The following discussion of our financial condition and results of operations
for the three and nine months ended September 30, 2021 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.
All references in this Quarterly Report to "we," "our," "us" and the "Company"
refer to Steven Madden, Ltd. and its subsidiaries unless the context indicates
otherwise.
This Quarterly Report contains "forward-looking statements" within the meaning
of the safe harbor provisions of the U.S. Private Securities Litigation Reform
Act of 1995. Examples of forward-looking statements include, among others,
statements regarding revenue and earnings guidance, plans, strategies,
objectives, expectations and intentions. Forward-looking statements can be
identified by words such as: "may", "will", "expect", "believe", "should",
"anticipate", "project", "predict", "plan", "intend", or "estimate", and similar
expressions or the negative of these expressions. Forward-looking statements are
neither historical facts nor assurances of future performance. Instead, they
represent our current beliefs, expectations and assumptions regarding
anticipated events and trends affecting our business and industry based on
information available as of the time such statements are made. Investors are
cautioned that such forward-looking statements are inherently subject to risks
and uncertainties, many of which cannot be predicted with accuracy and some of
which may be outside of our control. Our actual results and financial condition
may differ materially from those indicated in these forward-looking statements.
As such, investors should not rely upon them. Important risk factors include:
•our ability to maintain adequate liquidity when negatively impacted by
unforeseen events such as an epidemic or pandemic (COVID-19), which may cause
disruption to our business operations and temporary closure of Company-operated
and wholesale partner retail stores, resulting in a significant reduction in
revenue for an indeterminable period of time;
•our ability to accurately anticipate fashion trends and promptly respond to
consumer demand;
•our ability to compete effectively in a highly competitive market;
•our ability to adapt our business model to rapid changes in the retail
industry;
•our dependence on the retention and hiring of key personnel;
•our ability to successfully implement growth strategies and integrate acquired
businesses;
•our reliance on independent manufacturers to produce and deliver products in a
timely manner, especially when faced with adversities such as work stoppages,
transportation delays, public health emergencies, social unrest, changes in
local economic conditions, and political upheavals as well as their ability to
meet our quality standards;
•changes in trade policies and tariffs imposed by the United States government
and the governments of other nations in which we manufacture and sell products;
•disruptions to product delivery systems and our ability to properly manage
inventory;
•our ability to adequately protect our trademarks and other intellectual
property rights;
•legal, regulatory, political and economic risks that may affect our sales in
international markets;
•changes in U.S. and foreign tax laws that could have an adverse effect on our
financial results;
•additional tax liabilities resulting from audits by various taxing authorities;
•our ability to achieve operating results that are consistent with prior
financial guidance; and
•other risks and uncertainties indicated from time to time in our filings with
the Securities and Exchange Commission.
We do not undertake any obligation to publicly update any forward-looking
statement, including, without limitation, any guidance regarding revenue or
earnings, whether as a result of new information, future developments or
otherwise.
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Overview:
($ in thousands, except earnings per share and per share data)
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 branded 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, and online
retailers, throughout the United States, Canada, Mexico and certain European
nations. In addition, our products are marketed through our retail stores and
our e-commerce websites within the United States, Canada, Mexico, Europe and
South Africa, our joint ventures in Israel, Taiwan and China, and under
distribution arrangements in Italy, the Middle East, South and Central Americas,
Oceania and various countries in Asia. Our product lines 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.
Executive Summary
The impact of COVID-19 pandemic resulted in an unprecedented decline in our
revenue and earnings during 2020 and included charges from adjustments to the
carrying amount of certain trademarks, long-lived asset impairment charges and
restructuring and other related charges. In 2021, despite the continued impact
of the pandemic and supply chain disruption, our business saw improvements in
our retail segment and improvements in sell in and sell-through performance in
our wholesale businesses.
Total revenue for the quarter ended September 30, 2021 increased 52.4% to
$528,742 compared to $346,867 in the same period of last year. Net income
attributable to Steven Madden, Ltd. was $66,643 in the third quarter of 2021
compared to net loss of ($6,951) in the same period of last year. The effective
tax rate for the third quarter of 2021 increased to 24.4% compared to (145.6)%
in the third quarter of last year. Net income was $0.82 per share on 81,307
diluted weighted average shares outstanding in the third quarter of 2021
compared to a loss of ($0.09) per share on 78,560 diluted weighted average
shares outstanding in the third quarter of last year.
Our inventory turnover, calculated on a trailing twelve-month average, for the
quarters ended September 30, 2021 and 2020 was 7.3 times and 6.9 times,
respectively. The improvement in inventory turnover is due to the continued
recovery from the COVID pandemic partially offset by increased lead times as a
result of the supply chain disruptions and higher penetration from our Retail
segment. Our total Company accounts receivable days outstanding increased to 62
days in the third quarter of 2021 compared to 58 days in the third quarter of
2020 primarily due to the mix of accounts. As of September 30, 2021, we had
$259,913 in cash, cash equivalents and short-term investments, no debt and total
stockholders' equity of $807,180. Working capital was $492,527 as of
September 30, 2021, compared to $429,762 on September 30, 2020.
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The following tables set forth information on operations for the periods
indicated:
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