Q1 2024 Steven Madden Ltd Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the Steven Madden first quarter 2024 results conference call.
Good day and thank you for standing by welcome to the Steven Madden first quarter 'twenty 'twenty four results conference call. At this time, all participants are in a listen only mode.
Operator: 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 during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. 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.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one 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 Marie McCoy: Danielle Mccoy VP of corporate development and Investor Relations. Please go ahead.
Danielle Marie McCoy: Thanks Stevie and good morning everyone. Thank you for joining our first quarter 2024 earnings call and webcast. Before we begin, I'd like to remind you that our remarks may not follow. Including answers to your questions, which contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act, forward-looking statements are subject to risk that could cause actual results to materially differ from those expressed or implied by such forward-looking statements.
Thanks, Phebe and good morning, everyone. Thank you for joining our first quarter 2024 earnings call and webcast before we begin I'd like to remind you that our remarks today that follows.
Danielle Marie McCoy: 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.
Danielle Marie McCoy: We're 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. I hereby exclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis unless otherwise noted. Reconciliation to the Most Directly Comparable Gap Financial Measure and other associated disclosures are contained in our earnings release. Joining me on the call today is Edward Rosenfeld, Chairman and Chief Executive Officer, and Zine Mazouzi, Chief Financial Officer. With that, I'll turn the call over to Ed.
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 S E T.
Danielle Marie McCoy: We disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference call if at all.
Danielle Marie 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 release.
Danielle Marie McCoy: Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer and Zane.
Edward R. Rosenfeld: And with Susie Chief Financial Officer, with that I'll turn the call over to Ed.
Edward R. Rosenfeld: All right, Danielle, and good morning everyone, and thank you for joining us to review Steve Madden's first quarter 2024 results. So we got off to a strong start to 2024 with first quarter revenue increasing 19% and diluted EPS rising 30% compared to the same period last year. These results are the direct result of our team's disciplined execution of our strategy for long-term growth. The foundation of that strategy is creating deeper connections with our consumers through the combination of outstanding products and effective marketing,thereby enabling our success with our four key business strategies.
Edward R. Rosenfeld: Alright, Thank you Danielle and good morning, everyone and thank you for joining us to review, Steve Madden first quarter 2024 results.
Edward R. Rosenfeld: So we got off to a strong start to 2024 with first quarter revenue increased 19% and diluted EPS rising 30% compared to the same period. In 2023. These results are the direct result of our team's disciplined execution of our strategy for long term growth.
Edward R. Rosenfeld: The foundation of that strategy is creating deeper connections with our consumers through the combination of outstanding products and effective marketing, thereby enabling our success with our four key business drivers.
Edward R. Rosenfeld: Our first key driver is expanding our business in international markets. Revenue in International grew 15% in the first quarter compared to the same period in the prior year, including strong gains in each of our three international regions, EMEA, Americas Ex-US, and AIPAC. The EMEA region remains the biggest driver of... Continue to buck the trend in Europe and deliver solid growth there despite the challenging operating environment. Our Middle East JV has strong momentum and is ramping quickly, and our JV in South Africa continues to see explosive growth driven by the exceptional brand heat we have in them.
Edward R. Rosenfeld: Our first key driver is expanding our business in international markets revenue and international grew 15% in the first quarter compared to the same period in the prior year, including strong gains in each of our three international regions EMEA, the Americas ex U S and APAC.
Edward R. Rosenfeld: The EMEA region remains the biggest driver of growth, we continue to Buck the trend in Europe and deliver solid growth there. Despite the challenging operating environment, our middle East JV has strong momentum and is ramping quickly and our JV in South Africa continues to see explosive growth driven by the exceptional brand heat we have in that market.
Edward R. Rosenfeld: Our second key business driver is growing our business outside of football. In the first quarter, overall accessories and apparel revenue rose 73%, or 28% excluding the newly acquired Almost Famous. Our Steve Madden Handbag business continues to be outstanding. Revenue there increased more than 45% compared to the same period in the prior year for the third consecutive quarter. Steve Madden Apparel also saw strong growth, increasing 23% in the quarter, driven by additional doors and an expanded assortment. Steve Madden and Company have been key wholesalers.
Edward R. Rosenfeld: Our second key business driver is growing our business outside of footwear in the first quarter overall accessories, and apparel revenue rose, 73% or 28%, excluding the newly acquired almost famous business.
Our Steve Madden handbag business continues to be outstanding revenue, there increased more than 45% compared to the same period in the prior year for the third consecutive quarter.
Edward R. Rosenfeld: Steve Madden apparel also saw strong growth increasing 23% in the quarter driven by additional doors and expanded assortments within key wholesale accounts.
Edward R. Rosenfeld: And Almost Famous contributed $41 million in revenue in its first full quarter under our ownership. A critical part of our strategy with this acquisition is to utilize the Almost Famous platform to introduce and build a Madden Girl apparel business. We launched Madden Girl Apparel in Macy's in the first quarter, and initial sell-through performance has been very strong. Our third key business driver is expanding our direct-to-consumer business, led by digital. ETC revenue grew 13% compared to the first quarter of 2023, including double-digit percentage gains in both digital and brick-and-mortar channels.
Edward R. Rosenfeld: And almost famous contributed $41 million in revenue in its first full quarter under our ownership.
Edward R. Rosenfeld: A critical part of our strategy with this acquisition is to utilize the almost famous platform to introduce and build a Madden girl apparel business, We launched Madden girl apparel and Macy's in the first quarter and initial sell through performance has been very strong.
Edward R. Rosenfeld: Our third key business driver is expanding our direct to consumer business led by digital <unk>.
Edward R. Rosenfeld: <unk> revenue grew 13% compared to the first quarter of 2023, including double digit percentage gains in both digital and brick and mortar channels.
Edward R. Rosenfeld: We achieved these top-line results while also meaningfully expanding DTC's gross margin as the combination of on-trend merchandise assortments and effective inventory management enabled us to increase full-price selling and reduce discounts. And finally, our fourth key business driver is strengthening our core U.S. wholesale footwear business. This business was under pressure in 2023, as many of our largest wholesale customers entered last year with too much inventory and reduced orders significantly in order to right-size their inventory.
Edward R. Rosenfeld: We achieved these topline results, while also meaningfully expanding DTC gross margin.
Edward R. Rosenfeld: The combination of on trend merchandise Assortments and effective inventory management enabled us to increase full price selling and reduced discounting.
Edward R. Rosenfeld: And finally, our fourth key business driver is strengthening our core U S wholesale footwear business.
Edward R. Rosenfeld: This business was under pressure in 2023 as many of our largest wholesale customers entered last year with too much inventory and reduced order significantly in order to rightsize inventory levels.
Edward R. Rosenfeld: Fortunately, those wholesale customers have much healthier overall inventory levels. And, as expected, we were able to return to year-over-year growth in the U.S. wholesale footwear business in the first quarter, with revenue increasing 5% compared to Q1 of 2000. While our wholesale customers for branded products remain cautious overall, our private label business, which is primarily done in the mass channel, has improved significantly and experienced strong growth. So overall, we delivered tangible results across each of these areas, which not only drove strong top-line performance but also enabled us to expand our consolidated operating margin for the quarter to 11%, up from 10.3% in the first quarter of 2023, despite a headwind from the inclusion of Almost Famous
Edward R. Rosenfeld: Those wholesale customers have much healthier overall inventory levels. This year and as expected we were able to return to year over year growth in the U S. Wholesale footwear business in the first quarter with revenue, increasing 5% compared to Q1 of 2023.
Edward R. Rosenfeld: While our wholesale customers for branded product remain cautious overall.
Edward R. Rosenfeld: Our private label business, which is primarily done in the mass channel has improved significantly and experienced strong growth in the quarter.
Edward R. Rosenfeld: So overall, we delivered tangible results across each of these areas, which not only drove strong top line performance, but also enabled us to expand our consolidated operating margin for the quarter to 11% up from 10, 3% in the first quarter of 2023, despite a headwind from the inclusion of almost famous.
Edward R. Rosenfeld: Looking ahead, our first-quarter performance and the success we are seeing across each of our key strategic initiatives gives us confidence that we are not only on track to meet our financial goals for 2024 but that we are well positioned to continue to drive sustainable top and bottom line growth for years to come. And now, I'll turn it over to Zine to review our first quarter financial results in more detail and provide our outlook for 2024.
Edward R. Rosenfeld: Looking ahead, our first quarter performance and the success, we are seeing across each of our key strategic initiatives gives us confidence that we are not only on track to meet our financial goals for 2024, but that we are well positioned to continue to drive sustainable top and bottom line growth for years to come.
Edward R. Rosenfeld: And now I'll turn it over to Jim to review, our first quarter financial results in more detail and provide our outlook for 2024.
Zine Mazouzi: Thanks, Ed, and good morning, everyone. In the first quarter, our consolidated revenue was $552.4 million, a 19.1% increase compared to the first quarter of 2023. Excluding Almost Famous, Consolidated Revenue grew 10.3% compared to the same period in the prior year. Our wholesale revenue was $438.2 million, up 21% to the first quarter in the prior year, or 9.7% excluding Almost Famous. Wholesale Footwear revenue was $295.7 million.
Jim: Thanks, Ed and good morning, everyone in the first quarter, our consolidated revenue was $552 4 million.
Jim: 19, 1% increase compared to the first quarter of 2023.
Jim: Excluding almost famous consolidated revenue grew 10, 3% compared to the same period in the prior year.
Jim: Our wholesale revenue was $438 2 million up 21% to the first quarter in the prior year or nine 7% excluding almost famous.
Jim: Wholesale footwear revenue was $295 7 million a four 7% increase from the comparable period in 2023, driven by strong growth in the private label business.
Zine Mazouzi: 4.7% increase from the comparable period in 2023 driven by strong growth in the private label. Sales Accessories and Apparel Revenue was $142.6 million, up 78.6% to the first quarter in the prior year. 27.4% excluded almost famous.
Jim: Wholesale accessories and apparel revenue.
Jim: With $142 6 million up 78, 6% through the first quarter in the prior year.
Jim: Or 27, 4% excluding almost famous.
Zine Mazouzi: Our Steve Madden handbag business was the primary group driver, and Steve Madden Apparel also saw a strong gain. In our direct-to-consumer segment, revenue was $112.3 million. 12.8% increase compared to the first quarter of 2023. Rick and Morta revenue grew 15% or 8% on a comp store basis, and owned and operated e-commerce revenue rose 11%. We ended the quarter with 253 company-operated brick-and-mortar retail stores, including 69 outlets as well as 5 e-commerce websites and 25 company-operated concessions in international markets, which are now turning into our licensing segment.
Jim: Our Steve Madden handbag business was the primary growth driver and Steve Madden apparel also saw a strong gain.
Jim: And our direct to consumer segment revenue was $112 3 million.
Jim: 12, 8% increase compared to the first quarter of 2023.
Jim: Brick and mortar revenue grew 15% or 8% on a comp store basis.
Jim: Owned and operated E Commerce revenue rose 11%.
Jim: We ended the quarter with 253 company operated brick and mortar retail stores, including 69 outlets as well as five ecommerce web sites and 25 company operated concessions in international markets.
Jim: Turning to our licensing segment.
Zine Mazouzi: Our license in royalty income was $1.8 million in the quarter, compared to $2.1 million in the first quarter of 2020. Consolidated gross margin was 40.7% in the quarter versus 42.1% in the comparable period in 2023. The inclusion of almost famous negatively impacted consolidated gross margin by approximately 120 basis points. Wholesale gross margin was 35.1% compared to 37% in the first quarter of 2023, driven primarily by the impact of Almost Famous and a mixed shift in wholesale footwear to the private label. The direct-to-consumer gross margin was 61.9%, up 270 basis points from the comparable period in 2023, driven by a reduction in promotional activity.
Jim: Our licensing royalty income was $1 8 million in the quarter.
Jim: Compared to $2 1 million in the first quarter of 2023.
Jim: Consolidated gross margin was 47% in the quarter versus 42, 1% in the comparable period in 2023.
Jim: The inclusion of almost famous negatively impacted consolidated gross margin by approximately 120 basis points.
Jim: Wholesale gross margin was 35, 1% compared to 37% in the quarter and the first quarter of 2023, driven primarily by the impact of almost famous and a mix shift in wholesale footwear to the private label business.
Jim: Direct to consumer gross margin was 61, 9% up 270 basis points from the comparable period in 2023.
Jim: Driven by a reduction in promotional activity.
Zine Mazouzi: Operating expenses as a percent of revenue were 29.7% 29.7%, down from 31.8% in the first quarter of 2023. Operating income for the quarter was $61 million, or 11% of revenue, up from $47.7 million, or 10.3% of revenue in the comparable period in the prior year. The expected tax rate for the quarter was 23.5% compared to 24.2% in the first quarter of 2023.
Jim: Operating expenses as a percent of revenue were 29, 7% 29, 7% down from 31, 8% in the first quarter of 2023.
Operating income for the quarter was $61 million or 11% of revenue.
Jim: Up from 47, 7% to $47 7 million or 10, 3% of revenue in the comparable period in the prior year.
Jim: The effective tax rate for the quarter was 23, 5% compared to 24, 2% in the first quarter of 2023.
Zine Mazouzi: Finally, net income attributable to Steve Madden Ltd. for the quarter was $47 million, or $0.65 per dollar a share, compared to $37.6 million, or $0.50 per dollar a share, in the first quarter of 2022. Moving to the balance sheet, our financial foundation remains strong. As of March 31st, 2024, we had $143.1 million of cash, cash equivalents, and short-term investments and no debt. Inventory at the end of the quarter was $202,000,000, up 12.2% from the prior year, or 7.2% excluding almost payment.
Jim: Finally, net income attributable to Steve Madden Ltd for the quarter was 47 million or <unk> 65 per diluted share compared to $37 6 million or <unk> 50 per diluted share in the first quarter of 2023.
Jim: Moving to the balance sheet, our financial Foundation remains strong as of March 31 2024.
Jim: Had $143 1 million of cash cash equivalents and short term investments and no debt.
Inventory at the end of the quarter was $202 million up 12, 2% to the prior year or seven 2% excluding almost famous.
Zine Mazouzi: Our CapEx in the first quarter was $4 million. During the first quarter, the company spent $37.3 million on repurchases of its common stock, including shares acquired through the Net Settlement for Employee Stock. At the end of the quarter, there was approximately $143 million remaining on the share repurchase authorization. The Company's Board of Directors approved a quarterly cash dividend of $0.21 per share. Dividends will be payable on June 21, 2024 to stockholders of record as of the close of business on June 10, 2024. Turn to our Outlook. We are maintaining our annual guidance. We continue to expect revenue for 2024 to increase 11% to 13% compared to 2023, and we continue to expect diluted EPS to be in the range of $2.55 to $2.65.
Our capex in the first quarter was $4 million.
Jim: During the first quarter. The company spent $37 3 million on repurchases of its common stock including shares acquired through the net settlement for employee stock Awards.
Jim: At the end of the quarter, there was approximately $143 million remaining under share repurchase authorization.
Jim: The company's board of directors approved a quarterly cash dividend of 21 per share.
Jim: The dividend will be payable on June 21, 2024 to stockholders of record as of the close of business on June 10th 2024.
Jim: Turning to our outlook.
Jim: We are maintaining our annual guidance, we continue to expect revenue for 2024 to increase 11% to 13% compared to 2023 and.
Jim: And we continue to expect diluted EPS to be in the range of $2 55.
Jim: To $2 65 now.
Operator: Now I would like to turn the call over to the operator for questions. Thank you.
Speaker Change: Now I would like to turn the call over to the operator for questions.
Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. And our first question comes from Paul Lejuez of City. Your line is open.
Speaker Change: Thank you.
Speaker Change: Reminder, to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: And our first question comes from Paul <unk> of Citi. Your line is open.
Paul Lawrence Lejuez: Hey, thanks, guys. A couple of questions. Curious if you can talk about what was better than planned relative to your expectations during the quarter, if anything. And then also, we'd love to hear about the comp drivers within the DTC business from the traffic, there's ticket, AUR perspective, what you're seeing, and anything you can share about the start to 2Q relative to 1Q.
Hey, Thanks, guys couple of couple questions curious if you can talk about what.
Speaker Change: Better than planned.
Paul: Our expectations during the quarter, if anything and then also would love to hear about the comp drivers within the DTC business from a traffic versus ticket AUR perspective, what you're seeing.
Speaker Change: Sure about the start to <unk> relative to <unk>.
Edward R. Rosenfeld: Sure, yeah, in terms of the first quarter, we did come in modestly ahead of our internal forecast, as I will point out.
Speaker Change: Sure.
Yeah.
Speaker Change: In terms of the first quarter, we did come in modestly ahead of our internal forecast I will point out.
Edward R. Rosenfeld: I think the street had modeled the year a little bit different from us, or I should say that the street was in line with us for the full year but had modeled the quarters a little bit differently, and so our internal forecast was higher than the street for the first quarter. So while we exceeded our own internal expectations, it was not by the amount that we exceeded the street's expectations, but we were slightly ahead pretty much across the board. We were slightly ahead of our internal forecast on revenue across each of wholesale footwear, wholesale accessories, and DTC and even had slightly better gross margin performance on a consolidated basis.
Speaker Change: That I think the street had modeled the year, a little bit different from us or I should say that the street was in line with us for.
Speaker Change: For the full year, but.
Speaker Change: I had modeled the quarters, a little bit differently and so our internal forecast was higher than the streets for first quarter. So while we exceeded our own internal expectations. It was not by the amount that we exceeded the street expectations, but we were slightly ahead pretty much across the board. We were slightly ahead of our internal forecast.
Speaker Change: Cross each on revenue across each of wholesale footwear wholesale accessories, and DTC and even had slightly better gross margin performance on a consolidated basis.
Edward R. Rosenfeld: In terms of the comp drivers in DTC, traffic has still been weak, traffic has been negative, conversion has been..., but where we got some nice benefits was in AUR and also UPT. And I think the last question was about UPT.
Speaker Change: In terms of the comp drivers in DTC.
Speaker Change: Traffic has still been weak traffic has been negative conversion has been.
Speaker Change: Not great, but a little better, but where we got some nice benefit was in AUR and also <unk>. So a nice overall increase in average transaction value.
Speaker Change: And I think the last question was about.
Speaker Change: Yes.
Speaker Change: Performance in April.
Edward R. Rosenfeld: [inaudible] month to date in DTC. That has been a little bit softer than what we saw in Q1, but that was expected. That's how we modeled it, in part due to the Easter shift, and we still feel that we're on track to be where we thought we'd be for DTC, not only for Q2, but for the year. And we're still looking at that high single-digit overall DTC revenue growth for the year. So we had always planned that it would be slightly lower, you know, we did 13% in Q1. We'd always planned a little bit of a slowdown.
Speaker Change: Yes.
Speaker Change: Month to date.
Speaker Change: In DTC has been a little a little bit softer than what we saw in Q1, but that was expected.
Speaker Change: That's how we model that in part due to the Easter shift.
Speaker Change: And we still feel that way.
Speaker Change: We're on track to.
Speaker Change: Two to be where we thought we'd be for DTC.
Speaker Change: Not only for Q2, but for the year and we're still looking at that high single digit overall DTC revenue growth for the year. So we had always planned that it would be slightly.
Speaker Change: 13% in Q1, we'd always planned as a little bit of a slowdown due.
Through the balance of the year.
Operator: Guys, thank you. Good luck. Thank you. One moment for our next question.
Speaker Change: Got it. Thank you good luck.
Speaker Change: Thank you one moment for our next question.
Operator: And our next question comes from Sam Poser of Williams Training. Your line is open.
Speaker Change: And our next question comes from Sam Poser of Williams trading your line is open.
Samuel Marc Poser: Good morning, thanks for taking my questions. First of all, Ed and Zine, you were one minute off the last time, 12 minutes instead of 11 on the prepared list, still very good. Unknown Speaker Anyway, on the branded wholesale business, you How was that? And can you tell us about the sort of caution you talked about with those retailers? Can you talk about what's going on there? And I'll probably have a follow-up to whatever you say on that. And then I have one of the best.
Samuel Marc Poser: Hi, good morning, Thanks for taking my questions.
Samuel Marc Poser: Well.
First of all Ed and Zane you were one minute off the last time 12 minutes instead of 11 on the prepared still very good.
Samuel Marc Poser:
Samuel Marc Poser: Better than everybody else anyway on the branded wholesale business.
Samuel Marc Poser: Yes.
Samuel Marc Poser: How was that and can you tell us about sort of you talked about caution from those retailers could you talk about what's going on there and I'll probably have a follow up to whatever you say on that and then I have one move.
Edward R. Rosenfeld: Yeah, the branded wholesale business remains, at least on the footwear side, a bit challenging. We continue to see a pretty cautious approach from the big retailers. You know, as you know, many of our largest customers in the branded wholesale footwear business are still comping negative and having some, some challenges in their own business. And I think that, you know, we're feeling the impact of that.
Speaker Change: Yes, the branded wholesale business.
Speaker Change: Remains at least on the footwear side remains a bit challenging we continue to see a pretty cautious approach from the big retailers.
Speaker Change: As you know many of the.
Speaker Change: Of our largest customers.
Speaker Change: The branded in the branded wholesale footwear business R. R.
Edward R. Rosenfeld: You know, many of them, as we've been talking about, talking to them about their initial fall plans, I think it looks like the sentiment there is still pretty cautious. You know, the fashion boot business was not great last year. I think people are playing that part of the business conservatively. So overall, you know, while certainly better than last year, we're still seeing quite a bit of caution on that front.
Speaker Change: Still comping negative and having some some challenges in their own business and I think that we're feeling the impact of that.
Speaker Change: Many of them.
Speaker Change: We've been talking about talking to them about their initial fall plans I think.
Speaker Change: It looks like the sentiment there is still pretty cautious.
Speaker Change: The fashion boot business was not great last year I think people are planning that part of the business conservatively.
Speaker Change: No.
Speaker Change: Overall.
Speaker Change: Well certainly better than last year, we're still seeing quite a bit of caution on that front.
Edward R. Rosenfeld: Was that branded footwear business up in the quarter? No, not really.
Speaker Change: Was was that branded footwear business up in the quarter No no sorry, I should have told you it was down low singles in the quarter.
Edward R. Rosenfeld: No, no, sorry, I should have told you that. It was down low singles in the quarter.
Edward R. Rosenfeld: And is there a difference? I'm going to ask this, hopefully, in a way you could answer it. Is there a difference between those retailers that write orders to you and your vendor managed program retailers?
Speaker Change: And is there a difference I'm going to ask this hopefully in a way you could answer it is there a difference between the.
Speaker Change: Those retailers that right orders to you and your vendor manage program retailers.
Great.
Edward R. Rosenfeld: We always like to have as much input as possible with our wholesale customers about what they're bringing in, and we partner with everybody as closely as we can.
Okay.
Speaker Change: We always we always like to have as much input as possible with our wholesale customers about what they're about what they are bringing in and we partner with everybody as closely as we can and we will continue to do that.
Edward R. Rosenfeld: Did your vendor-managed partner retailers outperform the others? I said there were not a lot of us. I'm not going to start telling you about how we're doing with individual customers. All right.
Speaker Change: Did your vendor vintage partner retailers outperform the others.
Speaker Change: Theres not a lot of it is I'm not going to get very telling you about how we're doing with individual customers.
Samuel Marc Poser: Um, and then how should we think? I mean, it looks to me like, including myself, the estimates regarding The How to Think About Almost Famous were wrong. So can you give us some idea of how to think about, you know, how big that business is again, and the flow of how to think about that? I mean, you did 40 million in the quarter. How should we think about how that looks? by quarter? I mean, just so we are everybody's not way off base again.
Speaker Change: Alright, and then how should we think I mean, it looks to me like including myself.
Speaker Change: The estimates regarding.
Speaker Change: The.
Speaker Change: How to think about almost famous was wrong. So can you give us some idea of how to think about how big that business is again in the flow of how to think about that $40 million in the quarter, how should we think about how that looks.
Speaker Change: By quarter I mean, just so we are everybody is not way off base again.
Zine Mazouzi: Yeah, I think that this is about the quarterly revenue that they should do throughout the quarter. It's going to bounce around a little bit, we'll do a little bit more than this going forward per quarter, but there's not heavy seasonality here where you're going to see, you know, it should still be in this kind of low to mid-40s each quarter.
Speaker Change: Yes, I think that the.
Speaker Change: It's roughly this is about the quarterly revenue that they should do throughout the quarters, it's going to bounce around a little bit we will do a little bit more than this.
Speaker Change: <unk> forward per quarter, but but theres not heavy seasonality here, where youre going to see it.
Speaker Change: It should still be in this kind of.
Speaker Change: Low to mid 40% each quarter.
Zine Mazouzi: Sam, that applies to pretty much the expenses as well. The flow is pretty similar by quarter.
Speaker Change: And Sam that applies to pretty much the expenses as well.
Speaker Change: Flow is pretty similar by quarter.
Operator: All right, well, thank you very much and good luck. I'll talk to you in a bit. Thank you. Thank you. Please take a moment for our next question.
Speaker Change: Okay.
Samuel Marc Poser: Alright, well, thank you very much good luck.
Speaker Change: Talk to you. Thank you. Thank you one moment for our next question.
Operator: Thank you. One moment for our next question, and our next question comes from Jay Sole of UBS. Your line is open.
Speaker Change: And our next question comes from Jay sole of UBS. Your line is open.
Jay Daniel Sole: Terrific, thank you. Ed, you mentioned one of the company's key strategies is to expand DTC, led by digital. I'm sort of curious about the stores aspect of DTC. You know, how are you feeling about the stores that the company has added this year? And is there a plan to bring in some of the almost apparel, you know, for the Steve Madden brand into the stores? Can you just maybe talk about how you're thinking about that opportunity? That'd be helpful. Thank you.
Jay Daniel Sole: Terrific. Thank you and you mentioned one of the company's key strategies is to expand DTC led by digital.
Jay Daniel Sole: Sort of curious about the stores aspect of DTC.
Jay Daniel Sole: Are you feeling about the stores that are coming out of this year.
Jay Daniel Sole: Is there a plan to work in some of the almost.
Speaker Change: Apparel for the Steve Madden brand into the stores can you just maybe talk about how youre thinking about that opportunity.
Speaker Change: That'd be helpful. Thank you.
Edward R. Rosenfeld: Sure, yeah, yeah, we're, you know, we're pleased with what we're seeing out of DTC so far this year, obviously, a pretty significant acceleration from where we were in 2023. In Q1, getting to 13% overall DTC growth, and you asked about the brick and mortar stores in particular, we did have an 8% brick and mortar comp store sales gain in Q1. So that's quite healthy.
Speaker Change: Sure Yes, yes.
Speaker Change: We're pleased with what we're seeing at a DTC. So far this year, obviously, a pretty significant acceleration from where we were in 2023 in Q1 getting to <unk>.
Speaker Change: 13% overall.
Speaker Change: DTC growth and you asked about the brick and mortar stores in particular.
Speaker Change: Did have at 8% brick and mortar comp store sales gain in Q1, so that's quite healthy and we were pleased with that.
Edward R. Rosenfeld: And we were pleased with that. You know, we are also adding some stores this year. Again, those are really primarily or almost all driven from international markets. And, and, you know, we're very pleased with the returns that we're seeing when we do open international stores right now, in fact, seeing better ROIC in those stores than what we're getting in the US. In terms of apparel in the stores, look, that's pretty limited today.
Speaker Change: We are also adding some stores this year.
Speaker Change: Again, those are really primarily almost all driven.
Speaker Change: From international markets.
Speaker Change: And.
Speaker Change: We're very pleased with the returns that we're seeing.
Speaker Change: When we do open international stores right now in vaccine a better ROIC.
Speaker Change: In those stores than than what we're getting in the U S.
Speaker Change: In terms of apparel in the stores.
Speaker Change: That's pretty limited today.
Edward R. Rosenfeld: We don't, you know; most of our stores are not set up for apparel, don't have dressing rooms and such. But in some of the international markets, we are starting to introduce more apparel and have seen some early success there, so we're pretty encouraged.
Speaker Change: Day, we don't.
Speaker Change: Most of our stores are not set up for apparel don't have dressing rooms, and such but some of the international markets. We have we are starting to.
Speaker Change: Introduce more apparel and have seen some some early some early success there thats pretty encouraging.
Jay Daniel Sole: Got it. And if I could just ask one more question about Almost Famous and margins. If we just think about the big picture trajectory over this year, next year, how much opportunity do you see today to improve the margins in the Almost Famous business?
Speaker Change: Got it and if I could just ask one more just about almost famous on the margins. If we just think about big picture trajectory over this year next year, how much opportunity do you see today to improve the margins in your most payments business.
Zine Mazouzi: Yeah, good question. So I think you'll recall that when we acquired it, the business had about a 7% EBIT margin. And our goal was, over time, to get him into the high singles, and really, I think that there is an opportunity to get into the low doubles. We're already starting to see some improvement there. So this year we're looking at. If you're comparing apples to apples to the 7% that they were doing prior to our acquisition, we're looking at about 8%.
Speaker Change: Yeah. Good question, So I think youll recall that when we acquired it.
Speaker Change: The business had about a 7% EBIT margin and our goal was over time to get that into the high singles and really I think that there is an opportunity to get into the low doubles.
Speaker Change: We're already starting to see some improvement there so this year.
Speaker Change: We're looking at.
Speaker Change: If you're comparing apples to apples to the 7% that they were doing prior to our acquisition. We're looking at about 8%. So we've already gotten about 100 basis points. This year now keep in mind in our reported financials. We are still showing more like seven because there is some amortization of intangibles associated with the transaction that offsets that.
Zine Mazouzi: So we've already gotten about 100 basis points this year. Now keep in mind, in our reported financials, we're still showing more like 7% because there is some amortization of intangibles associated with the transaction that offsets that. But again, on an organic basis, we're getting about 100 basis points here. And I think that, you know, I'd like to think there's a path to getting about 100 basis points a year for the next, let's say, three years.
Jay Daniel Sole: Got it. Okay.
Speaker Change: But again on an organic basis, we're getting about 100 basis points here and I think that.
Speaker Change: I'd like to think there's a path to getting about 100 basis points a year for the next let's say three years.
Operator: Thank you so much. Thanks, Jay. Thanks.
Speaker Change: Got it okay. Thank you so much.
Operator: Thank you. One moment for the next question. And our next question comes from Janine Stichter of BTIG. Your line is open.
Speaker Change: Thanks, Jay Thank you.
Speaker Change: One moment for our next question.
Speaker Change: And our next question comes from Janine Stichter of BT <unk>. Your line is open.
Janine Marie Hoffman Stichter: Hi, good morning. So I want to ask about the AUR increases. You mentioned that being a driver of the retail business. How much of that was price increases you took on certain items versus just consumers gravitating toward higher-priced items? And then, maybe more broadly, if you could just comment on where we are in kind of the fashion cycle, how you feel about the trends that are out there right now and how well they play into your business. Thank you.
Janine Marie Hoffman Stichter: Hi, good morning, So I want to ask about the AUR increases you mentioned that being a driver of the retail business. How much of that was price increases you took on certain items versus just consumers gravitating towards higher price items, and then maybe more broadly if you could just comment on where we are in kind of a fashion cycle on how you feel about the trends that are out there right now.
Janine Marie Hoffman Stichter: And how will they play into your business. Thank you.
Edward R. Rosenfeld: Sure, yes. So in terms of the AUR, that's primarily, it's really not us taking the price on like-for-like items. I think there are two things happening. One, we're getting a bit of a mixed benefit based on the products people are buying this year compared to last year, and then also because we did pull back on promotional activity in DTC channels, that's also contributing to an AUR increase. In terms of the fashion cycle and the trend environment, I think it's certainly improved over where we were last year. There's some newness in the market, and we're pretty excited about some of the trends we're seeing. I mean, you know, some of the things that are working for us, Pearls.
Speaker Change: Sure Yeah, so in terms of.
Speaker Change: The AUR that's primarily.
Speaker Change: It's really not us taking price on like for like items.
Speaker Change: I think there are two things happening.
Speaker Change: One we're getting a bit of a mixed benefit based on the products people are buying this year compared to last year and then also because we did pull back on promotional activity in DTC channels. That's also contributing to an AUR increase.
Speaker Change: In terms of the fashion cycle and the trend.
Speaker Change: Environment I think it's.
Speaker Change: I think it's.
Speaker Change: Its certainly improved over where we were last year. There are some there are some newness in the market and we're pretty excited about some of the trends we're seeing in some of the things that are working for us This spring.
Speaker Change: Saying that I would call out we're having a lot of success with sandals.
Speaker Change: <unk>, particularly high foot beds, what we call platforms.
Speaker Change: <unk> are performing very well for us. It's also got some slides that are great.
Speaker Change: Sling backs are working on flats as well as kitten heels.
Speaker Change: I think one of the things that we're having some fun with it.
Speaker Change: Lastly, exactly success, where it is there's a lot going on with materials and ornamentation. So raffia.
Speaker Change: Pearls.
Edward R. Rosenfeld: Thank you very much. Thank you. Thank you. Flowers, Mesh, there's just a lot going on there that we can capitalize on, and the design team is really executing there, so feel good about it.
Speaker Change: Barcode treatments.
Speaker Change: Flowers mash Theres, just a lot going on there that we can capitalize on them.
Speaker Change: And.
Speaker Change: The design team is really executing there so feel good about that.
Janine Marie Hoffman Stichter: And then maybe just one more. When we think about the 11% operating margin for the year, can you just remind us what's happening with marketing expense there? How is it trending as a percent of sales?
Speaker Change: Great. Thank you and then maybe just one more on when we think about the 11% operating margin for the year can you just remind us what's happening with marketing expense in there how is it trending as a percent of sales.
Edward R. Rosenfeld: Marketing expenses We continue to invest in marketing, both in the U.S. and globally, so that's going up high single digits. Great, thanks so much.
Speaker Change: Marketing expenses are we continuing to invest in marketing in the U S and globally snow Thats going up high single digits.
Speaker Change: Great. Thanks, so much.
Operator: Thank you. One moment for our next question, and our next question comes from Aubrey Tianello of BNP Paribas. Your line is open.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And our next question comes from Abra PLO of BNP Paribas your.
Abra PLO: Your line is open.
Operator: Hey, good morning. Thanks for taking the question. Ed, I'd love to get your take on what you're seeing from the consumer right now. In the last couple of quarters, you talked about the consumer being more price conscious, you know, more responsive to promos, outlets outperforming full-price stores. Just curious how you're seeing consumer behaviors evolve so far this year.
Abra: Hey, good morning, Thanks for taking the questions.
Aubrey Leland Tianello: Yeah, good question. I think that mostly, the story is still the same there. So, you know, I still think that overall consumer demand for discretionary goods, fashion goods, is still relatively low. It's not the most robust environment I've ever seen. It's relatively metered out there when we talk to any of our key wholesale customers and other players in the industry. And we do see a customer that is still price sensitive.
Abra PLO: And I'd love to get your take on what Youre seeing from the consumer right. Now last couple of quarters, you talked about the consumer being more price conscious more responsive to promo outlet outperforming.
Abra PLO: Full price stores, just curious how youre seeing consumer behaviors of so far this year.
Speaker Change: Yes, good question.
Speaker Change: I think that most mostly the story is still the same there.
Speaker Change: So I still think that.
Speaker Change: Overall consumer demand for discretionary goods fashion goods is still.
Speaker Change: Relatively.
Speaker Change: Not the most robust environment I've ever seen it relatively metered out there when we talked to many of our key wholesale customers and other players in the industry and we do see a customer thats still is price sensitive so.
Aubrey Leland Tianello: So again, we had an outlet business in the US that significantly outperformed full price in terms of comps. You know, we've been talking about, you know, roughly a thousand basis point differential or even more, and we saw that again.
Speaker Change: Again, we had an outlet business in the U S that that significantly outperformed full price in terms of comps we've been talking about it relative roughly a 1000 basis point differential or even more and we saw that again in Q1.
Aubrey Leland Tianello: Got it. And then if I could just follow up on the operating margin, 11% in 1Q is in line with your 2024 guidance. I know it's been a while since we've had a normal year, but historically, I think 1Q operating margins are usually a little bit lower than the full year. Just curious if there's anything abnormal to call out in terms of timing of SG&A investments or just, you know, how we should think about the phasing of EBIT margins this year.
Speaker Change: Got it and then if I could just follow up on the operating margin of 11% and <unk> is in line with your 2020 guidance I know, it's been a while since we've had a normal year, but historically I think <unk> operating margins are usually a little bit lower than the full year.
Speaker Change: Just curious if there's anything abnormal to call out in terms of timing on SG&A investments or just how we should think about the phasing of EBIT margins. This year.
Zine Mazouzi: I think if you recall last year, we had some timing of expenses on the SG&A side, and we think we're up about 10% versus 2022 in Q1. And that's kind of causing
Speaker Change: I think if you recall last year, we had some timing of expenses on the SG&A side and we.
Speaker Change: I think we were up about 10% versus 2022 in Q1.
Speaker Change: And thats kind of causing most of that shift.
Zine Mazouzi: Yeah, and to follow up on that, yeah, I still think that that 11% is the right way to think about the full year. All right, thank you.
Speaker Change: Yes, and I think just to follow up on that yes, I still think that that 11% is the right way to think about the full year.
Speaker Change: Alright, thank you.
Operator: Thank you. One moment for the next question. And our next question comes from Corey Tarlowe of Jeffries. Your line is open.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And our next question comes from Cory <unk> of Jefferies. Your line is open.
Operator: Good morning, and thanks for taking my question. Unknown Speaker, I was just wondering if you could perhaps dimension how much the Easter shift impacted your business in the quarter. And then you also made some pretty encouraging commentary about your private label business in mass. I was wondering if you could provide a little bit more detail about what you're seeing there.
Cory: Good morning, and thanks for taking my question.
Cory: Okay.
Cory: I was just wondering if you could perhaps dimensionalize how much the <unk>.
Cory: We're impacted your business in the quarter.
Cory: And then you also made some pretty encouraging commentary about the private label business and math. So I was wondering if you could provide a little bit more detail about what you're seeing there.
Corey Tarlowe: In terms of the Easter shift, it really wasn't that meaningful for us. We did also move a friends and family promotion back a couple weeks, which offset part of that shift for us. So it wasn't a big needle mover in the quarter. And then, in terms of the private label footwear business, yeah, we're pretty pleased about what we're seeing there. Again, that's almost all done in the mass channel, and as we've talked about on previous calls, that was the channel where the big customers identified they had too much inventory in discretionary categories first and pulled back. Unknown Attendee, Tom Nikic, Corey Tarlowe, Zine Mazouzi, Steven Madden Ltd., well north of 30 percent in Q1 and we expect to see another very strong quarter in that business.
Cory: Sure.
Cory: In terms of the Easter shift it really wasn't that.
Cory: That meaningful for us.
Cory: Did also.
Cory: Move.
Cory: Friends and family promotion back a couple of weeks.
Cory: Which offset part of that that Easter shift for us so it wasn't a big needle mover in the quarter.
Cory: And then in terms of the.
Cory: Private label footwear business.
Cory: Yes, we're pretty we're pretty pleased about what we're seeing there again, that's almost all done in the mass channel.
Cory: As we've talked about on previous calls that was the channel were.
Cory: The big customers identified they had too much.
Cory: Inventory in discretionary categories earliest and pulled back the soonest and so we felt the pain there first.
Cory: Yes.
Cory: But we're also feeling the recovery there first and we've seen a nice bounce back in that business and our private label footwear business was up about.
Cory: Well north of 30% in Q1, and we expect to see another very strong quarter in that business in Q2.
Zine Mazouzi: And then just one quick follow-up to an earlier question. I think you mentioned that you're almost saying this margin has increased about 100 basis points. What was driving that? Curious to hear what the reasoning behind that is.
Speaker Change: Great and then just one quick follow up to an earlier question I think you mentioned that you're almost same as margins increased about 100 basis points.
Speaker Change: What was driving that.
Speaker Change: Thanks.
Speaker Change: The reason behind that is.
Corey Tarlowe: Yeah, most of that's coming in the form of gross margin. As you know, one of the strategies that we, or one of the parts of the rationale, a big part of the rationale for doing the deal, was to use Almost Famous as the platform to do Madden Girl apparel and Madden NYC apparel. And as we build those businesses, which are obviously associated with a Billion Dollar Plus brand and, you know, with pricing power, we think there's some opportunity to get some margin, and we're starting to see that.
Speaker Change: Yes, most of that is coming.
Speaker Change: In the form of gross margin.
Speaker Change: You know one of the strategies that we.
Speaker Change: One of the part of the rationale for a big part of the rationale for doing the deal was to use almost famous as the platform to do Madden girl apparel, and Madden NYSE apparel and as we as we build those businesses where which are.
Speaker Change: We see associated with it.
Speaker Change: $1 billion plus brand and.
Speaker Change: With pricing power.
Speaker Change: We think theres some opportunity to get the margin and we're starting to see that.
Operator: Great, super helpful. Thank you so much. Thank you. One moment for the next question.
Speaker Change: Great Super helpful. Thank you so much.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Okay.
Operator: And our next question comes from Laura Champine of Loop. Your line is open.
Speaker Change: And our next question comes from Laura Champine of Loop. Your line is open.
Laura Allyson Champine: Thanks for taking my question. Your handbag business is just showing great growth, and I'm wondering if that growth is weighted significantly to any given channel.
Laura Allyson Champine: Thanks for taking my question. Your handbag business is just showing great growth and Im wondering if that growth is weighted significantly to any given channel or if it's more broad based.
Edward R. Rosenfeld: We're really seeing strength across all the channels that we have Steve Madden handbags in, so that's something that we're pretty excited about. Look, you know, we've been talking about this for a number of years on these calls now, but this is an area that we have and have put a lot of focus on over the last several years.
Laura Allyson Champine: We're really seeing strength across all the channels that we have Steve Madden handbags, and so that's something that we're pretty excited about.
Speaker Change: Look we've been we've been talking about this for.
Speaker Change: A number of years on these calls now but this is an area that we have.
Speaker Change: A lot of investment in and put a lot of focus on over the last several years.
Speaker Change: And.
Speaker Change: And we're just really pleased that we think that's really paying dividends I think at all.
Edward R. Rosenfeld: For us, really, it always starts with product, and I think that we... You know, we have worked very hard to build a product engine for Steve Madden handbags that rivals what we have in shoes and is really consistently creating a trend right product and with great styling and quality that, you know, has a great price value proposition that the customer is responding to. And so that is translating to success across channels.
Speaker Change: For us really always starts with product and I think that we.
Speaker Change: We have worked very hard to build a product engine in Steve Madden handbags that rivals what we have in shoes and is really consistently creating trend right product and with great styling and quality that has a great price value proposition to the customers responding to and so that is translating to success.
Edward R. Rosenfeld: So it's the, you know, the U.S. wholesale channel is great, but we're also seeing growth in DTC. It's been a big driver of our international growth. And, you know, look, this is a business that, over the last five years, is up high teens on a compounded annual growth basis in revenue. So this is not something that's necessarily just, you know, we didn't just start having some success here. You know, this has been a multi-year growth journey.
Speaker Change: Across channels so its debt.
Speaker Change: The U S wholesale channel is great, but we're also seeing growth in DTC.
Speaker Change: <unk> been a big driver of our international growth.
Speaker Change: And.
Speaker Change: Look this is a business that over the last five years is up.
Speaker Change: High teens on a compounded annual.
Speaker Change: Growth basis in revenue so it's not something that's necessarily just.
Speaker Change: We didn't just start having some success. There this has been a multi year growth journey.
Laura Allyson Champine: Are there any points of distribution where you really are under penetrated in handbags where you can use the success you've had in the same door to open new doors for handbags, or do you think that you're fully penetrated at retail?
Speaker Change: Are there any points of distribution.
Speaker Change: You really are underpenetrated in handbags, where you can use the success you've had in same doors too to open new doors for handbags or do you think that you are fully penetrated at retail.
Edward R. Rosenfeld: Well, look, I mean, I think that there's tons of runway internationally, and we've got great momentum there. So there's lots of opportunity for new distribution points there. In the US, we're probably in most of the uh... channels that we want to be in, but we can grow within those channels and, in particular, but you know I think that our number one focus in the U.S. is going to be growing in our own direct-to-consumer channels.
Speaker Change: Well look I mean, I think that there's tons of runway internationally and we've got great momentum. There. So there is lots of opportunity for new distribution points. There in the U S. We're probably in most of the.
Speaker Change: The channels that we want to be in but we can grow within those channels and in particular I think are our number one focus in the U S is going to be growing in our own direct to consumer channels.
Speaker Change: Got it thank you.
Operator: Thank you. One moment for our next question. And our next question comes from Dana Telsey of Telsey Advisory Group. Your line is open. Okay, good morning.
Speaker Change: Thanks, Laura Thank you one moment for our next question.
Speaker Change: Okay.
Speaker Change: And our next question comes from Dana Telsey of Telsey Advisory Group. Your line is open.
Dana Lauren Telsey: Hey, good morning, everyone. As you think about the wholesale channel returning to growth, how did off-price do? And are we continuing to see the strength in the off-price retailers? Any change there in that particular channel? And then on the stores, you had mentioned last time beginning a remodel process. Where are you in that? Is it beginning?
Dana Lauren Telsey: Good morning, everyone. As you think about the wholesale channel returning to growth.
Dana Lauren Telsey: Had it off price due and we continuing to see the strength in the off price retailers any change there in that particular channel and then on the stores that you had mentioned last time beginning of remodel process, where are you in that is the beginning and lastly, Ed PUC acquisitions out there what would you be looking.
Dana Lauren Telsey: And lastly, Ed, do you see acquisitions out there? What would you be looking for? What would be attractive? Thank you.
Speaker Change: For what would be attractive thank you.
Edward R. Rosenfeld: Great. Thanks, Dana. So in terms of the off-price channel, yeah, that remains Unknown Attendee Probably, at least in the US, maybe the healthiest channel. Certainly, if you look at their comp store sales from those big retailers, they're exceeding what you're seeing from a lot of the other channels. And yeah, the demand there for our products remains, and our brands remain very strong. So that is definitely an area where we are seeing growth.
Speaker Change: Great. Thanks Dana.
Speaker Change: In terms of the off price channel, yes that remains.
Dana Lauren Telsey: Obviously at least in the U S. Maybe the healthiest channel certainly if you look at their comp store sales from those.
Dana Lauren Telsey: From those big retailers there they are exceeding what youre seeing from a lot of the other.
Dana Lauren Telsey: A lot of the other channels.
Dana Lauren Telsey: And yes, the demand there for our products remains and our brands remains very strong. So that is definitely an area, where we are where we are seeing growth.
Edward R. Rosenfeld: Obviously, I just want to always remind you that we also, you know, make sure that we keep the distribution balanced and don't get overweighted in that channel. In terms of remodels, yes, that is in progress, and we're going to be continuing to remodel stores throughout the year. And I'm pretty excited for you all to see what we've got coming, especially in some of our flagship locations in places like New York City. And then, in terms of acquisitions, look, we're always going to keep our eyes and ears open, and we'll be opportunistic.
Dana Lauren Telsey: Obviously.
Dana Lauren Telsey: Just want to always remind you that we also.
Dana Lauren Telsey: Make sure that we keep the about the distribution balanced and don't get overweighted in that channel as well.
Dana Lauren Telsey: In terms of Remodels, yes that that is in progress and we're going to be continuing to two to.
Dana Lauren Telsey: To remodel stores throughout the year and pretty excited for you or for you ought to see.
Dana Lauren Telsey: What we've got coming in especially in some of our flagship locations in places like New York City.
Dana Lauren Telsey: And then in terms of acquisitions.
Dana Lauren Telsey: Look where.
Dana Lauren Telsey: We're always going to keep our eyes and ears open and we'll be opportunistic.
Edward R. Rosenfeld: I don't know that there's a lot of color I can tell you about exactly what we would do, but if we find another brand to add to the portfolio that's complementary to what we do and where we can add value and make a difference, that's certainly something we would look at.
Speaker Change: Yes, I don't know that Theres a lot of color I can tell you on exactly what.
Dana Lauren Telsey: What we would what we would do but if we find another brand that to add to the portfolio that is complementary to what we do and where we can add value and make a difference that's certainly something we would look at.
Dana Lauren Telsey: Got it. And then just one follow-up on international, where are you seeing the strength there? Do you see the type of increase you had in the forties increasing going forward? Is it wholesale? Is it DTC, and any particular reasons that you'd call out with accelerated growth? Thank you.
Speaker Change: Got it and then just one follow up on international where are you seeing the strength there do you see the type of increase yet.
Speaker Change: <unk>, increasing going forward is it wholesale of the DTC in any particular regions that you'd call out with accelerated growth. Thank you.
Edward R. Rosenfeld: Yeah, so the nice thing about, in particular, what we saw in the first quarter was it was really balanced growth. We saw strong growth across each of our big international regions, again, those being EMEA, the Americas, Ex-US, and APEC. But the biggest driver of growth has really been EMEA. And as we pointed out in the prepared remarks, we continue to grow in Europe, despite the fact that, you know, it's a challenging operating environment over there, and a lot of folks are seeing their businesses decline. We're still growing there.
Speaker Change: Yes, so the nice thing about in particular, what we saw in first quarter was it was really balanced growth we saw.
Speaker Change: We saw strong growth across each of our big International regions again, those being EMEA, the Americas ex U S and APAC, but the biggest driver of growth has really been EMEA and as we pointed out in the prepared remarks, we continue to grow in Europe. Despite the fact that.
Speaker Change: It's a challenging operating environment over there and a lot of folks are seeing.
Speaker Change: Their business is decline, we're still growing there.
Edward R. Rosenfeld: We're pretty excited about our new Middle East joint venture, and we're getting a lot of traction there, and excited about the growth plans we have in that market. And we, you know, we've been calling it South Africa. It's obviously not a huge market, but it's just, you know, we're seeing really explosive growth there. And so that's a nice contributor as well. In terms of wholesale versus DTC, we're seeing expansion in both channels, but we are more penetrated in DTC, in international, relative to the U.S., and we think more of the growth will come from DTC channels in the coming years.
Speaker Change: We're pretty excited about our new middle East joint venture.
Operator: Thank you.
Speaker Change: We're getting a lot of traction there and excited about the growth plans, we have in that market and we know we've been calling out of South Africa, obviously, not a huge market, but it's just we're seeing really explosive growth there and so so that's a nice contributor as well.
Speaker Change: In terms of wholesale versus DTC, we're seeing expansion in both channels, but we are more penetrated in DTC.
Speaker Change: In international relative to the U S and we think more of the growth will come from DTC channels in the coming years.
Speaker Change: Thank you.
Operator: Thank you. One moment for our next question. And for our next question, we have a follow-up from Sam Poser of Williams Trading. Your line is open.
Speaker Change: Okay. Thank you one moment for our next question.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: And for next question, we have a follow up from Sam Poser of Williams trading your line is open.
Samuel Marc Poser: Thanks for taking my follow-up. These are some follow-ups to everybody's questions. One about international trade and then and then about private label competition at wholesale and DTC. I mean, it looks to me like
Samuel Marc Poser: Thanks for taking my follow up is this.
Samuel Marc Poser: Follow ups to everybody's questions one about international.
Samuel Marc Poser: And then and then.
Samuel Marc Poser: <unk> about private label competition at wholesale and DTC I mean, it looks to me like Youre.
Edward R. Rosenfeld: Your DTC business is showing off the strength of the Steve Madden footwear brand. And my guess is your outlet business isn't all giving stuff away, given the margins. But on the wholesale side, retailers seem unwilling to step up to the degree the product may be selling through relative to your wholesale to your DTC business. So the question is, with international and DTC, how do you get the penetration high enough to offset how long is it going to take to get the penetration high enough to offset The Big Wholesale Customer is Not Stepping Up Appropriately?
Samuel Marc Poser: Your DTC business is showing off the strength of.
Samuel Marc Poser: The Steve Madden footwear brand.
Samuel Marc Poser: And my guess is your outlet business isn't all giving stuff away given the margins, but on the wholesale side retailers seem unwilling to step up to the degree of the product may be selling through relative to your wholesale to DTC business. So the question is with international and DTC, How do you get.
Samuel Marc Poser: The penetration high enough to offset how long does it take to get the penetration high enough to offset.
Samuel Marc Poser: The big wholesale customers stepping up appropriately.
Edward R. Rosenfeld: Well, look, we're on a path to, and we have been making each of those businesses considerably more important and bigger pieces of our pie. I mean, if you go back to 2019, I think international was about 11% of our business. And now it's around 19-20% of our business. If you look at direct-to-consumer, in 2019, I think it was 18% of the business, and now it's about a quarter of the business, or maybe a little higher.
Samuel Marc Poser: Well.
Speaker Change: Look we're on it.
Speaker Change: The path to and we have been making each of those businesses.
Speaker Change: Considerably more important and bigger pieces of our pie I mean, if you go back to two.
Speaker Change: 2019, I think international was about 11% of our of our business and now it's around 19% 20% of our business.
Speaker Change: If you look at direct to consumer in 2019, I think it was 18% of the business and now it's about a quarter.
Speaker Change: Quarter that business or maybe a little higher so we are increasing the penetration.
Edward R. Rosenfeld: So we are increasing the penetration. It takes time, and we've got to go step-by-step here, but we do anticipate that each of those businesses will continue to increase in penetration and become more important to the overall
Speaker Change: It takes time and this is this is that we got to go step by step here, but we do anticipate that each of those businesses will continue to increase in penetration become more important to the overall overtime.
Samuel Marc Poser: It take, I mean, does it take more marketing? I mean, does it mean maybe coming out with a bigger campaign to drive people to you and to the brand overall and, you know, stepping up some, you know, you know, just some really new, you know, enticing advertising, you know, which you've had great success in the past?
Speaker Change: Does it take.
Speaker Change: Does it take more marketing I mean.
Speaker Change: Is it does it mean, maybe coming out with a bigger campaign to drive people to you and to the brand overall and <unk>.
Speaker Change: Stepping up.
Speaker Change: Some.
Speaker Change: Just some really new.
Speaker Change: Enticing advertising, which you've had great success in the past of doing.
Edward R. Rosenfeld: Well, look, we have, you know, We have been significantly increasing the marketing investment over the last several years. If you go back a handful of years, we were down below 2% of revenue on marketing. And you've seen that number rise consistently, year after year, and now we're around four and a half percent of revenue. And we've indicated we think that'll continue to go north.
Speaker Change: Well look we have.
Speaker Change: We have been.
Speaker Change: Significantly increasing the marketing investment over the last several years. If you go back a handful of years, we were down below 2% of revenue and marketing and <unk> seen that number rise consistently.
Speaker Change: Year after year and now we're around four 5% of revenue.
Speaker Change: We've indicated we think that will continue to go north.
Speaker Change: What.
Samuel Marc Poser: whether that entails
Speaker Change: Whether that entails.
Speaker Change: Much bigger splashy.
Speaker Change: Marketing campaigns or or whether we.
Speaker Change: Whether we deploy those dollars differently, it's something that we're continually looking at.
Speaker Change: But we are committed to investing in the brands and investing in enhanced marketing for our brands.
Speaker Change: Thanks very much.
Operator: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Ed Rosenfeld for a closing remark.
Speaker Change: Yes.
Speaker Change: Thank you I'm showing no further questions at this time I would like to turn it back to Ed Rosenfeld for closing remarks.
Edward R. Rosenfeld: Great, well, thanks so much for joining us today. Have a great day, and we look forward to speaking with you on the second quarter call.
Edward R. Rosenfeld: Great well, thanks, so much for joining us today have a great day, and we look forward to speaking with you on the second quarter call.
Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.
Speaker Change: Yes.
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