Q4 2023 Steven Madden Ltd Earnings Call

Edward R. Rosenfeld: As we look ahead, while the operating environment remains choppy, we believe the on-trend product assortments created by Steve and his team have us well positioned for 2024. And looking out further, we are confident that the combination of our strong brands and proven business model will enable us to drive sustainable revenue and earnings growth for years to come. And now I'll turn it over to Zine to review our fourth quarter and full year 2023 financial results in more detail and provide our initial outlook for 2023. Thanks, Seth, and good morning, everyone.

Zine Mazouzi: In the fourth quarter, our consolidated revenue was $519.7 million, a 10.4% increase compared to the fourth quarter of 2020. Excluding the almost famous, consolidated revenue grew 2.3% compared to the same period in the prior year. Our wholesale revenue was $354.8 million, up 14.9% compared to the fourth quarter of 2022, 2.5% excluding almost 80.

Zine Mazouzi: Footwear revenue was $225.2 million, a 0.4% decrease from the comparable period in 2022. [inaudible] Wholesale accessories and apparel revenue was $129.6 million, up 56.5% to the fourth quarter in the prior year, or 10.3% excluding almost same and almost same, driven by another quarter of strong growth in Steve Madden. In our direct-to-consumer segment, revenue was $162.3 million.

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Steve Madden fourth quarter and full year 2023 results conference call. At this time, all participants are in a listen only mode.

Speaker Change: Good day, and thank you for standing by and welcome to the Steve Madden fourth quarter and full year 2023 results 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 to ask a question you will need to press star.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Zine Mazouzi: 1.9% increase compared to the fourth quarter of 2022. An increase in the brake and motor business, partially offset by a modest decline in e-commerce, and at the year with 255 company-operated brick and mortar retail stores. It included 71 outlets, as well as 5 e-commerce websites and 25 company-operated concessions in international markets.

Speaker Change: One one on your telephone you will then hear an automated message I've asked in 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 VP of corporate development and Investor Relations. Please go ahead.

Operator: To withdraw your question, please press star 11 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, VP of Corporate Development and Investor Relations. Please go ahead.

Danielle Marie McCoy: Thanks, Abigail, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 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 Securities Litigation Reform Act. Such forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements.

Danielle Marie McCoy: Thanks, Abigail and good morning, everyone. Thank you for joining our fourth quarter and full year 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 meeting.

Zine Mazouzi: Turning to our licensing segment, our licensing royalty income was $2.7 million in the quarter compared to $2.5 million in the fourth quarter of 2021. Unincluded gross margin was 41.7% in the quarter versus 42.2% in the comparable period of 2020. When including Almost Famous, Consolidated Gross Margin increased 80 basis points year-over-year.

Danielle McCoy: Of the private Securities Litigation Reform Act.

Danielle McCoy: Forward looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward looking statements.

Danielle Marie McCoy: These risks include, among others, matters that we have described in our... Press release issued earlier today and filings 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 call, if at all. Financial results discussed. Today's calls are on an adjusted basis unless otherwise noted.

These risks include among others matters that we have described.

Danielle McCoy: Press release issued earlier today the filings we make with the SEC.

Danielle McCoy: Disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings call if at all.

Zine Mazouzi: Wholesale gross margin was 31.7%, an increase of 120 basis points compared to the fourth quarter of 2020. There have been buy increases in both the wholesale footwear and wholesale accessories and apparel segments. The direct-to-consumer gross margin was 62.7% versus 64% in the same period in 2020. [inaudible] Operating expenses were $163.9 million compared to $156.5 million in the fourth quarter of 2022, an increase of 4.7%, including Almost Famous. Operating expenses rose 1.3% compared to the same period last. For an income, for the quarter was $53 million, or 10.2% of revenue, up from $42.2 million The expected tax rate for the quarter was 14.3% compared to 20.9% in the fourth quarter of 2020. Finally, net income attributable to Steve Madden Limited for the quarter was $45 million.

Danielle McCoy: The financial results discussed on today's call are on an adjusted basis unless otherwise noted.

Danielle Marie McCoy: A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings report. Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer, and Dean Mazzuzzi, Chief Financial Officer. With that, I'll turn the call over to Ed.

Danielle McCoy: Conciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release.

Danielle McCoy: Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer, Andrew <unk>.

Andrew: Chief Financial Officer.

Edward R. Rosenfeld: I will turn the call over to Ed.

Edward R. Rosenfeld: Thanks, Danielle, and good morning everyone, and thank you for joining us to review Steve Madden's fourth quarter and full year 2023 results. We are pleased to have finished the year on a high note, delivering fourth-quarter results that exceeded expectations on both the top and bottom lines. After a tough start to 2023, we saw sequential improvement each quarter throughout the year in both revenue and earnings when compared to the prior year, culminating in the fourth quarter when revenue grew 10% and diluted EPS rose 39% versus the comparable period in 2022. The Q4 results included organic revenue growth in both the wholesale and direct-to-consumer channels, supplemented by the contribution from the newly acquired Almost Famous, as well as strong year-over-year operating margin improvements.

Edward R. Rosenfeld: Thanks, Danielle and good morning, everyone and thank you for joining us to review, Steve Madden is fourth quarter and full year 2023 results.

Edward R. Rosenfeld: We are pleased to have finished the year on a high note delivering fourth quarter results that exceeded expectations on both the top and bottom lines.

Edward R. Rosenfeld: After a tough start to 2023, we saw a sequential improvement each quarter throughout the year in both revenue and earnings when compared to the prior year, culminating in the fourth quarter when revenue grew 10% and diluted EPS rose, 39% versus the comparable period in 2022.

Edward R. Rosenfeld: The Q4 results included organic revenue growth in both the wholesale and direct to consumer channels supplemented by the contribution from the newly acquired almost famous as well as strong year over year operating margin improvement.

Edward R. Rosenfeld: Looking back at 2023 overall, we face challenging market conditions, with wholesale customers taking a cautious approach to orders and consumers pulling back on discretionary spending. I'm proud of how our team navigated the difficult environment, controlled what we could control, and remained focused on executing our strategy for long-term growth, the foundation of which is driving closer connections with consumers through the combination of consistently trend-right product assortments and effective consumer engagement, which, in turn, will enable success with our four key long-term business drivers. The first of those drivers is growing our business in international markets. International has been the fastest growing part of our business over the last several years, and the momentum continued in 2023 despite the challenging macro environment. International revenue increased 11% in 2023 to $381 million. 19% of the total number.

Edward R. Rosenfeld: Looking back at 2023 overall, we faced challenging market conditions with wholesale customers, taking a cautious approach to orders and consumers pulling back on discretionary spending.

Edward R. Rosenfeld: I'm proud of how our team navigated the difficult environment controlled what we can control and remain focused on executing our strategy for long term growth. The foundation of which is driving closer connections with consumers through the combination of consistently trend right product assortments and effective consumer engagement, which in turn will enable success with our four key.

Zine Mazouzi: $33.7 million, or $0.44 per diluted share, in the fourth quarter. And I would like to briefly touch on the full year results. Consolidated revenues for 2023 decreased 6.6% to $2 billion compared to $2.1 billion in 2022. Net income attributable to Steve Madden Ltd was $182.7 million or $2.45 per diluted share for the year ended December 31, 2023.

Edward R. Rosenfeld: Long term business drivers.

Edward R. Rosenfeld: The first of those drivers is growing our business in international markets.

Edward R. Rosenfeld: National has been the fastest growing part of our business over the last several years and the momentum continued in 2023, despite the challenging macro environment.

Edward R. Rosenfeld: International revenue increased 11% in 2000 $23 million to $381 million.

19% of total loss.

Edward R. Rosenfeld: Looking ahead to 2024, continuing to grow our business in the EMEA region will be our top priority as we seek to build on our momentum in Europe, develop our new Middle East joint venture, and capitalize on the exceptional brand heat we have in South Africa. Closer to home, driving continued growth in Mexico will also be a focus as we look to capitalize on our market-leading position and recent share gains in that country. Our second key business driver is expanding into categories outside of footwear, like accessories and apparel. In 2023, our overall accessories and apparel revenue increased 10% compared to 2022, or 1% excluding almost. Our Steve Madden handbag business was the highlight, increasing 37%, including strong growth in both wholesale and direct-to-consumer channels in both domestic and international markets.

Edward R. Rosenfeld: Looking ahead to 2020 for continuing to grow our business in the EMEA region will be our top priority as we seek to build on our momentum in Europe develop our new middle East joint venture and capitalize on the exceptional brand heat we have in South Africa.

Edward R. Rosenfeld: Closer to home driving continued growth in Mexico will also be a folks focus as we look to capitalize on our market leading position and recent share great share gains in that country.

Zine Mazouzi: [inaudible] $2.80 per Daigourde share for the year ended December 31st, 2022. Moving to the balance sheet, our financial foundation remained strong as of December 31st, 2023. We had $219.8 million of cash, cash equivalents, and short-term investments, and KnowDepth.

Edward R. Rosenfeld: Yeah.

Edward R. Rosenfeld: Our second key business driver is expanding in categories outside of footwear like accessories and apparel in 2023, our overall accessories and apparel revenue increased 10% compared to 2022 or 1% excluding almost famous.

Edward R. Rosenfeld: Our Steve Madden handbag business with the highlight increasing 37%, including strong growth in both wholesale and direct to consumer channels in both domestic and international markets.

Edward R. Rosenfeld: We also broadened our footprint outside of footwear with the acquisition in October of All Most Famous, a 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 NYC apparel since its launch in 2022 and has had outstanding success with that brand so far. Almost Famous's 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 is primarily distributed in department stores and e-commerce retail.

Edward R. Rosenfeld: We also broadened our footprint outside of the acquisition in October of almost famous a designer and marketer of women's apparel.

Zine Mazouzi: Inventory was $229 million, slightly down from the prior year. Inclusion almost famous, inventory was down 5.9% compared to the same period in 2012. Our capex in the fourth quarter was $5.6 million, and for the year, it was $19.5 million. During the fourth quarter and full year 2023, the company spent $38.1 million and $142.3 million on repurchases of its common stock Refecta, including chairs acquired through the Net Settlement of Employees.org. At the end of the year, we had approximately $176 million remaining on the share repurchase authorization. The Company's Board of Directors approved a quarterly cash dividend of $0.21 per share.

Edward R. Rosenfeld: Almost famous markets products in the wholesale channel under its own brands, primarily almost famous as well as private label brands for various retailers.

Edward R. Rosenfeld: 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.

Edward R. Rosenfeld: Almost famous as core expertise is in the junior apparel category and value price distribution channels, making it a strong complement to our existing Steve Madden apparel business, which is focused on contemporary styling and it is primarily distributed in department stores and ecommerce retailers.

Edward R. Rosenfeld: Our top priority will be to use the almost famous platform to introduce Madden Girl apparel and to grow Madden NYC apparel. 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 NYC, to reach customers in all tiers of distribution from premium channels down through mass. Beyond the successful integration of All Most Famous, our focus in 2024 will be building on the momentum we have in Steve Madden handbags, with a particular focus on driving continued growth in DTC channels, as well as the further development of the Steve Madden apparel business. Our third key business driver is driving our direct-to-consumer business, led by digital. After strong growth in this business in 2001 and 2021 and 2022, our DTC revenue declined 3% in 2023.

Edward R. Rosenfeld: Our top priority will be to use the almost famous platforms introduced Madden girl apparel and to grow our mandan why see apparel. 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 <unk> to reach customers at all.

Edward R. Rosenfeld: Tiers of distribution from premium channels down through mass.

Edward R. Rosenfeld: Beyond the successful integration of almost famous our focus in 2024 will be on building, we'll be building on the momentum we have in Steve Madden handbags with a particular focus on driving continued growth in DTC channels.

Zine Mazouzi: The dividend will be payable on March 22, 2024, to stockholders of record as of the close of business on March 8. Combining & Share Repurchase and a dividend, we returned $205 million to shareholders in 2020, over $1.4 billion over the past decade. Now, turning to our Outlook. I expect revenue for 2024 to increase 11% to 13% compared to 2023, and we expect diluted EPS to be in the range of $2.55 to $2.65. This includes a forecasted effective tax rate for 2024 of 23.5%, from 21.3% in 2023, primarily due to lower forecasted discrete tax benefits related to stock-based compensation. Now I would like to turn the call over to the operator for questions. Abigail?

Edward R. Rosenfeld: As well as the further development of the Steve Madden apparel business.

Edward R. Rosenfeld: Our third key business driver is driving our direct to consumer business led by digital.

Edward R. Rosenfeld: After strong growth in this business in 2001, and 202021 and 2022.

DTC revenue declined 3% in 2023.

Edward R. Rosenfeld: We did however, see sequential improvement in the year over year topline performance each quarter throughout the year and Q4, DTC revenue increased 2% compared to the comparable period in the prior year.

Edward R. Rosenfeld: We did, however, see sequential improvement in year-over-year top line performance each quarter throughout the year, and Q4 DTC revenue increased 2% compared to the comparable period in the prior year. And if we zoom out and look at the evolution of our DTC business over the past few years, we see that this business is up nearly 60 percent in revenue and nearly 200 percent in operating profit compared to pre-COVID 2000. In 2024, we plan to add 10 net new stores driven by expansion in international markets, primarily in EMEA, and we will also invest in remodels in key locations, including our flagship store in Times Square in New York City.

Edward R. Rosenfeld: And if we zoom out and look at the evolution of our DTC business over the past few years, we see that this business is up nearly 60% in revenue and nearly 200% in operating profit compared to pre Covid 2019.

Edward R. Rosenfeld: In 2024, we plan to add 10, net new stores driven by expansion in international markets, primarily in EMEA and we will also invest in remodels in key locations, including our flagship store in times square in New York City.

Edward R. Rosenfeld: The digital side, we'll be investing in global site enhancements designed to drive greater speed usability and conversion as well as continuing to refine our marketing mix and push more investment up the marketing funnel.

Edward R. Rosenfeld: On the digital side, we'll be investing in global site enhancements designed to drive greater speed, usability, and conversion, as well as continuing to refine our marketing potential and push more investment into marketing. Finally, our fourth key business driver is strengthening the U.S. wholesale footwear business. 2023 was a uniquely challenging year in that channel, as many of our wholesale customers entered the year with excess inventory and reduced orders significantly in efforts to right-size their inventory lists.

Edward R. Rosenfeld: Finally, our fourth key business driver has strengthened in the U S. Wholesale footwear business 2023 was a uniquely challenging year in that channel as many of our wholesale customers entered entered the year with excess inventory and reduced order significantly and efforts to rightsize inventory levels.

Operator: Thank you. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Edward R. Rosenfeld: However, after a revenue decline of more than 20% in the first half the trend in this business improved significantly in the back half, but we still saw revenue declines of 6% in Q3 and 2% in Q4.

Operator: To withdraw your question, please press star 11 again. One moment while we compile the Q&A roster. Our first question comes from Paul Lejuez with Citi. Your line is open. Hey, thanks guys.

Edward R. Rosenfeld: The good news is that inventories in the channel are much healthier than they were a year ago and so while the sentiment among many of our key customers remains cautious we are positioned to return to year over year revenue growth in this business beginning in Q1.

Edward R. Rosenfeld: After a revenue decline of more than 20% in the first half, the trend in this business improved significantly in the second half, but we still saw revenue declines of 6% in Q3 and 2% in Q4. The good news is that inventories in the channel are much healthier than they were a year ago. And so while the sentiment among many of our key customers remains cautious, we are positioned to return to year-over-year revenue growth in this business beginning in Q1. So overall, while 2023 was challenging in a number of ways, we drove sequential improvement throughout the year, ended the year with a strong quarter, and made important progress on our key strategic initiatives. We also demonstrated our ongoing commitment to returning capital to our shareholders with over $200 million in combined dividends and share purchases.

Paul Lawrence Lejuez: You heard from Macy's yesterday about a significant number of store closings. Just curious if that's having any impact on how you're guiding and thinking about 2024. And also just curious to hear how you might think about the impact over the next several years.

Edward R. Rosenfeld: So overall, while 2023 was challenging in a number of ways. We drove sequential improvement throughout the year ended the year with a strong quarter and made important progress on our key strategic initiatives.

Edward R. Rosenfeld: We also demonstrated our ongoing commitment to returning capital to our shareholders with over $200 million in combined dividends and share repurchases.

Edward R. Rosenfeld: As we look ahead, while the operating environment remains choppy, we believe the on trend product Assortments created by Steve and his team have us well positioned for 2024.

And looking out further we are confident that the combination of our strong brands and proven business model will enable us to drive sustainable revenue and earnings growth for years to come.

Edward R. Rosenfeld: And then second, just curious about the wholesale footwear business and F24. How are you thinking about that business on the branded side versus private label and what drives growth? Great, yes. Good morning, Paul.

Edward R. Rosenfeld: And now I'll turn it over to Jim to review, our fourth quarter and full year 2023 financial results in more detail and provide our initial outlook for 2024.

Jim: Thanks, Ed and good morning, everyone.

Edward R. Rosenfeld: As we look ahead, while the operating environment remains choppy, we believe the on-trend product assortments created by Steve and his team have us well positioned for 2024. And looking out further, we are confident that the combination of our strong brands and proven business model will enable us to drive sustainable revenue and earnings growth for years to come. And now I'll turn it over to Zin to review our fourth quarter and full year 2023 financial results in more detail and provide our initial outlook for 2020. Thanks, Seth, and good morning, everyone.

Jim: In the fourth quarter, our consolidated revenue was $519 7 million.

Edward R. Rosenfeld: So in terms of the Macy's announcement, obviously, we need to get more information there and understand exactly what stores are on the closure list, etc. But I don't think we're looking for any significant changes, Impact 2024 and even beyond 24. My initial take is that there probably will be pretty minimal impact because the bulk of what we do with Macy's is in the top 250 doors. So Steve Madden Women's, for instance, is really distributed just in those top 200.

Jim: <unk>, 5% increase compared to the fourth quarter of 2022.

Jim: Almost famous consolidated revenue grew two 3% compared to the same period in the prior year.

Jim: Our wholesale revenue was $354 8 million up 14, 9% compared to the fourth quarter of 2022.

Jim: Two 5% excluding almost payments.

Jim: Wholesale footwear revenue was $225 2 million.

Jim: 0.4% decrease from the comparable periods in 2022.

Jim: A modest increase in Nebraska business was offset by a decline in private label.

Operator: In the fourth quarter, our consolidated revenue was $519.7 million, a 10.4% increase compared to the fourth quarter of 2020, including the almost famous consolidated revenue grew 2.3% compared to the same period in the prior year. Our wholesale revenue was $354.8 million, up 14.9% compared to the fourth quarter of 2022, 2.5% excluding almost 80.

Jim: Wholesale accessories, and apparel revenue was $129 6 million.

Jim: 56, 5% to the fourth quarter and the prior year or 10, 3%, excluding almost famous driven by another quarter of strong growth in Steve Madden handbags.

Edward R. Rosenfeld: Steve Madden Women's Footwear is really distributed just in those top 250 doors, which I assume will not be impacted meaningfully. We do have some things that go to more doors and are distributed to doors that are likely on the closure list. That would include some Madden Girl footwear and certain accessory categories.

Jim: And our direct to consumer segment revenue was $162 3 million.

Jim: A one 9% increase compared to the fourth quarter of 2022 with.

Jim: With an increase in the brick and mortar business, partially offset by a modest decline in e-commerce.

Operator: All sales footwear revenue was $225.2 million, a 0.4% decrease from the comparable period in 2022, as a modest increase in the brand's business was offset by a decline in private labor. Wholesale accessories and apparel revenue was $129.6 million, up 56.5% to the fourth quarter of the prior year, or 10.3% excluding almost the same amount. Driven by another quarter of strong growth in Steve Madden. In our direct-to-consumer segment, revenue was $162.3 million.

We ended the year with 255 company operated brick and mortar retail stores, including 71 outlets as well.

Jim: As far as E Commerce web sites and 25 company operated concessions in international markets.

Edward R. Rosenfeld: We do a little bit of cold weather and some gifting that goes to more doors there, but that impact should be relatively moderate. In terms of the second part of your question about wholesale footwear, we do expect both branded and private label to be up in 2024, although I expect private label to grow faster. And as we've talked about, those mass merchant customers that make up the bulk of our private label business were the first ones to see the pullback that happened when folks decided they had to realize they had too much inventory and pulled back the reins on open to buys. And so we're also seeing the recovery there first. And so we expect to see some pretty nice growth, even starting in Q1, in wholesale footwear in the private label sector. Got it. Thanks. And just one additional question.

Jim: Turning to our licensing segment, our licensing royalty income was $2 7 million in the quarter compared to $2 5 million in the fourth quarter of 2022.

Consolidated gross margin was 41, 7% in the quarter.

Jim: This 42, 2% in the comparable period of 2022.

Jim: Almost famous consolidated gross margin increased 80 basis points year over year.

Operator: 1.9% increase compared to the fourth quarter of 2022. With an increase in the brake and motor business, partially offset by a modest decline in e-commerce, we ended the year with 255 company-operated brick-and-mortar retail stores.

Jim: Wholesale gross margin was 31, 7% an increase of 120 basis points compared to the fourth quarter of 2022.

Jim: Driven by increases in both the wholesale footwear and wholesale accessories and apparel segments.

Jim: Direct to consumer gross margin was 62, 7% versus 64% in the same period in 2022, driven by an increase in promotional activity.

Operator: It included 71 outlets, as well as 5 e-commerce websites and 25 company-operated concessions in international markets. Turning to our licensing segment, our licensing royalty income was $2.7 million in the quarter compared to $2.5 million in the fourth quarter of 2021. Consolidated gross margin was 41.7% in the quarter versus 42.2% in the comparable period of 2021. School is Almost Famous, Consolidated Gross Margin Increased 80 Basis Points Year-over-Year, The wholesale gross margin was 31.7%, an increase of 120 basis points compared to the fourth quarter of 2022. There have been buy increases in both the wholesale footwear and wholesale accessories and apparel segment. The direct-to-consumer gross margin was 62.7% versus 64% in the same period last year, due to an increase in promotional activity. In the first quarter, operating expenses were $163.9 million compared to $156.5 million in the fourth quarter of 2022, an increase of 4.7%, including Almost Famous. Operating expenses rose 1.3% compared to the same period last year. Operating income for the quarter was $53 million or 10.2% of revenue, The expected tax rate for the quarter was 14.3% compared to 20.9% in the fourth quarter of 2020. Finally, net income attributable to Steve Madden Ltd. for the quarter was $45 million.

Jim: In the quarter operating expenses were $163 9 million compared to $156 5 million in the fourth quarter of 2022.

Jim: An increase of four 7%.

Jim: Excluding almost famous operating expenses rose one 3% compared to the same period last year.

Jim: Operating income for the quarter was $53 million or 10, 2% of revenue.

Edward R. Rosenfeld: What do you assume for almost famous per year per 2024? I'm sorry if I missed that. Yeah, so I guess maybe the way to give it to you is if we exclude Almost Famous, so the revenue growth is 11 to 13, including Almost Famous. If we exclude Almost Famous, it's mid single-digit top line. Got it.

Jim: $42 2 million or 9% of revenue in the comparable period last year.

Jim: The effective tax rate for the quarter was 14, 3% compared to 29% in the fourth quarter of 2022.

Jim: Finally, net income attributable to Steve Madden Ltd for the quarter was $45 million or <unk> 61, SaaS per diluted share compared to $33 7 million or <unk> 44 per diluted share in the fourth quarter of 2022.

Aubrey Leland Tianello: Thank you. Good luck. One moment for our next question. Our next question comes from Aubrey Tianello with BNP Paribas. Your line is open. Hey, good morning.

Jim: Now I would like to briefly touch on our full year results.

Jim: Consolidated revenues for 2023 decreased six 6% to $2 billion.

Jim: Compared to $2 1 billion in 2022.

Aubrey Leland Tianello: Thanks for taking the question. I wanted to follow up on that last question about the 2024 revenue guide. And maybe could you break down a little bit more in terms of what you're expecting between DTC and wholesale on the organics side for 2024? Sure.

Jim: Net income attributable to Steve Madden Ltd was $182 7 million or $2.45 per diluted share for the year ended December 31 2023.

Jim: Compared to $218 3 million or $2 80 per diluted share for the year ended December 31st 2022.

Jim: Yes.

Jim: Moving to the balance sheet.

Jim: Our financial Foundation remains strong as of December 31, 2023, we had $219 8 million of cash cash equivalents and short term investments and no debt.

Zine Mazouzi: Yeah, so if we're looking at that kind of mid single-digit overall organic growth rate, it should be a little bit less than that in wholesale or on the lower side of that in wholesale and on the and slightly higher than that in DTC. So I would say low to mid singles in wholesale organic and approaching high singles in DTC. Perfect. I've got it. And then just to follow up on the gross margin for 2024, you know, how should we think about that for 2024? I think almost famous is, you know, maybe like 140 basis points drag or so.

Jim: Inventory was $229 million.

Jim: Back to the prior year, excluding almost famous inventory was down five 9% compared to the same period in 2022.

Operator: $361,000 per diluted share compared to $33.7 million and $0.44 per diluted share in the fourth quarter. Now I would like to briefly touch on the full year results; consolidated revenues for 2023 decreased 6.6% to $2 billion compared to $2.1 billion in 2022. Net income attributable to Steve Madden Ltd was $182.7 million or $2.45 per diluted share for the year ended December 31, 2023, compared to $218.3 million and $2.80 for DIGRU chair for the year ended December 31st, 2022, www.

Jim: Our capex in the fourth quarter was $5 6 million and for the year was $19 5 million.

Jim: During the fourth quarter and full year 2023, the company spent $38 $1 million and $142 $3 million on repurchases of its common stock respectively.

Jim: Including shares acquired through the net settlement of employee stock Awards.

Jim: At the end of the year, we had approximately $176 million remaining under share repurchase authorization.

Jim: The company's board of directors approved a quarterly cash dividend of 21 cents per share the dividend will be payable on March 22024.

Aubrey Leland Tianello: Is that, is that about right? And then, What are some of the other components we should think about within gross margin for 24? Hi Aubrey, it's Zine.

Jim: Holders of record as of the <unk>.

Jim: Most of business on March eight 2024.

When combined in share repurchases and the dividend, we returned $205 million to shareholders in 2023 and over $1 $4 billion over the past decade.

Zine Mazouzi: I would think of Almost Famous, its annualization of it at about 110 basis points. If you added the whole year and assumed it didn't exist before, yes, you get to that 140 that you quoted, but 110 is the annualization. And the other impact that we have, as discussed previously, is the Red Sea and Canal Suez, and we estimate that currently we have built in, based on certain assumptions, about 20 to 25 basis points. If you add those two together, you're a little over 130 basis points of pressure, and that is partially offset by some improvement in gross margin in the organics. Very clear.

Operator: TheBusinessProfessor.com Moving to the balance sheet, our financial foundation remains strong. As of December 31st, 2023, we had $219.8 million of cash, cash equivalents, and short-term investments. Know that inventory was $229 million, flat to the prior year.

Jim: Turning to our outlook, we expect revenue for 2024 to increase 11% to 13% compared to 2023 and.

Jim: And we expect diluted EPS to be in the range of $2 55 to.

Jim: $2 65.

Jim: This includes a forecasted effective tax rate for 2024 of 23, 5% up from 21, 3% in 2023, primarily due to lower forecasted discrete tax benefits related to stock based compensation.

Operator: Inclusion almost famous, inventory was down 5.9% compared to the same period in 2020. Our capex in the fourth quarter was $5.6 million, and for the year it was $19.5 million. During the fourth quarter and full year 2023, the company spent $38.1 million and $142.3 million on repurchases of its common stock, Refecta, including chairs acquired through the Net Settlement of Employees.org. At the end of the year, we had approximately $176 million remaining on the share repurchase authorization. The Company's Board of Directors approved a quarterly cash dividend of $0.21 per share.

Operator: Now I would like to turn the call over to the operator for questions Abigail.

Abigail: Thank you 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.

Laura Allyson Champine: Thank you. One moment for our next question. Our next question comes from Laura Champine with Loop. Your line is open.

Edward R. Rosenfeld: Thanks for taking my question, and I know you've already spoken about wholesale footwear returning to growth. The mix in the wholesale segment was interesting in Q4 with extremely strong growth on easy comparison accessories and kinds of flat footwear. Does that normalize in Q1 or will it take longer than that?

Operator: While we compile the Q&A roster.

Operator: Our first question comes from Paul <unk> with Citi. Your line is open.

Paul: Hey, Thanks, guys.

Paul: We heard from Macy's yesterday about a significant number of store closings just curious.

Paul: That's having any impact on how youre guiding in thinking about 2024 and also just curious to hear how you might.

Operator: The dividend will be payable on March 22, 2024, to stockholders of record as of the close of business on March 8. Combining and share repurchase and a dividend, we returned $205 million to shareholders in 2020, over $1.4 billion over the past decade. Now, turning to our Outlook. I expect revenue for 2024 to increase 11% to 13% compared to 2023, and we expect diluted EPS to be in the range of $2.55 to $2.65. This includes a forecasted effective tax rate for 2024 of 23.5%, from 21.3% in 2023, primarily due to lower forecasted discrete tax benefits related to stock-based compensation. Now I would like to turn the call over to the operator for questions. Abigail?

Paul: Think about the impact over the next several years and then second just curious on the wholesale footwear business and have 24, how are you thinking.

Samuel Marc Poser: I still expect wholesale accessories to be growing faster than wholesale footwear in Q1, even on an organic basis, and then it should normalize afterward. Thank you. One moment for our next question. Our next question comes from Sam Poser with Williams Trading. Your line is open. Good morning.

Paul: That business and on the branded side versus private label and what drives growth.

Speaker Change: Great Yes, good morning, Paul So in terms of the May.

Speaker Change: Macy's announcement, obviously, we need to get.

Edward R. Rosenfeld: Thank you for taking my questions. I guess I'd like to just dig in to wholesale footwear and how you're thinking about that. You know, we can sort of back into handbags; it's going to grow faster. Are we looking at like low to mid on the footwear side of things in the wholesale business? Yes, that's the right way to think about it, and probably a little, I mean, from the initial guidance, a little stronger in the first half of the year, just because it compares a little easier and the visibility is better. I think that's right, a little bit stronger, but not a big difference.

Speaker Change: More information there and understand exactly what stores are on the closure list et cetera, but.

Speaker Change: I don't think we're looking for any significant.

Speaker Change: Impact 2024 and.

Speaker Change: And even beyond 'twenty for my initial take is that there probably will be pretty minimal impact because the bulk of what we do with Macy's is in the top 250 doors. So Steve Madden Women's for instance is really distributed.

Speaker Change: Just in those top 200, Steve Madden Womens footwear is really distributed just in those top 250 doors, which which I assume will will not be impacted meaningfully.

Operator: Thank you. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: Yes, we do have some things that go to more doors and in our distributor to doors that are likely on the closure list that would include some Madden girl footwear.

Operator: To withdraw your question, please press star 11 again. One moment while we compile the Q&A roster. Our first question comes from all the ways in which your line is open. Hey, thanks guys.

Speaker Change: Certain accessory categories, we do a little bit of cold weather and some gifting that goes to.

Speaker Change: More doors, there, but that impact should be relatively modest.

Zine Mazouzi: And then, I'm just going to dig in, what gross margin and operating margin are you expecting that is built into the full year guide? Well, I'll tell you, I'll start with the gross margin. We expect, as I said earlier, that we'll have that 140 basis points combined between almost famous and freight. And we probably think that we'll have about 70 basis points of pressure on the gross margin compared to this year. On the up margin, if you just think of Almost Famous alone, that's roughly about 40 basis points, 50 basis points of pressure on the gross margin. The Albemarle.

Operator: You heard from Macy's yesterday about a significant number of store closings. Just curious if that's having any impact on how you're guiding and thinking about 2024. And also just curious to hear how you might think about the impact over the next several years.

Speaker Change: In terms of the second part of your question about.

Speaker Change: Wholesale footwear.

Speaker Change: Do expect both branded and private label to.

Speaker Change: <unk> to be up in 2024, although I expect private label to grow faster and as we've talked about that.

Edward R. Rosenfeld: And then second, just curious about the wholesale footwear business in F-24. How are you thinking about that business on the branded side versus private label and what drives growth? Great, yes, good morning Paul.

Speaker Change: Those mass merchant customers that make up the bulk of our private label business, where the first ones too.

Speaker Change: See that.

Speaker Change: The pullback.

Speaker Change: That happened when folks decided that they realize they had too much inventory and pulled back the reins on open to buys and so we're also seeing the recovery there first and so we expect to see some pretty nice growth, even starting in Q1 and wholesale footwear and the private label segment.

Edward R. Rosenfeld: So in terms of the Macy's announcement, obviously, we need to get more information there and understand exactly what stores are on the closure list, etc., but I don't think we're looking for any significant impact, Impact 2024, and even beyond 24. My initial take is that there probably will be pretty minimal impact because the bulk of what we do with Macy's is in the top 250 doors. So Steve Madden Women's, for instance, is really distributed just in those top 200.

Speaker Change: Got it thanks, and then just one additional.

Speaker Change: What do you assume for almost famous for 2024, I'm, sorry, if I missed that.

Speaker Change: Yes so.

Speaker Change: I guess I can.

Speaker Change: Maybe the way to.

Speaker Change: To give it to you is if we exclude our most famous so the revenue growth is 11% to 13, including almost same as if we exclude almost famous it's mid single digit top line growth.

Edward R. Rosenfeld: And that's where we, just to elaborate, that's where we think, you know, that's what's built in is about 11% operating margin for the year, which is down 50, which is essentially attributable, almost all attributable to the almost famous pressure and Wenda's Almost Famous. This is driving a good amount of revenue. How long does it take to get operating margins to where you want them to be?

Speaker Change: Got it. Thank you good luck.

Speaker Change: Thanks.

Edward R. Rosenfeld: Steve Madden Women's Footwear is really distributed just in those top 250 doors, which I assume will not be impacted meaningfully. We do have some things that go to more doors and are distributed to doors that are likely on the closure list. That would include some Madden Girl footwear and certain accessory categories.

Speaker Change: One moment our next question.

Speaker Change: Our next question comes from Adrienne <unk> with BNP Paribas. Your line is open.

Adrienne: Hey, good morning, Thanks for taking the questions.

Adrienne: I wanted to follow up on that last question about the 2024 revenue Guide Ed.

Adrienne: Maybe could you break down a little bit more in terms of what youre expecting between DTC and wholesale on the organic side for 2020 for revenues.

Edward R. Rosenfeld: We do a little bit of cold weather and some gifting that goes to more doors there, but that impact should be relatively moderate. www.TheBusinessProfessor.com. In terms of the second part of your question about wholesale footwear, we do expect both branded and private label to be up in 2024, although I expect private label to grow faster. And as we've talked about, those mass merchant customers that make up the bulk of our private label business were the first ones to see the pullback that happened when folks realized they had too much inventory and pulled back the reins on open to buys. And so we're also seeing the recovery there first. And so we expect to see some pretty nice growth, even starting in Q1 in wholesale footwear and the private label side. Yeah, thanks. And just one additional point.

Adrienne: Sure.

Speaker Change: Yes so.

Edward R. Rosenfeld: So if we're if we're looking at that kind of mid single digit overall organic growth rate it should be a little bit less than that in wholesale or on the lower side of that wholesale and on the a little bit higher than that in DTC. So I would say low to mid singles in wholesale organic and.

Edward R. Rosenfeld: In approaching high singles in DTC.

Speaker Change: Perfect got it and then just.

Speaker Change: Just a follow up on the gross margin for 2024.

Edward R. Rosenfeld: Well, I think we're, you know, certainly should start seeing improvement even in the back half here. And we've got a, you know, we think we see a path to improving those operating margins, but we've always been clear that because of the nature of this business, it's obviously done largely in the mass channel, and there's a big private label component, this business will be a lower operating margin business. As we articulated when we announced it, their operating margins the year before we bought them were about 7%. We think we see a path to getting them into the high singles and, over time, potentially into the low doubles.

Speaker Change: How we should think about that for 2020 for I think almost famous news, maybe like a 140 basis points drag.

Speaker Change: So is that is that about right and then.

Speaker Change: What are some of the other components, we should think about where the gross margin for 2004.

Speaker Change: Hi, Aubrey Athene.

Aubrey Athene: I'd think of almost famous.

Aubrey Athene: Utilization of.

Aubrey Athene: About 110 basis points, if you added the whole year.

Edward R. Rosenfeld: What do you assume for almost famous per year per 2024? I'm sorry if I missed that. Yeah, so I guess maybe the way to give it to you is if we exclude Almost Famous, so the revenue growth is 11 to 13, including Almost Famous. If we exclude Almost Famous, it's mid-single-digit top line. Got it.

Aubrey Athene: Assume that didn't exist before yes, you get to that 140 that you quoted but one tended to be on utilization and the other impact that we have as discussed previously is.

Aubrey Athene: <unk> and <unk>.

Aubrey Athene: Can house ways, and we estimate that currently we have built in based on certain assumptions about 20% to 25 basis points.

Edward R. Rosenfeld: You know, you shouldn't expect this to be a mid-teen operating margin business based on the distribution and the nature of... the sales breakdown. Okay, and then lastly, within the overall revenue, actually, I'll leave it out within the footwear revenue guide or the Organic Revenue Guide. How do you break out international or EMEA versus U.S. versus Canada and so on and so forth? How does that balance, like, you know, sort of you got that mid-single-digit growth organically? Unknown Attendee International is a little faster than that, and domestic is a little slower.

Operator: Thank you. Good luck. One moment for our next question. Our next question comes from Aubrey Tienelo with BNP Paribas. Your line is open. Hey, good morning.

Aubrey Athene: If you add those two together you are a little over 130 basis points of pressure and that is partially offset by some improvement in.

Aubrey Athene: Gross margin in the organic business.

Speaker Change: Very clear thank you.

Operator: Thanks for taking the question. I wanted to follow up on that last question about the 2024 revenue guide. Ed, maybe you could break down a little bit more in terms of what you're expecting between DTC and wholesale on the organics side for 2024? Sure.

Speaker Change: One moment our next question.

Speaker Change: Our next question comes from Laura Champine with loop. Your line is open thanks.

Laura Champine: Thanks for taking my question and I know you've already spoken to wholesale footwear returning to growth.

Laura Champine: The mix in the wholesale segment was.

Edward R. Rosenfeld: Yeah, so, if we're looking at that kind of mid single-digit overall organic growth rate, it should be a little bit less than that in wholesale or on the lower side of that in wholesale and on the and slightly higher than that in DTC. So I would say low to mid singles in wholesale organic and approaching high singles in DTC. Perfect, got it. And then just to follow up on the gross margin for 2024, you know, how we should think about that for 2024. I think almost famous is, you know, maybe like 140 basis points drag or so. Is that, is that about right? And then, what are some of the other components we should think about within gross margin for 24? I would think of it as almost famous, the annualization of it at about 110 basis points.

Laura Champine: Interesting in Q4 with extremely strong growth on an easy comparison accessories and kind of flat in footwear does that normalize in Q1 or will it take longer than that.

Laura Champine: I still expect the.

Edward R. Rosenfeld: And then, okay. Thank you very much. Thank you very much. Good luck. Thanks, Jeff. One moment for our next question. Our next question comes from Jay Sole with UBS. Your line is open. Great. Thank you.

Laura Champine: Wholesale accessories to be growing faster than wholesale footwear in Q1, even on an organic basis and then it should normalize after that.

Speaker Change: Got it thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Sam Poser with Williams trading your line is open.

Sam Poser: Good morning, Thank you for taking my question.

Jay Daniel Sole: My question is about the leverage point for SG&A. What was the leverage point for SG&A in fiscal 24? And as you look beyond that change, and has the leverage point changed with the acquisition? So we have some modest leverage built into the 2024 budget and the guide. And the reason I'm saying it's modest is because, as we always said, we'll continue to invest in the business, we're investing in marketing, and we're also investing in infrastructure internationally. As Ed mentioned, we grew 11%, and we expect double-digit growth to continue for the next couple of years. So there is some investment that we're doing to fuel the growth in the upcoming years in international, both from a people perspective and also from a technology perspective. And just to elaborate on that, keep in mind that the organic top-line growth is mid-singles, right? So you're looking at a consolidated 11 to 13, but that includes almost everything. Got it.

Sam Poser: I guess.

Sam Poser: I'd like to just dig in to wholesale footwear, and how youre thinking about that we can sort of back into handbags, it's going to grow faster or are we looking at like low to mid on the footwear side of things on the wholesale business.

Speaker Change: Yes, that's the right way to think about it.

Speaker Change: And probably a little I mean from the initial guidance a little stronger than the first half of the year.

Operator: If you added the whole year and assumed it didn't exist before, yes, you get to that 140 that you quoted, but 110 is the annualization. And the other impact that we have, as discussed previously, is the Red Sea and canal sways, and we estimate that currently we have built in, based on certain assumptions, about 20 to 25 basis points. If you add those two together, you're a little over 130 basis points of pressure, and that is partially offset by some improvement in gross margin in the organic business. Very clear. Thank you. Please take a moment for our next question. Our next question comes from Laura Champagne with Loop. Your line is open.

Speaker Change: And just because the comparison will easier.

Speaker Change: The visibility is better.

Speaker Change: I think thats right little bit stronger, but not not a not a big difference.

Speaker Change: And then.

Speaker Change: Just going to dig the what what gross margin and operating margin are you expecting that is built into the full year guide.

Speaker Change: Well I'll tell you I'll start with <unk>.

Speaker Change: Gross margin.

Speaker Change: <unk> as I said earlier that we will have that 140 basis points combined between.

Speaker Change: Almost famous and freight and we.

Speaker Change: Probably think that we'll have about 70 basis points pressure on the gross margin compared to this year on the op margin. If you just think of almost famous alone.

Operator: Thanks for taking my question, and I know you've already spoken about wholesale footwear returning to growth. The mix in the wholesale segment was interesting in Q4 with extremely strong growth on easy comparison accessories and kinds of flat footwear. Does that normalize in Q1 or will it take longer than that? I still expect wholesale accessories to be growing faster than wholesale footwear in Q1, even on an organic basis, and then it should normalize afterward. Thank you.

Speaker Change: Roughly about 40 basis points 50 basis points pressure on.

Speaker Change: On the op margin.

Speaker Change: And that's why we and just to elaborate and Thats, where we think that's what's built in is about is about 11% operating margin for the year, which is down 50, which is essentially all attributable almost all attributable to the almost famous pressure.

Zine Mazouzi: Okay. And then, just to add one more color on how we should think about gross profit margin for Q1. You guys are getting granular here, but there's going to be pressure in Q1 for the reasons that Zine already articulated. I don't think we're going to start.

Speaker Change: And when does almost famous.

Operator: One moment for our next question. Our next question comes from Sam Poser with Williams Trading. Your line is open. Good morning.

Speaker Change: Driving good revenue windows, when how long does it take to get almost famous.

Speaker Change: Margins to where you want them to be.

Speaker Change: Well I think.

Operator: Thank you for taking my questions. I guess I'd like to just dig in to wholesale footwear and how you're thinking about that. We can sort of go back into handbags.

Speaker Change: Certainly we should start seeing.

Speaker Change: Improvement even in the back half here.

Speaker Change: We think we see a path to improving those operating margins, but we've always been clear that.

Operator: It's going to grow faster. Are we looking at like low to mid on the footwear side of things in the wholesale business? Yes, that's the right way to think about it, and probably a little, I mean, from the initial guidance, a little stronger in the first half of the year, just because it compares a little easier and the visibility is better. I think that's right. A little bit stronger, but not a big difference.

Speaker Change: Because of the nature of this business, it's obviously done largely in the mass channel and there's a big private label component.

Edward R. Rosenfeld: Prefer not to start guiding by margin by quarter. Got it. Okay. Thanks. One moment for our next question. Our next question comes from Abby Zvejnieks with Piper Sandler. Your line is open.

Speaker Change: That this business will be a lower operating margin business.

Speaker Change: As we articulated when we when we announced that they were they.

Speaker Change: Operating margins the year before we bought them or about 7%. We think we see a path to getting them into the high singles and over time potentially into the low doubles.

Operator: And then, I'm just going to dig in, what gross margin and operating margin are you expecting that is built into the full-year guide? Well, I'll tell you. I'll start with the gross margin. We expect, as I said earlier, that we'll have that 140 basis points combined between almost famous and freight. And we probably think that we'll have about 70 basis points of pressure on the gross margin compared to this year. On the up margin, if you just think of Almost Famous alone, that's roughly about 40 basis points, 50 basis points pressure on the gross margin. And that's where we think, just to elaborate, that's where we think, you know, that's what's built in is about 11% operating margin for the year, which is down 50, which is essentially attributable, almost all attributable to the Almost Famous pressure and We It's driving a good amount of revenue. How long does it take to get these almost famous margins to where you want them to be?

Abigail Virginia Zvejnieks: Great, thanks so much for taking my question. Can you just give us some color on what gives you confidence in the high single-digit direct-to-consumer growth, any color on e-commerce versus stores, and then, I guess, what you're seeing and expecting in terms of promotions in that direct-to-consumer channel? Thank you.

But thats.

You Shouldnt expect us to be a mid teen operating margin business based on that the distribution and the nature of that.

Speaker Change: The sales breakdown.

Speaker Change: Okay, and then lastly within the within the overall revenue actually.

Speaker Change: I'll leave it out within the footwear revenue guidance or the organic revenue guidance.

Speaker Change: How do you break out international or EMEA versus U S versus Canada, and so on and so forth how does that balance like.

Edward R. Rosenfeld: Yeah, yeah, we've seen a nice improvement in that business. Over the last few months, even in Q4, we saw a significant improvement in November and December relative to the trend in October, and we've seen an additional step up in January and February compared to where we were in November and December.

Speaker Change: We've got that mid single digit growth organically is that.

Speaker Change: High singles.

Speaker Change: International demand assay that international is a little bit faster than that and in domestic is a little slower.

Speaker Change: Okay. Thank you very much.

Thank you very much good luck. Thanks.

Speaker Change: Thanks, Tim.

Speaker Change: One moment our next question.

Edward R. Rosenfeld: So we're running, and comps and have seen that in both brick and mortar and digital year-to-date. Part of what gives us confidence in the DTC Revenue Guide. We also do have, we'll probably have, you know, two and a half points of non-comp growth coming from non-comp stores as well because of some of the new store openings. What was the follow-up question? Sorry, just on promotions and direct-to-consumer. Oh, yeah. Right now, the promotional activity is, I would say, normal. It's not super heavy, but I wouldn't characterize it as super light either.

Speaker Change: Our next question comes from Jay sole with UBS. Your line is open.

Edward R. Rosenfeld: Well, I think we're, you know, certainly should start seeing improvement even in the back half here. And we've got a, you know, we think we see a path to improving those operating margins, but we've always been clear that because of the nature of this business, it's obviously, you know, done largely in the mass channel, and there's a big private label component, that this business will be a lower operating As we articulated when we announced it, their operating margins the year before we bought them were about 7%. We think we see a path to getting them into the high singles and, over time, potentially into the low doubles.

Jay Sole: Great. Thank you. My question is about the leverage point for SG&A, what is the leverage point for SG&A in fiscal 'twenty, four and as you look beyond.

Jay Sole: Should that change and has the leverage point changed with the acquisition.

Sole: Yes, so we have some modest leverage built into the 2020 for budget and the guidance.

Sole: And the reason I'm, saying, it's modest because as we always said we will continue to invest in the business. We are investing in marketing and we also invest in infrastructure internationally as Ed mentioned, we grew 11% we expect double digit growth to continue for the next couple of years. So there is some investment that we're doing to few.

Operator: You shouldn't expect this to be a mid-teen operating, the sales breakdown. Okay, and then lastly, within the overall revenue actually, I'll leave it out within the footwear revenue guide or the Organic Revenue Guideline. How do you break out international or EMEA versus U.S. versus Canada and so on and so forth?

Edward R. Rosenfeld: I think it's kind of normal activity for this time of year. [inaudible] A lot of boots and got very clean there, and so we feel good about our inventory position. And in fact, I believe that this year in DTC, there's an opportunity for gross margin improvement in DTC by controlling promotions. That's very helpful.

Sole: The growth in the upcoming years and international both from a people perspective, and also from a technology perspective.

Edward R. Rosenfeld: How does that balance, like, you know, sort of you got that mid-single-digit growth organically? High single digits. Yeah, so international is a little faster than that, and domestic is a little slower.

Speaker Change: And just to elaborate on that keep in mind that the organic top line growth is mid singles right. So youre looking at a consolidated 11 to 13, but that includes almost famous.

Operator: And then, okay, thank you very much. Thank you very much. Thanks, Sam. One moment for our next question. Our next question comes from Jay Sole with UBS. Your line is open. Great. Thank you.

Speaker Change: Got it Okay, and then Africa and just add one more just any color on how we should think about gross profit margin for Q1.

Speaker Change: Okay.

Speaker Change: As we get granular here.

Speaker Change: Okay.

Speaker Change: Look there is going to be.

Speaker Change: There'll be pressure in Q1 for the reasons that seen already articulated.

Operator: My question is about the leverage point for SG&A. What was the leverage point for SG&A in fiscal 24? And as you look beyond that change, and has the leverage point changed with the acquisition? So we have some modest leverage built into the 2024 budget and the guide. And the reason I'm saying it's modest is because, as we always said, we'll continue to invest in the business, we're investing in marketing, and we're also investing in infrastructure internationally. As Ed mentioned, we grew 11%, and we expect double-digit growth to continue for the next couple of years. So there is some investment that we're doing to fuel the growth in the upcoming years in international, both from a people perspective and also from a technology perspective. And just to elaborate on that, keep in mind that the organic top-line growth is mid-singles, right? So you're looking at a consolidated 11 to 13, but that includes almost everything. Got it.

Speaker Change: I don't think we're going to start.

Speaker Change: I'd prefer not to get sorry, guiding by margin by quarter.

Abigail Virginia Zvejnieks: Thank you. One moment for our next question. Our next question comes from Tom Nikic with Webush. Your line is open. Hey, good morning, everyone.

Speaker Change: Got it okay. Thanks, guys.

Speaker Change: Yeah.

Speaker Change: One moment our next question.

Speaker Change: All right.

Speaker Change: Our next question comes from <unk> <unk> with Piper Sandler Your line is open.

Jay Sole: Great. Thanks, so much for taking my question.

Jay Sole: Can you give us some color on what gives you confidence in the high single digit direct to consumer growth.

Tom Nikic: Thanks for taking my question. A lot of other brands have talked about the European consumer becoming a little more cautious. Your optimism around Europe stems from the fact that your brand is so under penetrated there that you kind of have growth opportunities, you know, almost, you know, kind of regardless of the macro environment. Yeah, I think that's, I think that's right.

Jay Sole: Color on e-commerce versus stores, and then I guess, what youre seeing and expecting in terms of promotions in that direct to consumer channel. Thank you.

Speaker Change: Yes, yes, we've seen a nice improvement in that business.

Speaker Change: Over the last few months and even in Q4, we saw a significant improvement in November and December relative to the trend in October and we've seen an additional step up.

Speaker Change: In January and February.

Speaker Change: Compared to where we were in November and December So we are running.

Operator: Okay. And then I can just add one more, just any color on how we should think about gross profit margin for Q1. You guys are getting granular here, but there's going to be pressure in Q1 for the reasons that Zane already articulated. I don't think we're going to start.

Edward R. Rosenfeld: You know, we have very strong momentum in Europe, and we do feel that we are outperforming our competitors in terms of sell-through and overall performance. That said, the overall macro environment is tough there, and the retail environment is challenging there. And, you know, if it weren't for those factors, I think we'd be doing even better.

Speaker Change: Very nice solidly positive comps.

Speaker Change: <unk> seen that in both brick and mortar and digital year to date.

Speaker Change: And so that.

As part of what gives us confidence.

Speaker Change: In the DTC revenue guide, we also do have probably happy to two five points of non comp.

Operator: Prefer not to start guiding by margin by quarter. Got it, okay, thanks. One moment for our next question. Our next question comes from Abby Zivaniex with Piper Sandler. Your line is open.

Speaker Change: Of growth coming from non comp stores as well because of some of the new store openings.

Edward R. Rosenfeld: But because of the momentum we have, the strong performance that we've been seeing, both in wholesale and in our direct to consumer channels, and to your point, the fact that we're just not a mature business there, you know, we've still got a lot of runway ahead of us, we still feel we can drive growth in that. Ed, can you remind us of the size of your business in Europe? ultimately, where you know what you think the region can become for you.

Speaker Change: What was the follow up question sorry.

Speaker Change: Sorry, just on promotions and direct to consumer.

Operator: Great, thanks so much for taking my question. Can you just give us some color on what gives you confidence in the high single-digit direct-to-consumer growth, any color on e-commerce versus stores, and then, I guess, what you're seeing and expecting in terms of promotions in that direct-to-consumer channel? Thank you.

Speaker Change: Yeah.

Speaker Change: I would say right now is the promotional activity is as I would say normal.

Speaker Change: It's.

Speaker Change: It's not super happy, but I wouldn't characterize it as Super light either I think it's kind of.

Speaker Change: Normal activity for this time of year.

Edward Rosenfeld: Yeah, yeah, we've seen a nice improvement in that business over the last few months. Even in Q4, we saw a significant improvement in November and December relative to the trend in October. And we've seen an additional step up in January and February, compared to where we were in November and December.

Speaker Change: Okay.

Speaker Change: It was if we go back to fall you know there was a somewhat challenging boot season, and so we did a little bit more promotional activity to move through the boots.

Speaker Change: But.

Speaker Change: Nice thing was January we got that cold weather, we really were able to get through.

A lot of boots in and got very clean there and so we feel good about how our inventory position.

Edward R. Rosenfeld: Yeah, the media region overall in 2023 was just under 170. In terms of what it could be, I mean, it could be multiples of that. Good. Thanks, everyone, and thanks a lot this year.

Speaker Change: And in fact, I believe that that this year in DTC theres opportunity for gross margin improvement in DTC.

Speaker Change: By controlling promotions.

Speaker Change: That's very helpful. Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Tom <unk> with Wedbush. Your line is open.

Tom: Hey, good morning, everyone. Thanks for taking my question.

Tom: Wanted to ask about the international business.

Tom Nikic: One moment for our next question. Our next question comes from Corey Tarlowe, and Jeffrey's line is, Great, thank you. Ed, I was wondering if you could just touch on the inventory balances and how you feel the inventory is positioned for this upcoming year. One of the things you've done a nice job of and made X almost famous is that inventories continue to be down, I think, for several quarters in a row now. So, could you talk about what that means for the business and how that all interplays with your ability to chase and be trend focused and drive really productive sales that way? Yeah, I mean, as you know, one of the hallmarks of the company has been our inventory management and our ability to turn our inventory faster than our peers in the industry.

Tom: No a lot of other brands have talked about the European consumer.

Tom: A little more cautious.

Tom: The your optimism around Europe.

Tom: Europe to stem from the fact that.

Tom: Your brand is so underpenetrated there.

Tom: Kind of pads.

Tom: The opportunity is almost kind of regardless of the macro environment.

Speaker Change: Yes, I think Thats I think thats right, we have very strong.

Speaker Change: Momentum in Europe.

Speaker Change: And we do feel that we are outperforming our competitors in terms of sell through.

Speaker Change: And overall performance.

Speaker Change: That said.

Speaker Change: The overall <unk>.

Speaker Change: <unk> environment is tough there the retail environment is challenging there.

Speaker Change: If it werent for those factors I think we'd be doing even better.

But because of the momentum we have.

Speaker Change: The strong performance that we've been seeing.

Speaker Change: Both in wholesale and in our direct to consumer channels.

Speaker Change: And to your point, the fact that we're just not a mature business there.

Speaker Change: We've still got a lot of.

Speaker Change: A lot of runway ahead of us we still feel we can drive growth in that region.

Speaker Change: Got it and can you remind us the size of that business in Europe.

Speaker Change: Maybe.

Speaker Change: Ultimately.

Speaker Change: What do you think.

Speaker Change: The regions of the country.

Speaker Change: Yes, the EMEA region.

Speaker Change: Overall.

Speaker Change: In 2023 was just under $170 million.

In terms of what it could be it could be multiples of that.

Speaker Change: Alright, thanks, everyone.

Tom Nikic: And, you know, it enables us to work close to season, not make big speculative inventory bets up front and chase goods in season, and be very nimble. That's been a good formula for us, especially in the fast-moving trend business in which we operate. So I do feel we're really, you know, obviously that whole model was challenged for a period when there was the tremendous supply chain disruption in the wake of COVID.

Speaker Change: Yes.

Speaker Change: One moment our next question.

Speaker Change: Our next question comes from Cory <unk> with Jefferies. Your line is open.

Cory: Great. Thank you.

Cory: And I was wondering if you could just touch on.

Inventory balances and how you feel the inventories positioned into this upcoming year one of the things.

Cory: Done a nice job of an ex almost same as inventories continue to be down I think for several quarters in a row now so.

Cory: Could you talk about what you think that means for the business and how that all interplay with your ability to chase.

Cory: The trend focused and drive really productive sales that way.

Speaker Change: Yes, I mean, I think thats.

Speaker Change: As you know what are the hallmarks of the company has been.

Speaker Change: Our inventory management, and our ability to turn our inventory faster than.

Edward R. Rosenfeld: And, and transit times were so extended, but we're, you know, we're back to being able to do what we do best. We've been able to, as you point out, reduce overall inventory levels, at least on an organic basis. We were flat, including almost famous at the end of the year. And so we're really positioned to run our playbook and do what we do. And we feel good about that. And I think that's another reason that we do believe that on an organic basis, we can see some gross margin improvement. That's great.

Speaker Change: Than our peers in the industry and that.

Speaker Change: That enables us.

Speaker Change: To work close to season, not make big speculative inventory bets upfront.

Speaker Change: And chase goods in season and be very nimble.

Speaker Change: That's been a good formula for us, especially in the fast moving trend business in which we operate so I do feel we're really.

Speaker Change: Obviously that that whole model.

Speaker Change: Was challenged for a period when there was a tremendous supply chain disruption in the wake of Covid.

Speaker Change: And transit times, whereas we're so extended but where we're back to being able to do what we do best.

We've been able to.

Speaker Change: As you point out reduce.

Speaker Change: Overall inventory levels.

Speaker Change: At least on an organic basis, we were flat, including almost famous at the end of the year.

Speaker Change: And so we're really positioned to.

Speaker Change: To run our playbook and do what we do and we feel good about that and I think that's another reason that we do believe that on an organic basis, we can see some gross margin improvement this year.

Corey Tarlowe: And then just, follow up on. You mentioned remodels. I'm curious about the potential impact of that on TAPEC, traditionally a very capital-light business. So curious about what the expectations are for remodels going forward if that's more broad or more specific to a finite number of. Yeah, we've done some this year. As I mentioned earlier, we ended up with $19.5 million this year. And we expect next year with what we do with our CapEx in the stores, either opening stores, remodels, our investment in IT and infrastructure, that we would probably be about $5 million above that. Great, thank you.

Speaker Change: That's great and then just.

Speaker Change: Follow up on you mentioned the Remodels.

Speaker Change: Curious about the potential impact of that on Capex. This is traditionally a very capital light.

Speaker Change: Business. So curious about what the expectations are for Remodels going forward, if that's something.

Speaker Change: More broad or specific to a finite number of stores.

Speaker Change: Yes, we've done some this year as I mentioned earlier.

Speaker Change: We ended at $19 $5 million this year.

Speaker Change: And we expect next year.

Speaker Change: What we do with our Capex and the stores are opening stores Remodels our investment in it infrastructure that we would be probably about $5 million above this year.

Speaker Change: Great. Thank you very much.

Zine Mazouzi: One moment for our next question. Our next question comes from Dana Telsey with the Telsey Advisory Group. Your line is open. Hi, good morning, everyone.

Speaker Change: One moment our next question.

Our next question comes from Dana Telsey with Telsey Advisory Group. Your line is open.

Dana Lauren Telsey: Hi, Good morning, everyone. As you think about the wholesale channel of distribution and the buckets of it whether it's off price department stores discounters with private label, how are each performing and how do you expect them to be different in 2024 versus <unk> 23, and on the retail component what are you seeing in terms of differences.

Dana Lauren Telsey: And if you think about the wholesale channel distribution and the buckets of it, whether it's off-price department stores, discounters with private labels, how are they performing? And how do you expect them to be different in 2024 versus 23? And on the retail component, what are you seeing in terms of differences in outlets versus street locations or malls? Thank you, Sugar.

Dana Lauren Telsey: In outlets versus Street Street locations our malls. Thank you.

Dana Lauren Telsey: Sure.

Edward R. Rosenfeld: So, in terms of the wholesale channels... Look, I think the one I'm the most bullish about, in terms of top line growth, is probably the mass channel. Because, as we point out, you know, we did take a big hit there, as they pulled back the reins really dramatically to get their inventories in line, and we're starting to see that business recover. And we're already, you know, as I pointed out, expecting to see a nice year-over-year improvement beginning in Q1. So I think that kind of bounce back should be a nice benefit for us in 2024.

Dana Lauren Telsey: So in terms of the wholesale channels.

Dana Lauren Telsey: Look I think that one of the.

Dana Lauren Telsey: The most bullish about in terms of top line growth is probably the mass channel because as we pointed out we did take.

Dana Lauren Telsey: A big hit there.

Dana Lauren Telsey: They pulled back the reins really dramatically.

Dana Lauren Telsey: Get their inventories in line and we're starting to see that business recover and we're already as I as I pointed out expecting to see.

Dana Lauren Telsey: A nice year over year improvement beginning in Q1.

Dana Lauren Telsey: So I think that kind of bounce back.

Dana Lauren Telsey: Should be a nice benefit for us in 2024.

Edward R. Rosenfeld: Kind of moving up the channels, off price; that's clearly still a channel that's performing. Although we take share, there's still a very healthy demand for our product there. We are obviously, controlling, you know how much distribution we have in that channel, but certainly, there's healthy demand there. And then you know as you move into the department stores, I would say overall the sentiment there remains cautious, but as I pointed out earlier, the inventory in the channel is much healthier than it was a year ago, and we obviously those customers are important to us, and we've gotten indications from them that they're planning their business in The big call out there is that we continue to see outlets outperforming full-price stores in the U.S. by a pretty significant margin. In Q4, it was about 1,000 basis points again in comps at www.

Dana Lauren Telsey: Kind of move it up.

Dana Lauren Telsey: Channels off price.

Dana Lauren Telsey: Clearly still a channel that's performing.

Dana Lauren Telsey: Taking share there is still a very healthy demand for our products. There we are obviously.

Dana Lauren Telsey: <unk> controller.

Dana Lauren Telsey: Controlling how much distribution, we have in that channel.

Dana Lauren Telsey: But certainly there is there is healthy demand there.

Dana Lauren Telsey: And then.

Dana Lauren Telsey: As you move into the Department stores I would say overall the sentiment there remains cautious but.

Dana Lauren Telsey: As I pointed out earlier the.

Dana Lauren Telsey: <unk>.

Dana Lauren Telsey: Inventory in the channel is much healthier than it was a year ago.

Dana Lauren Telsey: And we.

Dana Lauren Telsey: Obviously, those customers are important to us and.

Dana Lauren Telsey: We've gotten indications from them that they're planning their planning our business in excess of how Theyre planning their overall department.

Dana Lauren Telsey: So well.

Dana Lauren Telsey: We will look for a better year with them as well in 2024.

Dana Lauren Telsey: I think the second part was outlets versus.

Dana Lauren Telsey: Versus yes versus full price stores.

Dana Lauren Telsey: I'd call out the areas that we continue to see outlet outperforming full price stores in the U S by a pretty significant margin.

Dana Lauren Telsey: Q4, it was about a 1000 basis points again in comp.

Dana Lauren Telsey: And even coming into Q1, we continue to see.

Edward R. Rosenfeld: TheBusinessProfessor.com Price Conscious and Gravitating Towards, Thank you. One moment for our next question. Our next question comes from Janine Stichter with BTIG. Your line is open. Hi, good morning.

Dana Lauren Telsey: The significant outperformance in the outlet channel versus the full price channel in the United States and I think indicative of a customer that is still.

Dana Lauren Telsey: Price conscious and gravitating towards value.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Janine Stichter with BTG. Your line is open.

Janine Marie Hoffman Stichter: I had a couple questions around margins. So for growth margin, what are you assuming for freight? The Red Sea situation aside, we've seen rates pick up a bit, and I think your contracts are up for renewal soon. Just how to think about what you're assuming for freight for the rest of the year. And then on SG&A, I think you pointed to a bit of SG&A de-leverage in the guide. Sorry, the bit of leverage built into the guide.

Janine Stichter: Hi, Good morning, I had a couple of questions around margins.

Janine Stichter: For gross margin what are you assuming for freight and the Red Sea situation. Aside we've seen the rates pick up a bit and I think youre contracts that perennial finishes how to think about what youre assuming for free for the rest of the year and then on the SG&A I think you pointed to a bit of SG&A deleverage in the guide.

Janine Stichter: A bit of Blackberry built into the guide, but how are you thinking about marketing is that I know you've been investing there how to think about the overall investment in marketing spend and then maybe the split between brand spend and other marketing spend thank you.

Zine Mazouzi: But how are you thinking about marketing spend? I know you've been investing there, but how to think about the overall investment in marketing spend and then maybe the split between brand spend and other marketing spend. Thank you. I'll take the first part on Gross Margin, and Ed can elaborate on marketing. On the Gross Margin, Janine, we mentioned that we have built in, based on certain assumptions around the Red Sea and everything else around freight, 20 to 25 bits.

Speaker Change: I'll take the first part on.

Janine Stichter: The gross margin and Ed can elaborate in marketing.

Janine Stichter: The gross margin Jeanine, we mentioned that we have built in based on certain assumptions around <unk> and everything else around freight 20% to 25 bps impact to gross margin.

Zine Mazouzi: Welcome back to Growth March. On the marketing side, we're continuing to invest, but Ed can actually give you a little more color on that. Yeah, yeah.

Speaker Ed: On the marketing side.

Edward R. Rosenfeld: Continuing to invest but add can actually give you a normal color on yes, yes, I mean, I think look as you know that's been an area of continued investment for us over the last several years and we've.

Edward R. Rosenfeld: I mean, look, as you know, that's been an area of continued investment for us over the last several years, and we've, you know, we've moved up our marketing percentage of revenue pretty significantly, from 2% or under 2% to about 4.5% in 2023, to increase the investment in marketing. We think that's important to drive growth in the future. I think it's easiest to sort of look at it by backing out Almost Famous. If you back out Almost Famous, we're still looking to increase marketing by kind of high single digits in dollars, which is obviously faster than the mid-single-digit top-line growth on an organic basis that we forecasted. So there is a little bit of de-leverage there.

Jeanine: We've moved up our marketing percentage of revenue pretty significantly.

Jeanine: From 2% or sub 2% about four 5% in 2023.

Jeanine: As we go into 2024, we're going to continue to.

Jeanine: To increase the investment in marketing, we think Thats that's important.

Jeanine: To drive growth in the future.

Jeanine: I think it's easiest to sort of look at it backing out almost famous.

Jeanine: If you back out almost famous there is we're still looking to increase marketing.

Jeanine: High single digits in dollars, which is obviously faster than the mid single digit top line growth on an organic basis that we forecasted so a little bit of deleverage there and in terms of the mix as we talked about.

Janine Marie Hoffman Stichter: The big focus there is really optimizing our marketing spend throughout the funnel, and that means, we believe, at this point, pushing more marketing spend up the funnel, so making sure we're doing that top-of-funnel brand awareness work, as well as the mid-funnel sort of consideration, and, of course, not forgetting the bottom of the funnel for conversion, on that performance marketing. But we do think that there needs to be As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. One moment for our next question. We have a follow-up call from the line of Sam Poser with Williams Trading. Your line is open. Thank you. Two things.

Jeanine: The big focus there is really optimizing.

Jeanine: Our marketing spend throughout the funnel and that means we believe at this point pushing more marketing spend up the funnel, so making sure we're doing that top of funnel brand awareness.

Jeanine: <unk> work as well as the mid funnel sort of consideration.

Jeanine: And of course, not forgetting about the funnel of FERC conversion I think a few years ago like like many folks in the industry, we had gotten into a situation where.

Jeanine: We were very heavily penetrated in the lower part of the funnel and that was working.

Jeanine: For a while there were getting.

Jeanine: <unk>.

Jeanine: Great Great returns on that performance marketing, but we do think that there needs to be a better balance now and that's what we're focused on.

Speaker Change: Great. Thank you very much.

Speaker Change: Thank you.

Speaker Change: 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 one moment. Our next question.

Speaker Change: We have a follow up from the line of Sam Poser with Williams trading your line is open.

Sam Poser: Thank you.

Samuel Marc Poser: One, to follow up on Dana's question, on the wholesale brands, you know, Steve Madden and Adelchevita Footwear, they're sort of the better wholesale businesses; are the retailers opening up enough? When Macy's spoke yesterday, they said that they wanted to buy more of what people were coming in and asking for, which would be, you know, theoretically, you'd be one of those. But at the same time, they were talking about growing their private label business. So I'm just trying to get your interpretation of how that works out, giving people what they want and then growing private label. And then I wanted to talk about sort of expanding the scope of your direct-to-consumer business, getting to know more customers, building your database, or what's being done there to increase that. I don't know what else I can say about what's going on with the department stores.

Sam Poser: Two things one.

Sam Poser: Follow up on David's question on the wholesale brand on the.

Sam Poser: Steve Madden in.

Sam Poser: Dolce Vita footwear, there sort of a better wholesale businesses.

Sam Poser: Okay.

Sam Poser: Or are the retailers opening up enough when Macy's spoke yesterday.

Sam Poser: Ed that they wanted to buy more product of what people coming in and asking for which would be.

Sam Poser: Radically you'd be one of those but at the same time they were talking about growing their private label business. So I'm just trying to get your interpretation.

Sam Poser: How that works out giving people what they want and then growing private label.

Sam Poser: And then I wanted to talk about sort of expanding the scope of your direct to consumer business.

Sam Poser: Getting to know more customers building your database sort of what's being done there to increase that.

Speaker Change: Look I think I don't know what else I can say about that but.

Sam Poser: About what's going on with the Department stores, we we felt where we believe that we are.

Sam Poser: Were confident that were very important vendors for them that we're going to get more than our fair share.

Sam Poser: And that we're positioned to.

Sam Poser: Two.

Edward R. Rosenfeld: We believe that we are confident that we're very important vendors for them, that we're going to get more than our fair share, that we're positioned to, you know, do our job, DTC. That's, that's clearly been. You know, we've been increasing the penetration significantly over the last several years in DTC, and we continue, you know, we expect to continue to do that. So, you know, back in 2019, I think we were 18% DTC. We finished 2023 up 800 basis points in penetration.

Sam Poser: To take to take share frankly in that channel.

Sam Poser: Overall their sentiment does remain cautious there and we'll have to see how that develops over the course of the year, obviously, if their comp store sales improved.

Sam Poser: That will I believe that will encourage them to get more aggressive and I think we'll be very well positioned to participate.

Sam Poser: If that happens.

Sam Poser: In terms of.

Sam Poser: DTC.

Sam Poser: Look that's that's clearly been.

Sam Poser: We've been increasing the penetration significantly over the last several years in DTC and we continue we expect to continue to do that so back in 2019.

Sam Poser: I think we were 18% DTC, we finished 2023.

Sam Poser: Up 800 basis points and penetration.

Sam Poser: So pretty significant growth in DTC, there and.

Sam Poser: Obviously this year, we when you thought if you include almost famous you won't see that percentage go up but if you exclude almost famous youre seeing continued.

Sam Poser: Penetration increase in DTC and that will continue to be a long term initiative for us to to build that business and have more of those direct relationships that you've talked about with the consumer.

Edward R. Rosenfeld: Thank you. That concludes the question and answer session. At this time, I would like to turn the call back to Ed Rosenfeld for closing remarks. Alright, well, thanks so much for joining us today. Have a great day. We look forward to speaking with you on the next call. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you for watching!

Speaker Change: Thank you.

Sam Poser: That concludes our question and answer session. At this time I would like to turn the call back to Ed Rosenfeld for closing remarks.

Edward R. Rosenfeld: Alright, well thanks, so much for joining us today have a great day, we look forward to speaking with you on the next call.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Edward R. Rosenfeld: Okay.

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Edward R. Rosenfeld: Okay.

Edward R. Rosenfeld: Okay.