Q3 2023 Steven Madden Ltd Earnings Call
Good day and welcome to the Steve Madden Ltd third quarter 2023 earnings Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Ask a question you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Danielle Mccoy with VP of corporate development and <unk>.
Relations. Please go ahead.
Thanks, Abigail and good morning, everyone. Thank you for joining our third quarter 2023 earnings call and webcast before we begin I'd like to remind you that our remarks that follow including answers to your questions contain statements that we believe to be forward looking statements within the meaning of the private secure.
So litigation Reform Act.
Forward looking statements are subject to risks that could cause actual results materially differ from those expressed or implied by such forward looking statements.
These risks include among others matters that we have described in our press release issued earlier today and filings with NN.
We make with the SEC, we disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference call if at all.
<unk> financial results discussed on today's call are on an adjusted basis, unless otherwise noted a reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release.
Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer, and Zane was who is the chief financial officer with that I'll turn the call over to Ed Ed.
Thanks, Danielle and good morning, everyone and thank you for joining us to review, Steve Madden third quarter 2023 results.
We were pleased to return to year over year earnings growth in the third quarter, demonstrating the strength and durability of our business model in challenging operating environments.
After a tough first half we saw a significant year over year declines in revenue and earnings we drove strong improvement in our financial performance in Q3.
On a consolidated basis revenue for the quarter declined 1% versus the prior year period.
Operating margin expanded 90 basis points to 15, 1% and diluted EPS rebounded sharply to increase 11% over the comparable period in 2022.
In a challenging and uncertain environment. Our team remains focused on controlling what we can control and executing our strategy for long term growth.
That strategy starts with utilizing our proven model, which combines talented design teams, a test and react strategy and an industry, leading speed to market capability to create trend right product assortments and get them to market ahead of the competition.
We then support that great product with an always on full funnel marketing and consumer engagement strategy.
By consistently combining outstanding product and effective marketing, we create deeper connections with our consumers, which in turn enables our success with our four key business drivers.
The first of those drivers is growing our business in international markets.
In the third quarter, our international revenue increased 5% compared to the prior year period and accounted for just under 20% of consolidated revenue a new quarterly high.
Our EMEA region was a standout we continued to see strong momentum in Europe, where third quarter revenue rose, 18% compared to the same period in 2022.
Our success in the region was recently recognized by the leading UK industry trade publication, Drapers, which named Steve Madden Womens footwear brand of the year for 2023.
And in September we opened a flagship store on Oxford Street in London with our local partner.
That led us to showcase the brand to customers from around the globe and one of the world's most important shopping destinations.
We also continued to develop our business in the middle East through our new joint venture in the region.
The JV opened five new stores in the quarter drove strong performance in E Commerce and made significant investments in marketing, both offline and online to build brand awareness.
And while it's a smaller market I also want to call out our South African joint venture, where we experienced explosive growth with revenue increasing 87% versus the prior year period, driven in large part by outstanding performance in sneakers, well, we've seen multiple products go viral in the market.
Closer to home in our Americas region, our directly owned subsidiary in Mexico continued its strong momentum growing revenue, 31% compared to the prior year period, including a 23% gain in wholesale and a 46% increase in DTC.
This was offset by a decline in Canada, where trends continued to be softer overall and some large wholesale orders moved out of Q3 and into the beginning of Q4.
Our second key business driver is expanding in categories outside of footwear like accessories and apparel.
In the third quarter, our overall accessories and apparel revenue increased 27% versus the prior year period.
Our Steve Madden handbag business was the primary growth driver it had another outstanding quarter, increasing revenue, 52% compared to the third quarter of 2022, including a 46% gain in wholesale and a 90% increase in DTC.
We also continue to make meaningful progress at apparel.
Our Steve Madden apparel business is having a strong fall season with robust sell through rates in our key accounts and based on this performance, we see meaningful opportunity for board, both door growth and expanded assortments within existing doors in our most important accounts in 2024.
And last month, we further enhanced our apparel platform with the acquisition of privately held almost famous designer and marketer of women's apparel.
Almost famous markets products in the wholesale channel under its own brands, primarily almost famous as well as private label brands for various retailers.
It has also been the exclusive licensee for Madden NYSE apparel since its launch in 2022 and has had outstanding success with that brand so far.
Almost famous this core expertise is in the junior apparel category and in value price distribution channels, making it a strong complement to our existing Steve Madden apparel business, which is focused on contemporary styling and it's primarily distributed in department stores and ecommerce retailers.
Our top priorities will be to use the almost famous platform to introduce Madden girl apparel and to grow our Madden NYSE.
This will enable us to implement in apparel. The strategy that has been so successful for us in footwear and accessories, which is to utilize the Steve Madden brand portfolio, including Steve Madden Madden girl and Madden NYSE to reach customers in all tiers of distribution from premium channels down through mass.
Almost famous had revenue in the 12 months ended September 32023 of approximately $163 million in acquisition was completed for $52 million in cash subject to a working capital adjustment plus an earn out provision based on future financial performance.
Extremely excited about the addition of almost famous the capabilities. It brings any opportunities. It creates to continue the expansion of our business outside of footwear.
Our third key business driver is driving our direct to consumer business led by digital in.
In the third quarter DTC revenue declined 2% versus the prior year period, a sequential improvement from the 5% decline we experienced in the second quarter we.
We also delivered a 250 basis point improvement in gross margin in DTC, enabling us to expand operating margins and drive higher EBIT than in the prior year period. Despite the revenue decline.
And despite the pullback we've seen this year, it's important to note that our DTC business continues to be over 50% bigger than it was pre COVID-19.
On a trailing 12 month basis DTC accounted for 26% of consolidated revenue up from 18% in pre Covid 2019.
And our fourth and final key driver is strengthening our core U S wholesale footwear business.
As we have discussed on prior earnings calls this business has been under significant pressure this year as our wholesale customers pulled back on orders across the board as they prioritize inventory control.
But while we are still not all the way back to where we'd like to be we saw significant improvement in the third quarter.
U S wholesale footwear revenue decreased 6% in the quarter, a 1500 basis point improvement compared to the first half trend and we expect to see sequential improvement again in the fourth quarter.
So putting that altogether. We are we are pleased with the progress we're making on our key strategic initiatives.
And as we execute against our plan and focus on the long term. We are also cognizant of the challenging operating environment and disciplined in how we manage the business in the near term.
In the third quarter, we won expanded gross margin for the fourth consecutive quarter with gross margin increases in both wholesale and DTC channels, despite an increasingly promotional retail landscape.
<unk> managed our inventory with discipline, reducing inventory by 16% at the end of Q3 compared to the prior year.
And three controlled expenses and drove cost efficiencies with operating expense dollars declining year over year for the second consecutive quarter, even as we continued to invest in product innovation consumer engagement and our long term growth initiatives.
As we look ahead. This operating discipline will remain important because we continue to face a challenging macro environment.
Trends across our industry softened beginning in September, which combined with the impact of the crisis in the middle East on our Israeli Middle East Joint Ventures leaves us incrementally more cautious on the near term outlook.
Looking out further we remain confident that our core strengths our people brands and business model will enable us to deliver sustainable revenue and earnings growth over the long term.
And finally, as we navigate these challenges and execute our strategic initiatives. We also continue to embrace the opportunity and the responsibility we have to create positive change for our people planet and communities and we seek to embed corporate social responsibility and sustainability in everything we do.
In the third quarter, we published our 2022 sustainability report, which outlines the progress we have made on our let's get real sustainability strategy and our goals going forward.
Can find the report on the sustainability section of <unk> Dot Com and I encourage you all to check it out.
Now I will turn it over to Jim to review, our third quarter financial results in more detail and provide our updated outlook for the year.
Thanks, Ed and good morning, everyone.
Our consolidated revenue in the third quarter was $552 7 million.
0.7% decrease compared to the third quarter of 2022.
Our wholesale revenue was $433 5 million down <unk>, 3% compared to the same period in the prior year, a strong improvement compared to the 20% year over year decline, we experienced in the first half.
Wholesale footwear revenue was $306 1 million a seven 5% decrease from the third quarter of 2022.
Wholesale customers remain cautious in their approach to orders we are encouraged by the sequential improvement we are seeing in this business.
Expect to return to year over year revenue growth in the fourth quarter.
Wholesale accessories, and apparel revenue was $127 4 million.
An increase of 22, 7% compared to the same period last year, driven by the outstanding growth of Steve Madden handbags, and both domestic and international markets.
In our direct to consumer segment revenue was $116 4 million.
Decreasing one 8% compared to the same period last year.
Our brick and mortar business outperformed our e-commerce business and international outperformed the United States.
We opened 13, new stores and closed four stores during the third quarter all of these international markets and in the quarter with 251 brick and motor retail stores, including 71 outlets as well as five E Commerce websites and 22 company operated concessions in international markets.
In our licensing segment royalty income was $2 9 million in the quarter compared to $3 5 million in Q3 last year.
Turning to gross margin consolidated gross margin was 42, 1% in the quarter expanded 90 basis points from the third quarter of 2022 with.
With margin improvement in both wholesale and DTC.
Wholesale gross margin rose 60 basis points year over year to 35, 9% driven by improvement in wholesale accessories and apparel business.
Direct to consumer gross margin was 63, 7%.
250 basis point improvement compared to the same period last year, driven by lower freight expense and a reduction in promotional activity.
Operating expenses in the third quarter were $149 3 million, a <unk>, 8% decrease compared to the third quarter of 2022.
Reflecting our ability to control costs, while continuing to invest in marketing and our long term growth initiatives.
Operating income for the quarter totaled $83 4 million or 15, 1% of revenue.
Up from $79 million or 14, 2% of revenue in the same period last year.
We drove operating margin improvement in both wholesale and DTC channels.
Our effective tax rate for the quarter was 22, 8% compared to 22, 9% in Q3 2022.
Finally, net income attributable to Steve Madden Ltd for the quarter was $65 1 million or <unk> 88 per diluted share.
From $61 5 million or <unk> 79 per diluted share in the third quarter of 2022.
Moving to the balance sheet, our financial Foundation remains very strong and as of September 32023, we had $206 4 million of cash cash equivalents and short term investments and no debt.
Inventory at the end of the quarter was $205 7 million compared to $244 3 million at the end of the third quarter 2022.
A reduction of 15, 8%.
Our capex in the quarter was $6 $1 million.
During the quarter, we spent $40 million on repurchases of the company's common stock, which includes shares acquired through the net settlement of employee stock Awards.
Going into 2023 year to date spend to $104 $2 million.
Our board of directors approved a quarterly cash dividend of 21 per share the dividend will be payable on December 29, 2023 to stockholders of record as of the close of business on December 15th 2023.
Turning to our full year outlook, we are updating our revenue and earnings per share guidance.
We now expect revenue for 2023 will decrease approximately 7% compared to 2022.
And now we expect diluted EPS will be approximately $2 40.
This updated guidance includes a contribution from the almost famous acquisition.
Approximately $30 million to $35 million in revenue.
And one to two <unk> in EPS.
It also includes a negative impact related to the effects of the crisis in the middle East.
Our Israel and Middle East joint ventures of approximately $8 million to $9 million in revenue and <unk> and EPS.
Now I would like to turn the call over to the operator for questions Abigail.
Thank you and at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
And that will be compile the Q&A roster.
Our first question comes from Paul <unk> with Citi. Your line is open.
Hi, everyone. This is kelly on for Paul.
Thanks for taking my question I guess can we just dig into the <unk> guidance.
Further now.
It looks like you're growing the core business some of that is due to the middle East.
Theyre all JV, but outside of that can you just talk about where you are.
Kind of lowering the core business outlook seems like wholesalers.
Sequentially improved versus the fourth quarter, so just trying to figure out where.
We're seeing that we'll start there and I have another follow up.
Thanks.
Yes, good morning, Kelly, so essentially we're taking.
You back out the impact.
Almost famous as well as the impact from.
From the crisis in the Middle East, we're basically going to the low end of both.
The revenue and the earnings guidance the previous revenue and earnings guidance. So revenue would be down about eight if you exclude those two impacts and what's moving us towards that low end is a reduction in our forecast for DTC wholesale is pretty darn close to where it was before but we have taken the DTC down.
Based on this.
Softening trend that you've probably heard about from others, that's really happened across the industry since September.
I know you've talked a lot about the.
Customer kind of.
Showing up when there is reasons to shop I guess.
Taking all that into account that the health of the consumer some of maybe the fashion trends you're seeing out there are you are you.
Feeling optimistic that it does trend could improve or is there just not.
Not enough happening in that newness fashion side to make you more optimistic.
Well I think the point you raised is a good one that we have continued to see.
Customers.
The shopping pattern is becoming more and more and more event driven and customers showing up on those holiday weekends those those promotional times.
Then in between that the values have been a little deeper.
So.
Certainly we're hopeful that as we move into this holiday period in Black Friday, cyber Monday et cetera.
Which is clearly the biggest event of the year that the customers will really show up and so is it possible that we could do a little bit better than that yes, but essentially what we've done to build this forecast as his role of the recent trend.
Forward through the end of the year.
Just a quick one for me on the wholesale side.
Wholesale came in at a little bit better than expected did.
Did you see retailers. Please. Please orders then are they are they how are they kind of feeling about.
Are you taking any need that is their fashion out there that they're excited about and how does that.
Outlook look let me look to spring 'twenty four.
Alright.
Alright, great there are behaving.
Yes, I think.
There is some new new fashion I do feel good about our product Assortments, where we're getting very good feedback from our wholesale customers.
You asked about spring, we've been getting very good feedback about our spring assortments, but overall.
The sentiment amongst the big wholesale customers remains quite cautious and we still see a pretty conservative approach to order patterns.
Got it thank you.
Thanks Kelly.
One moment our next question.
Our next question comes from <unk> <unk> with BNP Paribas. Your line is open.
Hey, good morning, Thanks for taking the questions.
I wanted to touch on the almost payments acquisition.
Why now was kind of the right time to do the deal.
And then going forward, how do you see the landscape for M&A opportunities from here should we see kind of a pickup in activity and are you more focused on these type of platform acquisitions or could brands being the cards too.
Okay, well good morning, everybody. Thanks for thanks for the questions. So in terms of.
Now look we just feel.
Really excited about the path that we're on in apparel and we're excited about about expanding our business in that category expanding.
Our platform and our capability in that category.
We bought BB Dakota in 2019, which was our entre into apparel, we have since converted that to Steve Madden apparel as a fall of 2022, we feel.
Very good about the path we're on there and we felt it was time to expand the platform to add this capability that almost famous brands, which as a reminder, there their expertise is in the in the trend driven junior part of the market and value price distribution channels, which again.
Had a very strong complement to what we do in Steve Madden apparel, which is.
Contemporary styling.
It is primarily distributed in the premium channels like Department stores, better Department stores, and pure play e-commerce retailers. So so with this transaction.
We now have.
Capabilities similar to what we have in shoes and accessories, where are we.
We will be able to sell into all tiers of distribution from premium down through mass. So so.
So we feel quite good about about that strategy and are very excited about that about what we can do with this with this new capability.
Those are where the overall landscape for M&A.
I don't think Theres any big update there we're going to we obviously have the wherewithal to continue to do more if we find the right transaction. We will continue to keep our our eyes and ears open there is nothing else imminent, but but we'll continue to.
Look for the right transactions.
And then as far as what they would be yes, additional brands to add to the portfolio would be interesting.
So on occasion, we like to buy capabilities.
<unk> platform is the way, we did with almost famous but if we found the right brand that we thought it was complementary.
And then we could grow under our under our umbrella then we would be interested in that as well.
Great.
In the meantime, while we integrate almost famous will continue as always to look at our international opportunities International Joint Ventures. In addition to.
What we normally do.
Got it thank you.
And just as a follow up I think earlier this year you had called out some strength in your outlet business I'm.
Im wondering if youre starting to see any trade down effect happening at the consumer environment softens a bit.
Just how we should think about how you are positioned if the customer does start migrating down toward lower price points.
Yeah, well with respect to our.
Our own brick and mortar retail business in the United States, where we are seeing in outlets significantly outperform full price stores.
Q3, and so far in Q4, we're looking at like.
More than 1000 basis points.
Better comps in outlet than in full price stores. So I think thats definitely reflective of a customer that that is focused on value.
And.
Look we obviously operate one of the things we like about our business is we're very well diversified by channel and we operate.
In regular price channels. We also operate in the more value priced channels and so we should be able to.
To be able to go where the customer goes.
One moment for our next question.
Our next question comes from Tom Nick <unk> with Wedbush. Your line is open.
Okay.
Hi, everyone. Thanks for taking my question.
Following up on <unk> question earlier about <unk>.
<unk>.
And I believe you said.
You're more cautious on PTC now before three months ago can you give us any sort of.
I guess quantification or I guess previously you thought <unk> would be up low single digits for the year, how should we think about it.
Before or full year.
Yes.
Can you talk us a good question. So that's right we were our previous forecast we have built in about a 1% increase in DTC for the year and we have now lowered that to down close to four 5% for.
For the year so.
The bridge from that one to that close to down four and a half.
You got about 150 basis point negative impact.
The.
The crisis in the Middle East and the impact that's had on our.
On our bricks and mortars.
Brian our DTC business, rather than Israel, and our Israel, JV and our middle East JV.
We've also got about a 50 basis point impact from non comp stores stores that we were planning to open that we have delayed the openings on.
And then the balance.
<unk>.
Close to 350 basis points is due to a lower comp assumption because of this slowdown that we talked about starting in mostly starting really in September.
Understood.
I'm not sure. If you mentioned this earlier, but has there been any improvement in the DTC trend.
Quarter to date or with the with the cooler weather or anything like that.
No. Unfortunately.
About things slowed in September October was was even weaker than September.
In November has really been in line with October.
Alright, Thanks, and best of luck for holiday season.
Thanks, Tom.
One moment our next question.
Our next question comes from Laura Champine with loop your line is open.
Thanks for taking my question I wanted to ask about the <unk>.
Private label slowdown that happened in Q2 did you get catch up sales from that.
Q3 or was it just a return to normal wholesale volumes from from private label customers in Q3.
Good morning, Laura Thank you so.
I wouldn't say, we had catch up sales from Q2, but the private label did get much better in.
In Q3, and that's really a function of the comparisons from the prior year. So it was really Q3 of last year, when we began to see that steep.
Slowdown.
In private label as the big customers, there cut orders to try to get their inventories back in line. So we were anniversarying much easier numbers beginning in Q3.
And that's why you saw that that number get much.
That business get much better on a year over year basis, and we also did have between Q3 and Q4, a little bit of a shift from Q4 into Q3. So private label was up nicely in Q3, it will be down again in Q4, but but for the back half it will be up in total.
Understood.
And then on the EPS guide towards the low end of your prior range.
How much pricing are you giving.
Otherwise I think your gross margins for <unk>.
Be really strong in Q4.
Built in a little bit more we've assumed particularly in DTC that it is a very promotional.
Fourth quarter here I think from from here on out Youre going to see a lot of promotions across the industry. So we built a little bit of that into our <unk>.
So our guidance.
But.
But in wholesale I don't really see us, giving given any price back any color or any other color Jim yes no.
As far as Q4.
I think we were very clear with the Guy that 2004, <unk> four EPS amount as well I'll tell you that the gross margin.
We'll also be somewhere around 42%.
And.
If you look at the 42%, it's about 40 basis points or so lower than last year, and that's primarily driven.
We have a benefit from freight as we know and we discussed it earlier or 100 basis points.
And we have the offset of the mix of the business and mix means to penetration of DTC penetration of private label and the addition of almost famous into the mix.
And therefore, you basis points the other way.
Got it that's very helpful. Thank you.
Thanks, Laura.
One moment our next question.
Our next question comes from Janine Stichter with BTG. Your line is open.
Hey, good morning wanted to ask a little bit more into the slowdown that you've seen in September and beyond it's been pretty well documented across the industry, but would just love your thoughts on what you think is driving that and then it sounds like you've definitely seen it in your retail business I'm curious if you have any sense of what's happened in terms of sell throughs at wholesale and just your view.
On the inventory industry wide, if if any of the department stores have kind of been caught off guard by the slowdown in what inventories look like in the channel. Thank you.
Sure.
Yes.
I think the first question. Thank you Jim I think the first question was.
What's driving the slowdown.
Look I think there's a lot of macro data that we can point to about.
Pressure on the on the consumer whether it's credit card debt or continued inflation or resumption of student loan payments et cetera.
I can't tell you exactly what's what's driving what we're seeing but I'm not sure that matters I think that what matters is happening that we need to make sure that we manage our business accordingly.
You asked about sell throughs at wholesale we have.
Have seen a similar impact in wholesale.
When we speak to our.
Wholesale customers I think on a relative basis, we're still doing well.
And better than our direct competitive set in terms of wholesale sell throughs.
Even though for the last couple of months, but we have seen the rate.
Slow down a bit.
And then in terms of inventory in the channel.
I think that.
Generally speaking I still don't think inventories are very out of whack in the channel. Although there are certainly categories.
<unk>.
Where there's probably too much inventory I mean, if you think about boots for instance.
The beauty category.
It has been weaker than expected and theres, probably some excess inventory building in the channel build in the channel there.
Thanks, a lot.
Thank you.
Our next question.
Okay.
Our next question comes from Cory <unk> with Jefferies. Your line is open.
Hi, good morning.
I'll follow up on the almost famous acquisition could you talk a little bit about what you think the longer term.
Sales and margin opportunity for the acquisition could be as we think about the growth or the potential growth for that business business ahead.
If it's perhaps ratable what that could look like.
And then also you mentioned that you've controlled expenses and you're driving some cost efficiencies, where some other areas, where you think you could.
Fine tune the business to further optimize costs ahead.
Sure.
Thanks, Cory I'll I'll take the first one then I'll turn it over to Zane to talk about expenses.
So in terms of almost famous.
As we disclosed it's a little over $160 million business in revenue currently and its most recent.
Fiscal year, they had about a 7% operating margin.
But we believe we see a pretty clear path to increasing that over time as we get the benefits of combination of our two companies and so we think we can get that into the high singles and overtime.
Most likely into the low doubles in terms of operating margin.
In terms of revenue growth, we do think that there are some pretty significant revenue synergies from combining with our company. We mentioned the introduction of Madden girl apparel for instance.
We wanted to do.
So.
Not willing to quantify exactly how big I think this business can be at this very moment, but we certainly see significant <unk>.
Revenue growth and operating margin opportunity.
In this business.
Zane do you want to address the operating expenses sure. So for Q3, we came in at.
Negative 0.8 dollars against the dollar from last year from the quarter last year, obviously, as we said before we continue to try and control the controllable and this choppy environment and we put a lot of controls around specifically our supply chain, mainly our warehouses to make sure that we control.
All of those expenses so that drove.
A big portion of the drop versus last year, and we also have variable expenses related specifically to retail and E. Com, we didn't do so well from a sales perspective and those variable expenses came in favorable and that was partially offset by our continued investment in marketing and innovation.
So for Q4, just to give you a little bit of guidance there we expect.
Operating expenses to be up.
Round, 4% and that is primarily due to the inclusion of almost famous into debase without almost famous we expect to be below a 1% increase in Q4.
And as far as going forward any initiatives that we may have just wondering obviously you remind you that we run very lean as a company and we did some big cuts back into Covid days, and we always try and not run with with fat in the company.
But going forward, we're looking at many areas, we're continuing to invest in our automation and some of our warehouses to reduce cost.
And we look basically as we always do and they are every rock for any savings by using technology and automation is a good thing that we're doing in our supply chain.
Very helpful. Thanks, so much.
Thanks Gordon.
Question.
Our next question comes from Samuel Poser with Williams trading your line is open.
Hi, good morning, Thanks for taking my questions a lot of them have been answered, but I'd like to know are you.
Are you seeing a variance in your let's say sell through rates or.
Consumer appetite.
Within with the Steve Madden brand within your wholesale accounts.
How does that compare to what you are seeing.
With DTC.
Yeah.
Thanks, Tim No I really don't think Theres, a big I don't think Theres any big distinction to call out at this very moment for in terms of consumer demand across channel.
But you did say that you felt like you were sort of out maybe outperforming.
Let's say your peers are outperforming maybe how people are doing other other brands are doing within.
Let's say on the macys floor.
But there is there is still a reticence from those wholesale accounts too.
Right fill ins for the best selling stuff.
Is that a fair statement that is accurate, yes, we do feel that for the fall season. If you look at the folks that we compete with most directly we feel that were.
At our sell throughs are better than theirs, that's the feedback that we're getting.
It's not resolved tighter.
Reorders given the overall environment.
But I do think it bodes well for spring.
We're getting pretty good feedback from our wholesale customers about.
About how they're thinking about us for spring I think they've got a conservative approach overall, but we are hearing from from all the big folks that theyre going to plan US better then they plan their overall department and I think thats a function of number one the sell through we are seeing right now relative to the competition and number two the strength of the spring product Assortments.
Two other things one.
Do you think they are actually buying to the trend or are they still buying sort of cautiously below it.
<unk> one of your larger accounts as a vendor managed program can you sort of talk to maybe the difference between the vendor managed program and the non vendor managed program and.
<unk>.
Youre, making any headway in convincing the no I haven't.
Vendor.
To become vendor managed programs.
So in terms of the overall approach to orders.
He is still cautious I would still I would say its still below what we view as an.
Underlying consumer demand and so we're working with our wholesale customers to try to get that back in line.
You mentioned.
Vendor managed program with a big wholesale customer.
Over the last.
Even zoom out a little bit and look over the last few years, that's been one of our most successful businesses and we do think thats in part because of the influence that we have been able to have on.
What the Assortments look like at that account.
And so we're continually.
On a process of trying to work more closely with our key wholesale customers to make sure that we have the right goods in the right stores at the right time.
Lastly, can you tell me the variance between let's say that vendor managed programs.
Business from an increase or D or the variance between that and the non vendor managed program.
No I cannot.
Okay.
You could but you won't but I appreciate it.
Okay.
Good try as always thanks.
Thank you.
One moment for our next question.
As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced our next question comes from Jay sole with UBS. Your line is open.
Great. Thank you so much I can I just ask for an update on the handbag.
All parts of the business like BB Dakota business, how have you seen those trends in the quarter or are they different from what you're seeing in footwear. Thanks. So much.
Yes, Thank you Jay so yes.
I'll start with handbags, because thats just a fantastic story.
You heard you heard about in the prepared remarks, but Steve Madden handbags has just been on this incredible.
Yeah.
Growth journey.
This is something that goes back years now that we've been really investing in this area and we've been seeing strong growth in this business double digit growth year. After year now for several years and the business continues to have incredible momentum.
I think we called it out but demand handbags is up over 50% overall.
In Q3, 46% and wholesale at 90% in our in our own direct to consumer channels and so we're just really excited about the momentum that we have there for us at all.
It starts with product and.
Just very proud of the of all the work. The team has done I think the bags are better than they've ever been.
They are on trend.
Detailing the materials everything it's just been right and they've done a great job and Thats and Thats driven the growth in wholesale and DTC as I mentioned, but also in domestic and international markets and that Steve Madden handbag business has become a significant business for US now I think it's going to it will.
Be close to $225 million in 2023.
So meaningful meaningful business and very strong growth over the last several years.
And Thats just be bad if you add in our other handbag businesses inclined Betsy private label, that's another $100 million or so.
And then in terms of apparel.
Again, we've talked about that.
Fall of last year was the first season of Steve Madden apparel and.
We continue to refine the product assortment, there and we really feel that this is this fall is the best assortment that we've had and we're really pleased with the sell throughs were seeing there were outperforming.
Our key competitors in.
Our top accounts and I'm talking about our better department stores, whether it's a bloomingdale's at Dillard's et cetera.
We're very pleased with what we're seeing and as I mentioned based on the success that we're having we are expecting.
<unk> growth and we're also expecting to get significantly expanded assortments.
Out of those better department stores.
And some of the pure play e-commerce retailers.
Revolve et cetera, so so really positive positive story there.
Sounds great. Thanks, so much thanks Jay.
Thank you that concludes our question and answer session. At this time I would like to turn the call back to Ed Rosenfeld for closing remarks.
Great well. Thank you so much for joining us this morning.
Have a great holiday season, and we look forward to speaking with you on the next call.
Good day.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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