Steven Madden reaffirms outlook for 2008

05 Aug '08

4 min read

Steven Madden Ltd, a leading designer, wholesaler and marketer of fashion footwear and accessories for women, men and children, announced financial results for the second quarter ended June 30, 2008.

Second quarter net sales were $109.3 million compared to $108.3 million in the second quarter of 2007. Gross margin decreased slightly to 41.7% compared to 42.0% in the second quarter of the prior year due to a margin decline in the retail division, which was partially offset by a margin increase in the wholesale division.

Operating expenses as a percent of sales were 33.5% versus 31.0% in the same period of 2007, due primarily to increased expenses in the retail division for new stores, the write-off of fixed assets related to store closures and remodels, and severance.

Operating income was $12.1 million, or 11.1% of sales, compared with operating income of $17.5 million, or 16.2% of sales, in the second quarter of 2007. This decline was due primarily to higher operating expenses as a percent of sales and a decline in commission income from the private label business versus the prior year period. Net income was $7.6 million, or $0.43 per diluted share, compared to $10.5 million, or $0.49 per diluted share, in the prior year's second quarter.

Revenues from the wholesale business were $79.4 million compared to $78.6 million in the second quarter of 2007 due primarily to the strength of the Madden Girl and Daniel M. Friedman divisions, which offset relative softness in the Steve Madden Women's and Steve Madden Men's divisions during the quarter. Gross margin in the wholesale business increased to 34.7% from 34.2% in last year's second quarter as a result of margin improvement in both the wholesale footwear and Daniel M. Friedman accessories divisions.

Retail revenues were $29.9 million compared to $29.6 million in the second quarter of the prior year due to sales from new stores. Same store sales decreased 3.3%. Retail gross margin decreased to 60.3% from 62.4% in the comparable period of the prior year, due primarily to increased promotional activity due to the challenging retail environment. During the second quarter of 2008, the Company closed two stores.

For the first six months of fiscal 2008, net sales were $209.9 million compared to $214.9 million in the comparable period last year. Net income totaled $9.7 million, or $0.51 per diluted share, for the first six months of fiscal 2008, compared to $20.1 million, or $0.92 per diluted share, in the comparable period last year.

Excluding a one-time after-tax charge of $3.0 million in first quarter resulting from the resignation of the Company's former Chief Executive Officer, net income totaled $12.7 million, or $0.67 per diluted share, for the first six months of fiscal 2008.

Edward Rosenfeld, Interim Chief Executive Officer, stated, "In wholesale, Madden Girl and Daniel M. Friedman were bright spots as we generated strong sales increases in these two divisions in the second quarter. We also remain pleased with our wholesale gross margin, which rose modestly and reflects positive trends in both footwear and accessories.

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