Steven Madden, Ltd. (NASDAQ:SHOO) Q4 2015 Earnings Conference Call - Final Transcript

Feb 24, 2016 • 08:30 am ET


Steven Madden, Ltd. (NASDAQ:SHOO) Q4 2015 Earnings Conference Call - Final Transcript


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Please stand by. Good day and welcome to the Steve Madden Fourth Quarter 2015 Earnings Conference Call. Today's call is being recorded.

At this time, I'd like to turn it over to Megan Crudele of ICR. Please go ahead.

Megan Crudele

Thank you. Good morning, everyone. Thank you for joining us today for the discussion of Steve Madden's fourth quarter 2015 earnings results.

(Forward-Looking Cautionary Statements)

I would now like to turn the call over to Ed Rosenfeld, Chairman and CEO of Steve Madden.

Ed Rosenfeld

Thanks Megan. Good morning everyone and thank you for joining us to review Steve Madden's fourth quarter and fiscal year 2015 results. With me to discuss the business is Derek Browe, the Company's Director of Finance and Investor Relations.

We delivered solid financial performance in 2015, bouncing back after a tough 2014. Successfully capitalized on some new fashion footwear trends, recorded strong growth in both sales and earnings in our retail and e-commerce business, made significant progress in building our newly acquired Dolce Vita and Blondo brands and further expanded our international presence.

As expected, our earnings performance improved as the year progressed. And we finished 2015 with both net sales and EPS, up about 5% for the year. Year ended on a good note in the fourth quarter, despite an overall tough retail environment. We delivered EPS growth of 27% in Q4, on the strength of margin improvement in both wholesale and retail. We achieved this growth during one of the warmest seasons on record, which pressured seasonal products like boots and cold weather accessories and contributed to a heavily promotional retail environment.

Before I turn the call over to Derek to walk you through the financials, let me spend a few minutes recapping the year in a little more detail. First, Steve and his design team did a great job in 2015 of creating fashion-forward product that resonated with our consumers. Our dress and fashion sneaker offerings were particularly outstanding. The on-trend merchandise assortment led to a dramatic improvement in our retail segment performance.

Retail comparable store sales were up 11.1% for the year, and operating margin for our retail business expanded 260 basis points. We remain pleased with the momentum in our retail business and expect continued improvement in 2016 as we work toward our goal of a 10% operating margin in this segment. Although strong product assortment also resulted in improved sell-through performance in the wholesale channel, our overall wholesale footwear financial results were negatively impacted by a number of factors during the year, including the lingering effects of a challenging 2014, the West Coast port slowdown in the first half and the extremely unfavorable weather in the back half.

As we enter 2016, we have better momentum with our key wholesale partners than we did a year ago and are confident that we can show sales and earnings improvement versus 2015 in this segment. That being said, the overall tone among most of our largest wholesale customers is one of caution and we are