Yahoo Finance Steven Madden Ltd (SHOO) Q1 2024 Earnings Call Transcript Highlights: Robust Revenue Growth and ...
Revenue: $552.4 million, up 19.1% year-over-year; excluding Almost Famous, growth was 10.3%.
Wholesale Revenue: $438.2 million, increased by 21%; 9.7% growth excluding Almost Famous.
Wholesale Footwear Revenue: $295.7 million, a 4.7% increase from last year.
Wholesale Accessories and Apparel Revenue: $142.6 million, up 78.6%; 27.4% growth excluding Almost Famous.
Direct-to-Consumer Revenue: $112.3 million, up 12.8% from the previous year.
Brick-and-Mortar Revenue: Grew 15%; 8% on a comparable store basis.
E-commerce Revenue: Increased by 11%.
Gross Margin: Consolidated at 40.7%, down from 42.1% last year.
Wholesale Gross Margin: 35.1%, decreased from 37%.
Direct-to-Consumer Gross Margin: 61.9%, improved by 270 basis points.
Operating Income: $61 million, representing 11% of revenue.
Net Income: $47 million, or $0.65 per diluted share, up from $37.6 million or $0.50 per diluted share.
Effective Tax Rate: 23.5%, slightly reduced from 24.2%.
Cash and Equivalents: $143.1 million, with no debt.
Inventory: $202 million, a 12.2% increase year-over-year; 7.2% excluding Almost Famous.
Capital Expenditures: $4 million in the quarter.
Stock Repurchases: $37.3 million spent on repurchases.
Dividend: Quarterly cash dividend of $0.21 per share, payable on June 21, 2024.
Annual Guidance: Revenue expected to increase by 11% to 13%; EPS projected at $2.55 to $2.65.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Steven Madden Ltd (NASDAQ:SHOO) reported a 19% increase in first quarter revenue and a 30% rise in diluted EPS compared to the same period in 2023.
International revenue grew by 15%, with significant contributions from EMEA, the Americas excluding the U.S., and APAC regions.
Accessories and apparel revenue rose by 73%, driven by strong performance in the Steve Madden handbag business and the addition of the Almost Famous business.
Direct-to-consumer (DTC) revenue increased by 13%, with both digital and brick-and-mortar channels showing double-digit gains.
Operating margin expanded to 11% from 10.3% in the first quarter of 2023, despite the inclusion of Almost Famous, indicating improved operational efficiency.
Negative Points
The core U.S. wholesale footwear business experienced pressure, only achieving a 5% revenue increase due to cautious wholesale customer behavior.
Consolidated gross margin declined to 40.7% from 42.1% in the previous year, impacted negatively by the Almost Famous acquisition.
Wholesale gross margin decreased to 35.1% from 37% due to the mix shift towards private label business and the inclusion of Almost Famous.
Licensing royalty income decreased to $1.8 million from $2.1 million in the first quarter of 2023.
Inventory levels rose by 12.2% compared to the previous year, indicating potential excess stock that could affect future profitability.
Q & A Highlights
Q: Can you discuss what exceeded your expectations in Q1? Also, could you elaborate on the drivers within the DTC business from traffic, ticket, and AUR perspectives? A: Edward R. Rosenfeld, Chairman & CEO of Steven Madden, Ltd., noted that Q1 results modestly exceeded internal forecasts across wholesale footwear, accessories, and DTC, with slightly better consolidated gross margin performance. In DTC, traffic was weak, but benefits were seen in average unit retail (AUR) and units per transaction (UPT), contributing to increased average transaction value. April's performance in DTC was softer, attributed to the Easter shift, but aligned with expectations.
Q: How is the branded wholesale business performing, especially given the cautious approach from big retailers? A: Edward R. Rosenfeld explained that the branded wholesale footwear business is still facing challenges, with big retailers comping negative and adopting a cautious approach. The fashion boot business did not perform well last year, leading to conservative planning for this segment.
Q: Could you provide insights into the performance and expectations for the Almost Famous business? A: Edward R. Rosenfeld indicated that Almost Famous is expected to generate low to mid-40s in millions each quarter, with minimal seasonality. Zine Mazouzi, CFO, added that expenses would follow a similar quarterly pattern.
Q: What strategies are being implemented to expand DTC, particularly through digital channels, and how are you integrating Almost Famous apparel into your stores? A: Edward R. Rosenfeld highlighted the significant growth in DTC, driven by international markets. The company is focusing on enhancing returns by opening stores internationally. Regarding apparel, most stores aren't set up for significant apparel sales, but some international markets are beginning to see success with apparel integration.
Q: How are you improving margins in the Almost Famous business, and what are the future margin improvement plans? A: Edward R. Rosenfeld shared that the goal is to improve EBIT margins from 7% to high single digits or low double digits. The company has already achieved a 100 basis point improvement this year through gross margin enhancements, leveraging the brand strength of Madden Girl and Madden NYC apparel.
Q: Can you discuss the consumer behavior trends observed this year and how they compare to previous quarters? A: Edward R. Rosenfeld remarked that consumer demand for discretionary fashion goods remains moderate, with sensitivity to prices still prevalent. The outlet business continues to outperform full-price stores, indicating a continued consumer preference for value.
These insights from the Q&A session of Steven Madden Ltd's earnings call provide a comprehensive overview of the company's current strategies, performance, and market conditions as they navigate through various challenges and opportunities in the retail sector.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
