increased to $951 for the second quarter of 2019 compared to $623 for the comparable period of 2018. Included in the First Cost segment was a recovery of $143 related to the Payless ShoeSource bankruptcy.
Licensing Segment:
Net licensing income increased to $2,196 for the second quarter of 2019 compared to $1,621 for the comparable period of 2018 primarily due to an increase in royalties in connection with the licensing of our Betsey Johnson® trademark.
Six Months Ended June 30, 20192020 Compared to Six Months Ended June 30, 20182019
Consolidated:
Net salesTotal revenue for the six months ended June 30, 2019 increased 9.1%2020 decreased 42.0% to $855,914$501,980 compared to $784,767$865,417 in the same period of last year, with growth decreases in the Wholesale Accessories,Footwear, Wholesale Accessories/Apparel and Retail and Wholesale Footwear segments.segments as a result of the impact of the COVID-19 pandemic. Gross margin increasedprofit was $189,352, or 37.7% of total revenue, as compared to 37.7% from 36.8%$331,845, or 38.3% of total revenue, in the prior yearprior-year period. The increase of 90 basis pointsdecrease in gross margin inprofit as a percentage of total revenue was primarily due to inventory reserves, inclusive of inventory purchase commitments as a result of the current period was driven by gross margin improvements primarily in our Wholesale Footwear segment.COVID-19 pandemic. Operating expenses increased in the six months ended June 30, 20192020 were $229,784, or 45.8% of total revenue, as compared to $233,373 from $216,269$238,502, or 27.6% of total revenue, in the comparablesame period of 2018. In the first six months of 2019 and 2018 operating expenses included a net benefit of $575 and charges of $5,459, respectively. (See "Non-GAAP Financial Measures" above for a description of the net benefit and charges.) Excluding these items,prior year. The increase in operating expenses as a percentage of sales increased to 27.3% for the first six months of 2019 compared to 26.9% in the first six months of 2018. Excluding these items, the increase in operating expensestotal revenue was primarily comprisedattributable to a deleverage on a lower sales base, in addition to the impairment of (i) higher warehouselease right-of-use assets and distributionstore fixed assets, restructuring and other related charges as a result of the COVID-19 pandemic, and the inclusion of the GREATS and BB Dakota businesses, partially offset by reduced discretionary spending as a result from our initiatives to control expenses, (ii) higher payroll and related expenses, (iii) higher advertising and promotions, and (iv) higher legal charges consistingalong with the change in valuation of costs and estimated settlement amounts. Commission and licensing fee incomecontingent considerations. The effective tax rate for the six months ended June 30, 2019 decreased2020 increased to $4,37428.0% compared to $5,903 in the comparable period of 2018, resulting primarily from the provision22.2% for bad debt expenses, net of recovery, associated with the Payless ShoeSource bankruptcy. (See "Non-GAAP Financial Measures" above.) The effective tax rate for the first six months of 2019 decreased to 22.2% compared to 22.7% in the same period of last year. The decreaseincrease in effective tax rate is primarily due to a decrease in the amount of GILTI tax incurred, a decrease inbenefit from the state taxes incurred and a partially offsetting increase in 20192020 pre-tax incomeloss in jurisdictions with highhigher tax rates. Net incomerates and a change to the valuation of contingent considerations, partially offset by an increase in GILTI tax. Net loss attributable to Steven Madden, Ltd. for the six months ended June 30, 2019 increased to $71,0972020 was $34,037 compared to net income of $71,097 for the same period of 2019.
Wholesale Footwear Segment:
Revenue from the Wholesale Footwear segment for the six months ended June 30, 20182020 accounted for $313,035, or 62.4% of $61,083. Net income attributable to Steven Madden, Ltd. for the first six months of 2019 increased to $74,605 (excluding (i) $344 after-tax recovery net of bad debt expense associated with the Payless ShoeSource bankruptcy, (ii) $1,717 after-tax expense in connection with a provision for early lease termination charges, (iii) $1,399 after-tax net benefit associated with the change in a contingent liability, partially offset by the acceleration of amortization related to the termination of the Kate Spade license agreement as of December 31, 2019, (iv) $501 after-tax expense associated with a divisional headquarters relocation and (v) $3,033 after-tax impact of an impairment of the Brian Atwood trademark),total revenue, as compared to $66,181 (excluding (i) $2,135 after-tax expense in connection with a provision for legal charges, (ii) $1,021 after-tax expense in connection with the integration$562,825, or 65.0% of the Schwartz & Benjamin acquisition and the related restructuring, (iii) $914 after-tax impact of expense related to a warehouse consolidation, and (iv) $1,028 tax expense related to an impairment to the preferred interest investment in Brian Atwood Italia Holding, LLC)total revenue, for the same period last year.
of 2019. The 44.4% decrease in revenue in the current period was primarily related to order cancellations due to the impact of the COVID-19 pandemic. Gross profit was $101,528, or 32.4% of Wholesale Footwear Segment:
Net sales from the Wholesale Footwear segment accounted for $562,825, or 65.8%, and $527,190, or 67.2%, of our total net salesrevenue, for the six months ended June 30, 2019 and 2018, respectively. 2020 as compared to $192,978, or 34.3% of Wholesale Footwear revenue, for same period of 2019. The increasedecrease in net sales in the current period isgross profit as a percentage of Wholesale
Footwear revenue was primarily due to inventory related to strong growth in the Steve Madden brand and the additionreserves taken as a result of the Anne Klein brand which were mostly offset by not recognizing sales to Payless ShoeSource in the current period. Gross margin in the Wholesale Footwear segment was 34.3%COVID-19 pandemic. Operating expenses for the six months ended June 30, 20192020 were $83,136, or 26.6% of Wholesale Footwear revenue, as compared to 32.1%$102,227, or 18.2% of Wholesale Footwear revenue, for the same period of the prior year. The increase in operating expenses as a percentage of Wholesale Footwear revenue was primarily attributable to a deleverage on a lower sales base in addition to restructuring and other related charges as a result of the COVID-19 pandemic, partially offset by reduced discretionary spending as a result from our initiatives to control expenses. Income from operations decreased to $18,392 for the six months end June 30, 2020 as compared to $86,701 for the comparable period in the prior year.
Wholesale Accessories/Apparel Segment:
Revenue generated by the Wholesale Accessories/Apparel segment for six months ended June 30, 2020 accounted for $89,690, or 17.9% of total revenue, as compared to $148,772, or 17.2% of total revenue, for the comparable period of 2018. Gross margin increased 2.2%2019. The 39.7% decrease in revenue in the current period is primarily resulting from not recognizing salesattributable to order cancellations due to the low-margin Payless ShoeSource customer,impact of the COVID-19 pandemic. Gross profit was $23,318, or 26.0% of Wholesale Accessories/Apparel revenue, for the six months ended June 30, 2020 as well as the strong growthcompared to $43,928, or 29.5% of Wholesale Accessories/Apparel revenue, in the Steve Madden brand.prior year. The decrease in gross profit as a percentage of Wholesale Accessories/Apparel revenue was due to inventory related reserves as a result of the COVID-19 pandemic. Operating expenses increased to $102,227 infor the first six months ended June 30, 2020 were $29,281, or 32.6% of 2019 from $101,951Wholesale Accessories/Apparel revenue, as compared to $34,311, or 23.1% of Wholesale Accessories/Apparel revenue, in the same period of last year. In the first six months of 2019, operating expenses included a net benefit of $2,750, comprised of a recovery of $1,668 related to the Payless ShoeSource bankruptcy and a net benefit of $1,868 associated with the change of a contingent liability and the acceleration of amortization related to the termination of the Kate Spade license agreement as of December 31, 2019, partially offset by divisional headquarters relocation expenses of $669 and a charge of $117 related to an early lease termination. Also recorded The increase in the Wholesale Footwear segment was a $4,050 impairment charge for the Brian Atwood trademark impacting operating income. In the first six months of 2018, operating expenses included charges of $2,837 in connection with provisions for legal charges and $1,241 related to a warehouse consolidation, as well as $1,381 related to the integration of the Schwartz & Benjamin acquisition and related restructuring. Excluding these items, operating expenses for the first half of 2019 increased, however, operating expenses as a percentage of Wholesale Accessories/Apparel revenue was primarily attributable to a deleverage on a lower sales decreasedbase, in addition to 17.9% in the first six months of 2019 compared to 18.5% in the same period of 2018. The increase in operating expenses primarily resulted from higher warehouserestructuring and distribution expenses and higher payroll andother related expenses associated with higher sales and the additioncharges as a result of the Anne Klein footwear business. IncomeCOVID-19 pandemic, partially offset by reduced discretionary spending as a result from operations increasedour initiatives to $86,701control expenses, along with a change in the six months ended June 30, 2019, compared to $67,293 for the comparable period in 2018. Income from operations, excluding the items mentioned above, increased to $88,001 in the first six monthsvaluation of 2019 compared to $71,511 for the same period last year.
a contingent consideration. In the Wholesale Accessories Segment:
Net sales generated by the Wholesale AccessoriesAccessories/Apparel segment, accounted for $148,772, or 17.4%, and $125,370, or 16.0%,an impairment of total net sales for the Companycertain trademarks was recorded for the six months ended June 30, 2019 and 2018, respectively. The increase in net sales was primarily
due to growth in our private label and Steve Madden branded handbags, as well as the addition of Anne Klein handbags. Gross margin in from operations for the Wholesale AccessoriesAccessories/Apparel segment decreased to 29.5% in the first six months of this year from 31.6% in the same period of 2018. The 2.1% decrease in gross margin resulted from tariffs imposed on accessories and an increase in low-margin private label sales as well as the addition of Anne Klein handbags when compared to 2018. In the six-month period ended June 30, 2019, operating expenses increased to $34,311 compared to $30,734 in the same period of last year. Infor the six months ended June 30, 2018, operating expenses included a charge2020 was $15,025 as compared to income from operations of $1,241 related$9,617 for the comparable period of the prior year.
Retail Segment:
For the six months ended June 30, 2020, revenue from the Retail segment accounted for $94,322, or 18.8% of total revenue, as compared to a warehouse consolidation. Excluding this item, operating expenses$144,317, or 16.7% of total revenue, in the firstsame period of 2019. The 34.6% decrease in revenue was primarily due to the closure of all of our brick-and-mortar stores in the U.S. and the vast majority of our brick-and-mortar stores globally from the second half of March through at least the end of May, when we started to reopen some of our stores. We added four stores and closed six stores during the six months ended June 30, 2020. As of 2019 increased, however,June 30, 2020, we had 225 retail stores compared to 224 stores as of June 30, 2019. Gross profit for the six months ended June 30, 2020 was $59,573, or 63.2% of Retail revenue, as compared to $85,436, or 59.2% of Retail revenue, in the comparable period of 2019. The increase in gross profit as a percentage of Retail revenue was primarily due to strong margins from a shift in sales to the higher-margin e-commerce business. Operating expenses for the six months ended June 30, 2020 were $113,853, or 120.7% of Retail revenue, as compared to $96,835, or 67.1% of Retail revenue, in the comparable period of 2019. The increase in operating expenses as a percentage of Retail revenue was primarily attributable to a deleverage on a lower sales decreased to 23.1%base, in the first six months of 2019 compared to 23.5% in the same period of 2018. The increase in operating expenses in the six months ended June 30, 2019 primarily resulted from higher warehouse and distribution expenses associated with an increase in sales. Income from operations for the Wholesale Accessories segment for the first six months of 2019 was $9,617 compared to $8,926 for the same period of 2018. Income from operations, excluding the item mentioned above, decreased to $9,617 in the first six months of 2019 compared to $10,167 for the same period last year.
Retail Segment:
In the six months ended June 30, 2019, net sales from the Retail segment accounted for $144,317, or 16.9%, of our total net sales compared to $132,207, or 16.8%, of our total net sales in the same period last year, which represents a $12,110, or 9.2%, increase. The increase in net sales is primarily dueaddition to the net additionimpairment of 16 stores from the prior year periodlease right-of-use assets and a 6.2% increase in comparable stores sales gain. We added 30 stores, which included additional stores from the addition of our joint venture in Israelstore fixed assets, restructuring and closed 14 stores during the twelve months ended June 30, 2019. Asrelated charges as a result we had 224 retail stores as of June 30, 2019 compared to 208 stores as of June 30, 2018. The 224 stores currently in operation include 149 Steve Madden® stores, 66 Steve Madden® outlet stores, 2 Steven® stores, 1 Superga® store and 6 e-commerce websites. In addition, the Company operated 31 concessions in our international markets. Comparable store sales (sales of those stores, including the e-commerce websites, that were open throughout the first six months of 2019 and 2018) increased 6.2% when compared to the prior year period. The Company excludes new locations from the comparable store base for the first twelve months of operations. Stores that are closed for renovations are removed from the comparable store base. In the six months ended June 30, 2019, gross margin decreased to 59.2% from 60.2% in the same period of 2018primarily due to inventory liquidation and markdowns in connection with the wind-down of the Company's joint venture relationship in China as well as aggressive liquidation of slow-moving inventory in the Company’s North American retail operations. In the first six months of 2019, operating expenses increased to $96,835, or 67.1% of net sales, compared to $83,584, or 63.2% of net sales, in the comparable period of last year, primarily due to the growth in the Company's e-commerce businessCOVID-19 pandemic and the operationinclusion of additional stores. In addition,the GREATS business, partially offset by reduced discretionary spending as a result from our initiatives to control expenses, along with the change in the current period, operating expenses includedvaluation of a charge of $2,175 related to early lease terminations.contingent consideration. Loss from operations for the Retail segment was $11,399 in$54,736 for the six months ended June 30, 20192020 as compared to $3,981$11,399 in the comparable period last year.
First Cost Segment:
Commission fee income generated by the First Cost segment accounted for $1,502, or 0.3% of total revenue, for the six months ended June 30, 2020 as compared to $3,934, or 0.5% of total revenue, for the same period of 2019. Operating expenses decreased to $1,526 in the current period as compared to $3,399 in the same period last year. Loss from operations was $24 for six months ended June 30, 2020 as compared to income from operations of $535 in the comparable period of last year.
Licensing Segment:
Licensing fee income generated by the Licensing segment accounted for $3,431, or 0.7% of total revenue, for six months ended June 30, 2020 as compared to $5,569, or 0.6% of total revenue, for the second quarter of 2019. Operating expenses increased to $1,988 in the current period as compared to $1,730 in the same period of last year. LossIncome from operations, excluding the items mentioned above, resulted in a loss from operations of $9,224Licensing segment was $1,443 as compared to $3,839 in the current period of 2019, compared to $3,981 in the samecomparable period last year.
First Cost Segment:
Income from the First Cost segment, which includes net commission income and fees, decreased to $535 for the six months ended June 30 2019 compared to $1,491 for the comparable period of 2018, primarily due to a charge of $1,409 for provisions for bad debt, net of recovery related to the Payless ShoeSource bankruptcy.
Licensing Segment:
Net licensing income decreased to $3,839 for the six-month period ended June 30, 2019 compared to $4,412 for the comparable period of 2018 primarily due to a decrease in royalties in connection with the licensing of our Betsey Johnson® trademark.
LIQUIDITY AND CAPITAL RESOURCES
($ in thousands)
Our primary source
We took a number of precautionary but significant measures to preserve liquidity isand enhance financial flexibility as a result of the COVID-19 pandemic. We suspended stock repurchases and our quarterly cash flows generateddividend. We significantly scaled back all non-essential operating expenses, capital expenditures and inventory purchases. We also furloughed a significant portion of our employees, temporarily suspended salaries for our Founder and Creative and Design Chief, Steve Madden, our Chairman and Chief Executive Officer, Edward Rosenfeld, and our Board of Directors, reduced salaries by 30% for our President, Chief Financial Officer, Chief Operating Officer and Chief Merchandising Officer, temporarily reduced the salaries of all employees with salaries greater than $100 per year and drew down from our operations. Our primary useexisting credit facility as of this liquidity is to fund our ongoing cash requirements, including working capital requirements, share repurchases, acquisitions, system enhancements, retail store expansion and remodeling and payment of dividends.March 2020.
Cash, cash equivalents and short-term investmentsmarketable securities totaled $248,760$356,938 and $266,999$304,622 at June 30, 20192020 and December 31, 2018,2019, respectively. Of the total cash, cash equivalents and short-term investmentsmarketable securities at June 30, 2019, $149,781,2020, $138,964, or approximately 60%39%, was held in our foreign subsidiaries and of the total cash, cash equivalents and short-term investmentsmarketable securities at December 31, 2018, $198,110,2019, $137,072, or approximately 74%45%, was held in our foreign subsidiaries.
The Company hasWe have a collection agency agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”). TheUntil May 6, 2020, the agreement providesprovided us with a credit facility in the amount of $30,000, having a sub-limit of $15,000 on the aggregate face amount of letters of credit, at an interest rate based, at our election, upon either the prime rate or LIBOR. The agreement can be terminated byEffective May 6, 2020, the Company or Rosenthal at any time with 60 days’ prior written notice.credit facility was increased to $50,000 as a precautionary measure in response to the COVID-19 pandemic. As of June 30, 2019 we had no borrowings against2020, the balance drawn on this credit facility.facility was $42,622.
On July 22, 2020, we entered into a new $150,000, five-year, asset-based revolving credit facility, which replaced our credit facility with Rosenthal.
As of June 30, 2019,2020, we had working capital of $458,584,$398,029, cash and cash equivalents of $212,664 and$318,101, investments in marketable securities of $36,096$38,837 and we did not have any long-term debt.had short-term debt of $42,662.
We believe that based uponon our current financial position and available cash, cash equivalents, and marketable securities, the Companywe will meet all of itsour financial commitments and operating needs for at least the next twelve months. In addition, we have an asset-based revolving credit facility, which we can access as a precautionary measure.
OPERATING ACTIVITIES
($ in thousands)
Cash provided by operations was $59,761$57,867 for the six months ended June 30, 20192020 compared to $44,927$59,761 in the same period of last year. The primary sourceCash provided by operations was derived primarily from a change in factor accounts receivables of cash was from net income$92,975 and a decrease in inventory of $71,376 and an increase$33,614, partially offset by a change in accounts payable and accrued expenses of $26,232, partially offset by cash used from the increase in factor accounts receivables of $43,832.$76,183.
INVESTING ACTIVITIES
($ in thousands)
During the six months ended June 30, 2019,2020, we invested $37,426$25,818 in marketable securities andoffset by cash received $69,488of $25,656 from the maturities and sales of marketable securities. We also made capital expenditures of $6,214,$4,320, principally for systems enhancements, leasehold improvements to office space, systems enhancements, improvements to existing stores and new stores.stores, which were committed to and in final stages prior to the COVID-19 pandemic.
FINANCING ACTIVITIES
($ in thousands)
During the six months ended June 30, 2019,2020, net cash used inprovided by financing activities was $73,174,$1,844, which consisted of share repurchases of $51,156,$29,678 and cash dividends paid of $23,987 and distribution of noncontrolling interest earnings of $1,113. These payments were$12,459, partially offset by an investment in noncontrolling interestnet proceeds from advances from factor of $1,283$42,662 and proceeds from the exercise of stock options of $1,799.$960.
CONTRACTUAL OBLIGATIONS
($ in thousands)
Our contractual obligations as of June 30, 20192020 were as follows:
| | | | Payment due by period | | | Payment due by period | |
Contractual Obligations | | Total | | Remainder of 2019 | | 2020-2021 | | 2022-2023 | | 2024 and after | Contractual Obligations | | Total | | Remainder of 2020 | | 2021-2022 | | 2023-2024 | | 2025 and after |
Operating lease obligations | | $ | 219,693 |
| | $ | 23,422 |
| | $ | 84,433 |
| | $ | 53,159 |
| | $ | 58,679 |
| Operating lease obligations | | $ | 169,747 | | | $ | 22,602 | | | $ | 70,908 | | | $ | 40,448 | | | $ | 35,789 | |
Purchase obligations | | 91,099 |
| | 91,099 |
| | — |
| | — |
| | — |
| Purchase obligations | | 52,790 | | | 52,790 | | | — | | | — | | | — | |
| Future minimum royalty and advertising payments | | 34,150 |
| | 5,355 |
| | 16,910 |
| | 11,885 |
| | — |
| Future minimum royalty and advertising payments | | 26,401 | | | 4,363 | | | 16,600 | | | 5,438 | | | — | |
Transition tax | | 17,973 |
| | 1,563 |
| | 3,126 |
| | 4,493 |
| | 8,791 |
| Transition tax | | 16,410 | | | 1,563 | | | 3,126 | | | 6,837 | | | 4,884 | |
Total | | $ | 362,915 |
| | $ | 121,439 |
| | $ | 104,469 |
| | $ | 69,537 |
| | $ | 67,470 |
| Total | | $ | 265,348 | | | $ | 81,318 | | | $ | 90,634 | | | $ | 52,723 | | | $ | 40,673 | |
At June 30, 2019,2020, we had no open letters of credit for the purchase of inventory.
VirtuallySubstantially all of our products are produced by independent manufacturers at overseas locations, the majority of which are located in China, with a small and growing percentage located in Cambodia, Mexico, Brazil, Italy, Mexico,India, Vietnam and Cambodia and smaller volumes in Brazil, India, The Netherlands, The Dominican Republic, Spain and South Korea.some other European nations. We have not entered into any long-term manufacturing or supply contracts with any of these foreign manufacturers. We believe that a sufficient number of alternative sources exist outside of the United States for the manufacture of our products. Purchases are made primarily in United States dollars.
The Company hasWe have employment agreements with itsour Creative and Design Chief, Steven Madden, and certain executive officers, which provide for the payment of compensation aggregating approximately $5,553$3,276 in the remainder of 2019, $9,378 in 2020, $8,668$10,150 in 2021, $7,026$8,366 in 2022 and $7,026$7,174 in 2023. In addition, some of these employment agreements provide for discretionary bonuses and some provide for incentive compensation based on various performance criteria as well as other benefits, including stock-related compensation.
Transition tax of $17,973$16,410 was the result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). Excluded from the contractual obligations table above are long-term taxes payable of $1,511$1,150 as of June 30, 20192020 primarily related to uncertain tax positions, for which we are unable to make a reasonably reliable estimate of the timing of payments in individual years beyond one year due to uncertainties in the timing of tax audit outcomes.
DIVIDENDS
In April 2019,At the end of March 2020, in response to the COVID-19 pandemic, as a precautionary measure our Board of Directors temporarily suspended the payment of dividends and the repurchase of the Company declared a quarterly cash dividend of $0.14 per share on the Company’s outstanding shares ofCompany's common stock. The dividend was paid on June 28, 2019 to stockholders of record as of the close of business on June 18, 2019. The total cash dividends paid for the three months ended June 30, 2019 was $11,945.
In July 2019, the Board of Directors of the Company declared an additional quarterly cash dividend of $0.14 per share on the Company’s outstanding shares of common stock. The dividend will be paid on September 27, 2019 to stockholders of record as of the close of business on September 17, 2019.
Future quarterly cash dividend payments are also subject to the discretion of our Board of Directors and contingent upon future earnings, our financial condition, capital requirements, general business conditions, and other factors. Therefore, we can give no assurance that cash dividends of any kind will be paid to holders of our common stock in the future.
INFLATION
We do not believe that inflation and price changes have had a significant effect on our sales or profitability in the three months ended June 30, 2019.2020. Historically, we have minimized the impact of product cost increases by increasing prices, changing suppliers and by improving operating efficiencies. However, no assurance can be given that we will be able to offset any such inflationary cost increases in the future.
OFF-BALANCE SHEET ARRANGEMENTS
The Company hasWe have no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES
There have been no material changes to our critical accounting policies and the use of estimates from these disclosures reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 20182019 filed with the Securities and Exchange Commission on February 28, 2019.March 2, 2020.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
($ in thousands)
We do not engage in the trading of market risk sensitive instruments in the normal course of business. Our financing arrangements are subject to variable interest rates, primarily based on the prime rate and LIBOR. The terms of our collection agency agreements with Rosenthal & Rosenthal, Inc. can be found in the Liquidity and Capital Resources section of Item 2 and in Note DF to the Condensed Consolidated Financial Statements included in this Quarterly Report. The terms of our new $150 million asset-based revolving credit agreement can be found in Note T to the Condensed Consolidated Financial Statements included in this Quarterly Report.
As of June 30, 2019,2020, we held marketable securities valued at $36,096,$38,837, which consist of certificates of deposit and corporate bonds. The values of these securities may fluctuate as a result of changes in values, market interest rates and credit risk.deposit. We have the ability to hold these investments until maturity. In addition, any decline in interest rates would be expected to reduce our interest income.
We face market risk to the extent that our U.S. or foreign operations involve the transaction of business in foreign currencies. Also,In addition, our inventory purchases are primarily done in foreign jurisdictions and inventory purchases may be impacted by fluctuations in
the exchange rates between the U.S. dollar and the local currencies of our contract manufacturers, which could have the effect of increasing the cost of goods sold in the future. We manage these risks primarily by denominating these purchases in U.S. dollars. To mitigate the risk of purchases that are denominated in foreign currencies we may enter into forward foreign exchange contracts for terms of no more than two years. A description of our accounting policies for derivative financial instruments is included in Note P Note M to the Condensed Consolidated Financial Statements.
In the first six months of 2019, the Company2020, we entered into forward foreign exchange contracts with notional amounts totaling $29,280.$16,121. We performed a sensitivity analysis based on a model that measures the impact of a hypothetical change in foreign currency exchange raterates to determine the effects that market risk exposures may have on the fair values of our forward foreign exchange contracts that were outstanding as of June 30, 2019.2020. As of June 30, 2019,2020, a 10% appreciationincrease or depreciationdecrease of the U.S. dollar against the exchange rates for foreign currencies under forward foreign exchange contracts would result in a net increase or decrease, respectively, in the fair value of our derivatives portfolio of approximately $2,754.$1,599.
In addition, we are exposed to translation risk in connection with our foreign operations in Canada, Mexico, Europe, South Africa, China, Taiwan and Israel because our subsidiaries and joint ventures in these countries utilize the local currency as their functional currency, and those financial results must beare translated into U.S. dollars. As currency exchange rates fluctuate, foreign currency exchange rate translation adjustments reflected in our financial statements with respect to our foreign operations affects the comparability of financial results between years.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter covered by this Quarterly Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were, as of the end of the fiscal quarter covered by this Quarterly Report, effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal controls over financial reporting to determine whether any changes occurred during the quarter covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. BasedThere were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the effects that the COVID-19 pandemic may have on our internal controls to minimize the impact on their design and operating effectiveness.
On August 9, 2019 and August 12, 2019, we acquired GREATS Brand, Inc. and B.B. Dakota, Inc., respectively. In conducting our evaluation of the effectiveness of internal controls over financial reporting as of June 30, 2020, we excluded GREATS Brand, Inc. and B.B. Dakota, Inc. from that evaluation there has been no such change duringin accordance with the quarter covered by this Quarterly Report.rules relating to recently acquired entities.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company hasWe have been named as a defendant in certain lawsuits in the normal course of business. In the opinion of management, after consulting with legal counsel, the liabilities, if any, resulting from these matters should not have a material effectimpact on the Company'sour financial position, or results of operations or cash flows. It is the policy of management to disclose the amount or range of reasonably possible losses in excess of recorded amounts.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
($ in thousands, except share and per share data)
The following table presents the total number of shares of the Company'sour common stock, $.0001 par value, purchased by the Companyus in the three months ended June 30, 2019,2020, the average price paid per share and the approximate dollar value of the shares that still could have been purchased at the end of the fiscal period pursuant to our Share Repurchase Program. In the middle of March 2020, in response to the COVID-19 pandemic, as a precautionary measure, the Company temporarily suspended the repurchase of the Company's common stock under the Share Repurchase Program. See also Note HK to the Condensed Consolidated Financial Statements. During the three months ended June 30, 2019,2020, there were no sales by the Companyus of unregistered shares of the Company's common stock.
| | | | | | | | | | | | | | | | | | | |
Period | Total Number of Shares Purchased (1) | | Average Price Paid per Share (1) | | | | Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Plans or Programs |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
4/1/2020 - 4/30/2020 | 15,304 | | | $ | 19.70 | | | | | $ | 111,590 | |
5/1/2020 - 5/31/2020 | 2,554 | | | 25.07 | | | | | 111,590 | |
6/1/2020 - 6/30/2020 | 7,159 | | | 24.33 | | | | | 111,590 | |
Total | 25,017 | | | $ | 21.57 | | | | | |
|
| | | | | | | | | | | | | |
Period | Total Number of Shares Purchased (1) | | Average Price Paid per Share (1) | | Total Number of Shares Purchased as part of Publicly Announced Plans or Programs | | Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Plans or Programs |
4/1/2019 - 4/30/2019 | 9,415 |
| | $ | 33.99 |
| | — |
| | $ | 200,000 |
|
5/1/2019 - 5/31/2019 | 568,011 |
| | $ | 32.28 |
| | 565,695 |
| | $ | 181,751 |
|
6/1/2019 - 6/30/2019 | 481,270 |
| | $ | 31.89 |
| | 470,333 |
| | $ | 166,754 |
|
Total | 1,058,696 |
| | $ | 32.12 |
| | 1,036,028 |
| | $ | 166,754 |
|
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(1) The Steven Madden, Ltd. 2019 Incentive Compensation Plan and its predecessor plan, the Steven Madden, Ltd. Amended and Restated 2006 Stock Incentive Plan, each provide the Companyus with the right to deduct or withhold, or require employees to remit to the Company,us, an amount sufficient to satisfy all or part of the tax withholdingtax-withholding obligations applicable to stock-based compensation awards. To the extent permitted, employeesparticipants may elect to satisfy all or part of such withholding obligations by tendering to the Companyus previously owned shares or by having the Companyus withhold shares having a fair market value equal to the employee's withholding tax obligation.minimum statutory tax-withholding rate that could be imposed on the transaction. Included in this table are shares withheld during the second quarter of 20192020 in connection with the settlement of vested restricted stock to satisfy tax withholdingtax-withholding requirements in addition to the shares repurchased pursuant to the Share Repurchase Program. Of the total number of shares repurchased by the Company in the second quarter of 2019, 22,668 shares were withheld at an average price per share of $33.36, forwith an aggregate purchase price of approximately $756, in connection with the settlement of vested restricted stock to satisfy tax withholding requirements.$540.
ITEM 6. EXHIBITS
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101 | The following materials from Steven Madden, Ltd.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019,2020, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of (Loss)/Income, (iii) the Condensed Consolidated Statements of Comprehensive (Loss)/Income, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text* |
104 | Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).* |
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†# | Filed herewith |
# | Indicates management contract or compensatory plan or arrangement required to be identified pursuant to Item 6 15(b) of this Quarterly Report on Form 10-Q. |
*† | Filed herewith |
* | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 5, 20194, 2020
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STEVEN MADDEN, LTD. |
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/s/ EDWARD R. ROSENFELD |
Edward R. Rosenfeld |
Chairman and Chief Executive Officer |
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/s/ ARVIND DHARIA |
Arvind Dharia |
Chief Financial Officer |