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Steve Madden posts 36.2% growth in Q2 sales

Aug '10
Steve Madden, a leading designer and marketer of fashion footwear and accessories for women, men and children, announced financial results for the second quarter ended June 30, 2010.

• Second quarter net sales increased 36.2% to $158.7 million.
• Operating margin reached 20.2% of sales in the second quarter of 2010, compared with operating margin of 16.6% in the same period of 2009.
• Second quarter net income increased 63.0% to $19.8 million, or $0.70 per diluted share, compared to $12.1 million, or $0.44 per diluted share in the prior year's second quarter.
• Increase in fiscal 2010 diluted EPS guidance to a range of $2.45 to $2.55.

Edward Rosenfeld, Chairman and Chief Executive Officer, commented, "We are pleased to have reported the highest quarterly sales and earnings in our Company's history during our second quarter 2010. Our performance reflects broad-based strength in our business, with sales and profitability gains in the wholesale footwear, wholesale accessories and retail segments.

“We believe that our ability to deliver outstanding top and bottom line growth in a difficult retail environment demonstrates the strength of our business model and the creativity of Steve and our design team as they consistently deliver on-trend product that drives consumer demand. We are confident in our belief that the strength in our core business combined with the growth opportunities from some of our new businesses position us to achieve our long term goal of doubling EPS by 2014."

Second Quarter 2010 Results
Second quarter net sales were $158.7 million compared to $116.5 million reported in the comparable period of 2009. Net sales from the wholesale business were $129.2 million compared to $88.2 million in the second quarter of 2009, a 46.5% increase driven by sales increases across all existing divisions as well as contributions from our recent acquisitions, Madden Zone and Big Buddha, and our new men's brand, Madden. Sales also benefitted from the transition of one of the Company's mass merchant customers from a buying agency model to a selling agency model. Retail net sales grew 4.2% to $29.5 million compared to $28.3 million in the second quarter of the prior year despite a smaller store base. Same store sales increased 7.4%.

Gross margin improved to 43.4% in the second quarter from 42.6% in the comparable period of 2009, reflecting margin improvement in both the wholesale and retail segments. Gross margin in the wholesale business increased to 38.7% in the second quarter from 36.8% in the prior year's second quarter driven primarily by improvement in our accessories division as a result of fewer markdown allowances and the addition of the higher margin Big Buddha business. Retail gross margin increased to 63.9% for the second quarter from 60.4% in the comparable period of the prior year as a result of less discounting.

Operating expenses as a percent of sales declinedto 26.5% for the second quarter compared to 32.2% in the same period of the prior year, due to leverage on increased sales.

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