UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to _____________________

Commission File Number 0-23702 

STEVEN MADDEN, LTD.

(Exact name of registrant as specified in its charter) 

Delaware	13-3588231
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

52-16 Barnett Avenue, Long Island City, New York 11104

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (718) 446-1800

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $.0001 per share	SHOO	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐   No ☒ 

As of July 30, 2020, there were 83,151,403 shares of the registrant’s common stock, $0.0001 par value, outstanding.

STEVEN MADDEN, LTD.

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2020

PART I – FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of (Loss)/Income	2
	Condensed Consolidated Statements of Comprehensive (Loss)/Income	3
	Condensed Consolidated Statements of Changes in Stockholder' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements - Unaudited	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	33
ITEM 4.	Controls and Procedures	33
PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	34
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
ITEM 6.	Exhibits	35
	Signatures	36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

	June 30, 2020		December 31, 2019		June 30, 2019
	(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	318,101	$	264,101	$	212,664
Accounts receivable, net of allowances of $9,937, $11,066 and $12,570	20,183		38,166		21,409
Factor accounts receivable	123,496		216,471		285,227
Inventories	103,282		136,896		146,120
Marketable securities – available for sale	38,837		40,521		36,096
Prepaid expenses and other current assets	18,444		22,066		31,275
Prepaid taxes	13,578		658		8,012
Total current assets	635,921		718,879		740,803
Note receivable – related party	1,369		1,558		1,743
Property and equipment, net	49,594		65,504		61,654
Operating lease right-of-use asset	120,489		155,700		179,320
Deposits and other	2,917		2,948		2,592
Deferred taxes	6,360		—		9,319
Goodwill – net	166,333		171,349		148,566
Intangibles – net	149,409		162,709		137,563
Total Assets	$	1,132,392	$	1,278,647	$	1,281,560
LIABILITIES
Current liabilities:
Accounts payable	$	42,474	$	61,706	$	107,436
Accrued expenses	113,744		169,895		129,810
Operating leases - current portion	36,890		38,624		38,652
Advances from factor	42,662		—		—
Accrued incentive compensation	2,122		11,046		6,321
Total current liabilities	237,892		281,271		282,219
Contingent payment liability	1,829		9,124		—
Operating leases - long-term portion	114,630		133,172		154,643
Deferred taxes	3,128		5,877		4,041
Other liabilities	7,793		7,979		13,101
Total Liabilities	365,272		437,423		454,004
Commitments, contingencies and other (Note Q)
STOCKHOLDERS’ EQUITY
Preferred stock – $.0001 par value, 5,000 shares authorized; none issued; Series A Junior Participating preferred stock – $.0001 par value, 60 shares authorized; none issued	—		—		—
Common stock – $.0001 par value, 245,000 shares authorized, 133,173, 132,754 and 132,681 shares issued, 83,035, 83,520 and 84,821 shares outstanding	6		6		6
Additional paid-in capital	466,384		454,217		438,242
Retained earnings	1,263,910		1,310,406		1,264,631
Accumulated other comprehensive loss	(39,850)		(30,440)		(29,449)
Treasury stock – 50,138, 49,234 and 47,860 shares at cost	(935,366)		(905,688)		(855,076)
Total Steven Madden, Ltd. stockholders’ equity	755,084		828,501		818,354
Noncontrolling interest	12,036		12,723		9,202
Total stockholders’ equity	767,120		841,224		827,556
Total Liabilities and Stockholders’ Equity	$	1,132,392	$	1,278,647	$	1,281,560

See accompanying notes to condensed consolidated financial statements - unaudited.

1

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of (Loss)/Income

(unaudited)

(in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net sales	$	141,363	$	444,974	$	497,047	$	855,914
Commission and licensing fee income	1,449		4,655		4,933		9,503
Total revenue	142,812		449,629		501,980		865,417
Cost of sales	86,924		279,629		312,628		533,572
Gross profit	55,888		170,000		189,352		331,845
Operating expenses	79,590		121,317		229,784		238,502
Impairment of intangibles	—		4,050		9,518		4,050
(Loss)/income from operations	(23,702)		44,633		(49,950)		89,293
Interest and other income – net	357		1,262		1,403		2,454
(Loss)/income before provision for income taxes	(23,345)		45,895		(48,547)		91,747
(Benefit)/provision for income taxes (Note M)	(6,201)		9,784		(13,602)		20,371
Net (loss)/income	(17,144)		36,111		(34,945)		71,376
Less: net (loss)/income attributable to noncontrolling interest	(558)		(461)		(908)		279
Net (loss)/income attributable to Steven Madden, Ltd.	$	(16,586)	$	36,572	$	(34,037)	$	71,097
Basic net (loss)/income per share	$	(0.21)	$	0.46	$	(0.43)	$	0.89
Diluted net (loss)/income per share	$	(0.21)	$	0.44	$	(0.43)	$	0.85
Basic weighted average common shares outstanding	78,517		79,951		78,696		80,241
Effect of dilutive securities – options/restricted stock	—		3,918		—		3,823
Diluted weighted average common shares outstanding	78,517		83,869		78,696		84,064
Cash dividends declared per common share	$	—	$	0.14	$	0.15	$	0.28

See accompanying notes to condensed consolidated financial statements - unaudited.

2

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive (Loss)/Income

(unaudited)

(in thousands)

	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Pre-tax amounts		Tax benefit		After-tax amounts		Pre-tax amounts		Tax (expense)		After-tax amounts
Net (loss)					$	(17,144)					$	(34,945)
Other comprehensive income/(loss):
Foreign currency translation adjustment	$	5,770	$	—	5,770		$	(9,880)	$	—	(9,880)
(Loss)/gain on cash flow hedging derivatives	(797)		240		(557)		879		(249)		630
Total other comprehensive income/(loss)	$	4,973	$	240	5,213		$	(9,001)	$	(249)	(9,250)
Comprehensive (loss)					(11,931)						(44,195)
Less: comprehensive (loss) attributable to noncontrolling interests					(740)						(748)
Comprehensive (loss) attributable to Steven Madden, Ltd.					$	(11,191)					$	(43,447)
	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Pre-tax amounts		Tax benefit/(expense)		After-tax amounts		Pre-tax amounts		Tax benefit/(expense)		After-tax amounts
Net income					$	36,111					$	71,376
Other comprehensive income:
Foreign currency translation adjustment	$	1,362	$	—	1,362		$	3,617	$	—	3,617
(Loss) on cash flow hedging derivatives	(567)		136		(431)		(816)		196		(620)
Unrealized gain on marketable securities	18		(4)		14		88		(21)		67
Total other comprehensive income	$	813	$	132	945		$	2,889	$	175	3,064
Comprehensive income					37,056						74,440
Less: comprehensive (loss)/income attributable to noncontrolling interests					(536)						164
Comprehensive income attributable to Steven Madden, Ltd.					$	37,592					$	74,276

See accompanying notes to condensed consolidated financial statements - unaudited.

3

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity

(unaudited)

(in thousands)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - March 31, 2020	83,046	$	6	$	460,777	$	1,280,496	$	(45,245)	50,113	$	(934,827)	$	12,417	$	773,624
Share repurchases	(25)	—		—		—		—		25	(539)		—		(539)
Exercise of stock options	4	—		86		—		—		—	—		—		86
Issuance of restricted stock, net of forfeitures	10	—		—		—		—		—	—		—		—
Stock-based compensation	—	—		5,521		—		—		—	—		—		5,521
Foreign currency translation adjustment	—	—		—		—		5,952		—	—		(182)		5,770
Cash flow hedge (net of tax benefit of $240)	—	—		—		—		(557)		—	—		—		(557)
Investment of noncontrolling interest	—	—		—		—		—		—	—		359		359
Net (loss)	—	—		—		(16,586)		—		—	—		(558)		(17,144)
Balance - June 30, 2020	83,035	$	6	$	466,384	$	1,263,910	$	(39,850)	50,138	$	(935,366)	$	12,036	$	767,120
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - December 31, 2019	83,520	6		454,217		1,310,406		(30,440)		49,234	(905,688)		12,723		841,224
Share repurchases	(904)	—		—		—		—		904	(29,678)		—		(29,678)
Exercise of stock options	52	—		960		—		—		—	—		—		960
Issuance of restricted stock, net of forfeitures	367	—		—		—		—		—	—		—		—
Stock-based compensation	—	—		11,207		—		—		—	—		—		11,207
Foreign currency translation adjustment	—	—		—		—		(10,040)		—	—		160		(9,880)
Cash flow hedge (net of tax expense of $249)	—	—		—		—		630		—	—		—		630
Dividends on common stock ($0.15 per share)	—	—		—		(12,459)		—		—	—		—		(12,459)
Investment of noncontrolling interest	—	—		—		—		—		—	—		359		359
Acquisition adjustment of noncontrolling interest	—	—		—		—		—		—	—		(298)		(298)
Net (loss)	—	—		—		(34,037)		—		—	—		(908)		(34,945)
Balance - June 30, 2020	83,035	$	6	$	466,384	$	1,263,910	$	(39,850)	50,138	$	(935,366)	$	12,036	$	767,120

4

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity

(unaudited)

(in thousands)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - March 31, 2019	85,729	$	6	$	431,228	$	1,240,004	$	(30,469)	46,801	$	(821,074)	$	10,851	$	830,546
Share repurchases	(1,059)	—		—		—		—		1,059	(34,002)		—		(34,002)
Exercise of stock options	48	—		1,077		—		—		—	—		—		1,077
Issuance of restricted stock, net of forfeitures	103	—		—		—		—		—	—		—		—
Stock-based compensation	—	—		5,937		—		—		—	—		—		5,937
Foreign currency translation adjustment	—	—		—		—		1,437		—	—		(75)		1,362
Unrealized holding gain on securities (net of tax expense of $4)	—	—		—		—		14		—	—		—		14
Cash flow hedge (net of tax benefit of $136)	—	—		—		—		(431)		—	—		—		(431)
Dividends on common stock ($0.14 per share)	—	—		—		(11,945)		—		—	—		—		(11,945)
Distributions to non-controlling interests, net	—	—		—		—		—		—	—		(1,113)		(1,113)
Net income/(loss)	—	—		—		36,572		—		—	—		(461)		36,111
Balance - June 30, 2019	84,821	$	6	$	438,242	$	1,264,631	$	(29,449)	47,860	$	(855,076)	$	9,202	$	827,556
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - December 31, 2018	85,715	6		424,835		1,217,521		(32,628)		46,276	(803,920)		8,868		814,682
Share repurchases	(1,584)	—		—		—		—		1,584	(51,156)		—		(51,156)
Exercise of stock options	80	—		1,799		—		—