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Operator: Good morning, everyone, and welcome to the Q1 2023 Steven Madden, Ltd. Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note today’s event is being recorded. At this time, I’d like to turn the floor over to Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Danielle McCoy: Thanks, Jamie, and good morning, everyone. Thank you for joining our first quarter 2023 earnings call and webcast. Before we begin, I’d like to remind you that our remarks that follow including answers to your questions contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These 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. 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 into 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. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me today on the call is Ed Rosenfeld, Chairman and Chief Executive Officer; and Zine Mazouzi, Chief Financial Officer. With that, I’ll turn the call over to Ed. Ed?

Edward Rosenfeld: Thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steven Madden’s first quarter 2023 results. When we spoke to you on the last earnings call, we talked about the challenging setup we faced in the first quarter, including a choppy retail environment as consumers were pulling back on discretionary spending, conservative order patterns from our wholesale customers as they were prioritizing inventory control, and extremely tough comparisons with the prior year, as we were lapping a quarter where revenue was up 35% and diluted EPS was up 121% to pre-COVID 2019. In light of the difficult backdrop, we were pleased to deliver Q1 revenue and earnings slightly ahead of expectations.

We also significantly reduced our inventory levels, while driving strong gross margin performance despite a promotional retail landscape, demonstrating the benefits of our business model including our industry leading inventory turns in challenging operating environments. As we move forward, we remain focused on executing our strategic initiatives. Most importantly, we are leaning into our proven model, which combines our talented design teams led by Steve, test-and-react strategy and speed to market capability, to create trend-right products and bring them to market quickly. This agile model enables us to run lean on inventory and chase goods in season when needed, a critical advantage in periods of economic uncertainty, and when wholesale customers are cautious about placing significant orders upfront.

We also continue to support our brands and products with targeted marketing investment, in order to drive closer connections with our consumers, and increased brand relevance across the globe. These remain our foundational initiatives and the enablers of our four key long-term business drivers. Driving our direct-to-consumer business led by digital expanding in categories outside of footwear like handbags and apparel, growing in international markets and strengthening our core U.S. wholesale footwear business. So, turning to our performance by business in Q1. In wholesale, revenue was under pressure due to the combination of conservative initial spring orders from our wholesale customers and very tough comparisons with the prior year. In the first quarter of 2022, we had our largest ever quarter in wholesale shipping, with revenue up 29% versus pre-COVID 2019.

Against that record performance, this year’s first quarter wholesale revenue declined 19%. On the positive side, we did see a number of wholesale customers pull forward orders on key items and trends from the second quarter into March, which enabled us to come in ahead of our expectations for wholesale revenue for Q1. Our direct-to-consumer business on the other hand, came in below expectations for the quarter. Consistent with what’s been reported by others in the industry, we saw sales trends decelerate in the latter part of the quarter, particularly in March. DTC revenue was down 8% in Q1, and so far in Q2, we have seen a similar year-over-year decline. Across both wholesale and DTC, our international business was a bright spot in Q1. International revenue increased 13% in the quarter, and accounted for over 18% of consolidated revenue for the third consecutive quarter.

Looking ahead, we expect the operating environment to remain turbulent in the near-term. That said, we have a proven ability to navigate difficult market conditions, and a track record of taking share during challenging economic periods. And looking out further, we remain as confident as ever that by leveraging our core strengths, our people, brands and business model and executing on our strategy, we can drive growth and create significant value for our stakeholders over the long-term. And now, I will turn it over to Zine, to review our first quarter financial results in more detail and provide our outlook for 2023.

Zine Mazouzi: Thanks Ed, and good morning, everyone. Our consolidated revenue in the first quarter was $463.8 million, a 17. 1% decrease compared to 2022. Our wholesale revenue was $362.1 million, down 19.3% compared to the prior year. Wholesale footwear revenue was $282.3 million, an 18.6% decrease from 2022. The branded business declined 16%, while private label, which is primarily done in the mass channel, decreased 29%, as our large private label customers continue to work to reduce overall inventory level in our categories. Wholesale accessories and apparel revenue was $79.8 million, down 22% to last year. The branded business declined 14%. Steve Madden handbags was a bright spot, with a modest year-over-year increase driven by strong growth in international markets.

As in footwear, private label was significantly softer, decreasing 39%. In our direct-to-consumer segment, revenue was $99.6 million, an 8.1% decrease compared to 2022. We experienced declines in both brick and mortar and e-commerce channels. We ended the quarter with 235 brick and mortar retail stores, including 68 outlets, as well as five e-commerce websites and 21 Company operated concessions in international markets. Turning to our licensing segment, our licensing royalty income was $2.1 million in the quarter, compared to $1.6 million last year. As we discussed previously, the Company no longer operates under the buying agency model and as a result no longer reports under the First Cost segment. In last year’s first quarter, we generated approximately $800,000 in revenue in the First Cost segment.

Consolidated gross margin was 42.1% in the quarter, expanding 140 basis points from the prior year. Wholesale gross margin was 37%, a 180 basis points improvement compared to last year, driven by a strong increase in wholesale accessories and apparel. Direct-to-consumer gross margin was 59.2% compared to 62.3% last year, driven by an increase in promotional activity. Operating expenses in the first quarter were $147.4 million or 31.8% of revenue compared to $133.5 million or 23.8% of revenue in the prior year. Looking ahead, we expect year-over-year operating expense growth for the balance of the year to moderate to roughly 3% as a result of easing comparisons combined with cost control initiatives. Operating income for the quarter totaled $47.7 million or 10.3% of revenue, down from $94.4 million or 16.9% of revenue last year.

Our effective tax rate for the quarter was 24.2% compared to 22.3% in 2022. Finally, net income attributable to Steven Madden, Ltd. for the quarter was $37.6 million or $0.50 per diluted share, down from $73.4 million, or $0.92 per diluted share in 2022. Moving to the balance sheet. Our financial foundation remains very strong. As of March 31, 2023, we had $223.7 million of cash, cash equivalents and short-term investments and no debt. Inventory ended at $179.9 million compared to $233.4 million last year, a 22.9% decline. Our CapEx in the quarter was $3.8 million. During the quarter, we repurchased $38.5 million of the Company’s common stock, which includes shares acquired through the net settlement of employees’ stock awards. The Company’s Board of Directors approved an increase of $189.9 million in the share repurchase authorization bringing the total to $250 million.

The Board also approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on June 23, 2023 to stockholders of record as of the close of business on June 12, 2023. Turning to our outlook, we are reiterating our revenue and earnings per share guidance. We continue to expect revenue 2023 to decrease 6.5% to 8% compared to 2022, and we continue to expect diluted EPS to be in the range of $2.40 to $2.50. While our first half outlook is in-line with our previous expectations overall, the pull-forward of wholesale orders into Q1 resulted in a shift of revenue and earnings from Q2 to Q1. As such, we expect Q2 revenue and EPS to be modestly below Q1 amounts. Now, I would like to turn the call over to the operator for questions.

Jamie?

Operator: Ladies and gentlemen, we’ll now begin the question-and-answer session. [Operator Instructions]. Our first question today comes from Aubrey Tianello from BNP Paribas. Please go ahead with your question.

Operator: And our next question comes from Paul Lejuez from Citi. Please go ahead with your question.

Operator: Our next question comes from Jay Sole from UBS. Please go ahead with your question.

Operator: Our next question comes from Tom Nikic from Wedbush. Please go ahead with your question.

Operator: Our next question comes from Laura Champine from Loop Capital. Please go ahead with your question.

Operator: [Operator Instructions]. Our next question comes from Dana Telsey from Telsey Advisory Group. Please go ahead with your question.

Operator: And ladies and gentlemen with that, we’ll be concluding today’s question-and-answer session. I’d like to turn the floor back over to, Ed Rosenfeld for any closing remarks.

Edward Rosenfeld: Great. Well, thanks everybody for joining us for today’s call. Have a wonderful day. We look forward to speaking with you on the next call. Bye-bye.

Operator: And ladies and gentlemen, with that will conclude today’s conference call and presentation. We thank you for joining. You may now disconnect your line.