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Executives

Jean Fontana - ICR, Inc., Investor Relations

Ed Rosenfeld - Chairman and CEO

Analysts

Sam Poser - Sterne, Agee & Leach

Jeff Mintz - Wedbush Morgan Securities

Jeff Van Sinderen - B. Riley & Company

Heather Boksen - Sidoti & Company

Susan Sainsbury - Miller Tabak

Steven Madden, Ltd. (SHOO) Q4 2008 Earnings Conference Call February 24, 2009 8:30 AM ET

Operator

Welcome to the Steven Madden Limited Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today's call is being recorded.

I would now like to turn the conference over to your host Ms. Jean Fontana of ICR. Please go ahead ma'am.

Jean Fontana

Thank you, good morning everyone and thank you for joining this discussion of Steven Madden Limiteds' fourth quarter and full year 2008 earnings results. Before we begin I would like to remind you that the statements in this conference call that are not statements of historical or current facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. The statements contained herein are all subject generally to other risks and uncertainties that are described from time-to-time in the company's reports and registration statements filed with the SEC. Also please refer to the earnings release for more information on risk factors that could cause actual results to differ. Finally, please note that any forward-looking statements used in this call should not be relied upon as current after today.

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

Ed Rosenfeld

Thanks, Jean. Good morning and thank you for joining us today. On today's call, I will review the company's results for the fourth quarter and full year 2008 and provide our outlook for 2009.

We are pleased to have met our expectations for the fourth quarter despite the challenging economic environment.

Net sales for the fourth quarter rose 16%, while EPS increased to $0.40 from $0.23 in last year's Q4.

We believe that in this environment, consumers increasingly find value in our product, not just based on price, but on the fact that we consistently deliver trend right merchandise at a fair value.

Gaining value in purchases is more important to consumers than it has been in years, especially when it comes to fashion. And our core Steve Madden brand is well-positioned to benefit from this trend.

Steve and our talented design team continued to create an excellent assortment of footwear capturing the latest trends and enabling us to stay at top of mind with our customers. Furthermore, with our test-and-react strategy, we ensure that we optimize our wholesale assortment by putting in the best selling styles from our retail stores.

While we are pleased with our recent performance and very excited about all the developments in our company in 2008, we recognize that we are operating in a challenging environment and will carefully controlled inventory, operating expenses and capital expenditures as we focus on driving the strong cash flow in 2009.

Now turning to the performance for the fourth quarter, consolidated net sales increased 16% in the quarter to $119.1 million lead by 24% increase in our wholesale business, where net sales were $79.1 million in the quarter compared to $63.5 million in the prior year.

The increase in wholesale sales was primarily driven by strong gains in our Steve Madden Women's, Madden Girl and Steve Wholesale Footwear divisions as well as the Daniel M. Friedman accessories division.

Net sales in our core Steve Madden Women's increased 30% in the quarter to $32.9 million from $25.3 million a year-ago. Casual boots drove the business especially flat suede boots.

We are particularly pleased with our strong increase in sales at Nordstrom in the quarter.

In Steven and Steve Madden net sales were $4.6 million, up 63% from $2.8 million in last year’s fourth quarter. Casual boots were the strongest selling category in Steven as well including outstanding performance of demi-wedge leather boots.

As in Steve Madden we recorded a substantial increase with Nordstrom in our Steven business. Madden Girl also continued its standout performance with net sales growing 76% to $10.4 million versus $5.9 million in the prior year.

Retailers and consumers alike continue to respond to Madden Girl's trend styling and great price value proposition.

Madden's business on the other hand remains challenging. Net sales in Steve Madden Men's were $7.9 million versus $12 million in the year-ago period. Casual styles continued to be particularly disappointing.

For spring our revamped design team has introduced a new collection target toward a younger consumer and we are encouraged by the positive response we have received from the retailers.

In fact in Q1 we are shipping a selection of these new styles with specialty retailers including Journeys and Underground Station that do not carry our products in 2008.

Turing to two of our smaller owned brands Stevies and Steven Madden Fix, Stevies had net sales of $600,000 versus $500,000 a year-ago and Steven Madden Fix recorded net sales of $1.1 million in the quarter compared to $400,000 last year.

In regard to our licensed brands, we completed the transition of our Candies business to a First Cost model in the quarter.

Net sales in Candies totaled $0.8 million in the quarter versus $1.5 million a year ago, and the majority of the Candies business was done First Cost to our Adesso-Madden division. The revenue was recorded on the other income plan.

If we included both the branded wholesales and First Cost business in the quarter, total income from the Candies business increased by over $2 million compared to last year's Q4.

Fabulosity, our new license brand distributed exclusively at JC Penny, had net sales of $1.2 million in its first quarter of shipping. Currently the assortment is operating in 250 doors and we are pleased with the performance so far particularly in the dress shoe category.

Moving on to accessories, the Daniel M. Friedman business grew 30% in the quarter to $19.4 million and $14.9 million a year ago. Handbag continued to drive growth while the performance of belts improved.

In our retail division, net sales in the quarter were $14 million, a 2% increase over last year's net sales of $39.3 million. Comp store sales declined 0.5%. Stores opened for all of 2008 generated $628 in sales per square foot. We closed two stores in the quarter bringing our total at the end of the year to 97 stores including our Internet store.

We continue to view the Internet as a major opportunity to drive sales growth.

Other income, the company's commission and licensing fee income net of expenses increased 12% to $3.2 million in the quarter versus $2.9 million last year.

Our Adesso-Madden First Cost division grew 19% to $2.6 million from $2.2 million in last year's Q4, due primarily to the transition of the Candies business echo to a First Cost model as well as the introduction of l.e.i. at Wal-Mart.

Initial shipments at l.e.i. went out in December and we will in 2400 Wal-Mart doors with l.e.i. products by next month. Initial sell-through there have been strong.

Licensing income for the quarter was $600,000 versus $700,000 a year ago. Gross margin for the quarter increased to 40.4% from 37.9% in the comparable period last year reflecting margin improvements in both the wholesale and retail segments.

Wholesale gross margin increased 510 basis points to 31.9% from 26.8% in the same period last year, benefiting from significantly lower mark down allowances due to the strong sell through of our product to retail.

Gross margin in the retail division was 57.1% up from 55.9% last year, as strong as merchandise and better inventory management resulted in fewer close outs in Q4 2007.

Operating expenses as a percentage of sales declined a120 basis points compared to the prior year's fourth quarter reflecting leverage on the increased sales.

The year-over-year improvement in the SG&A ratio had two mitigating factors. First, we posted $1.3 million reserve associated with the expected loss on two store locations we plan to sublet. And second, in last year's fourth quarter operating expense benefited from $2 million reversal of bonuses accrued in the first three quarters of 2007 and we did not record a similar bonus reversal in the fourth quarter of 2008.

Operating income increased 76% to $12.2 million or 10.3% of sales compared to $7 million or 6.8% of sales last year.

Diluted EPS for the quarter was $0.40 a share on 18.1 million diluted weighted average shares outstanding compared to $0.23 a share and 20.4 million diluted weighted average shares outstanding in the prior year period.

Now I would like to briefly touch on our full-year results. Net sales for the full year increased 6% to $457 million, wholesale sales increase 7% to $331.4 million and sales for the retail division increased 4% to $125.6 million, comp store sales were flat for the year.

Commission and licensing income net of expenses declined 22% to $14.3 million reflecting a 23% decrease in commission income at our Adesso-Madden division a 19% decrease in licensing royalty income.

Gross margin improved to 40.9% in fiscal 2008 from 40.2% in fiscal 2007 and operating expense as a percent of sales excluding non-recurring items increased by 120 basis points.

Net income totaled $28 million or $1.51 per share for the year compared to $35.7 million or $1.68 per diluted share in fiscal 2007.

Fiscal 2008 results include a one time charge of $4.9 million pre-tax or $0.16 per diluted share resulting from the resignation of the company's former Chief Executive Officer.

Fiscal 2007 results include a one time benefit of $2.9 million or $0.13 per diluted share, resulting from tax savings related to prior periods.

Partially offset by a one time charge for prior year custom duties of $1.2 million pre-tax or $0.03 per diluted share.

Excluding these one time items fiscal 2008 net income totaled $31 million or $1.67 per diluted share, compared to fiscal 2007 net income of $33.6 million or $1.58 per diluted share.

With respect to the balance sheet, we continue to have a strong financial foundation with $124.8 million in cash and marketable securities and $30.2 million in advances payable to the fact rate December 31 where net cash of $94.6 million as of the end of the year.

Total inventory at the end of Q4 was $31.6 million versus $27.2 million a year ago. And our inventory turns for the last 12 months was 8.1 times. A 16% increase in inventory was primarily due to early receipts of merchandise particularly boots for both our retail stores and wholesale account as a way to capitalize on the continued demand in this category.

On the wholesale side, we also decided to carry additional inventory in Madden Girl to support the growth of the business given the strongest sell through versus just matching inventory with bookings last year.

Accounts receivable and due from factor were $39.9 million at the end of the year reflecting average collection of 47 days. CapEx for the quarter was $2.1 million and stockholder's equity as of December 31st was $206.2 million.

Turning to our guidance, for fiscal 2009 we expect sales to decline 6% to 8%, partially due to the shift of our Candies business to the First Cost model where revenue will be recorded in the other income line.

Excluding the impact of this shift sales are expected to decline 3% to 5% for the year. Diluted EPS is expected to be in the range of $1.40 to $1.55. We are planning capital expenditures to be under $5 million in 2009 as compared to $8.3 million in 2008. We plan to open two to three stores and to close between 8 and 13 locations in 2009.

In conclusion, we are pleased with the finished to 2008, our positioning for 2009 and our many growth opportunities for when consumers feel better about spending again.

We believe that the strong image of our brands, combined with our unmatched ability to create the right product, at accessible price point gives us a solid competitive advantage in the current environment. Also, our three new licenses, expanded internet business, category extensions, via both our in-house accessories business and our licensing program and continued potential for international expansion offer us a lot of opportunity for growth and should position us to reach our mid-teen operating margin target over the next three to five years.

Now, I would be happy to answer any question you may have.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions). We will take our first question from Mr. Jeff Van Sinderen with B. Riley. Please go ahead sir. Your line is open. Mr. Van Sinderen, your line is open.

Due to no response, we will move to our next question. Our next question comes from Mr. Sam Poser with Sterne, Agee. Please go ahead your line is open.

Sam Poser - Sterne, Agee & Leach

Good morning, Ed.

Ed Rosenfeld

Good morning, Sam.

Sam Poser - Sterne, Agee & Leach

Just a couple of questions. One, can you give us the inventory by wholesale and retail and if you gave both, if you split it or not?

Ed Rosenfeld

Sure. Retail was up from $12.5 million a year ago, to $15.4 million this year. And wholesale $14.7 million a year ago, up to $16.2 million this year. If I can just talk about that for a moment.

Sam Poser - Sterne, Agee & Leach

14 from?

Ed Rosenfeld

14.7, Q4 '07 to 16.2, Q4 '08 in wholesale.

Sam Poser - Sterne, Agee & Leach

Correct.

Ed Rosenfeld

So, you can see that the majority of the increase came from retail about $2.9 million, about $4.3 million overall increase came from retail and that was really driven by conscious decision on our part to change the flow of receipts versus a year ago. We really felt that we missed out on sales in January last year due to not having enough inventory particularly in the boot category. And with boots strong again we decided that this year we were going to bring in more receipts in December and January and fewer receipts in February and March and this is a strategy that we feel has paid off.

Our quarter-to-date, through today or through yesterday, our comps in the retail stores are up 8% year-over-year based in large part on brining this inventory particularly the boots in. So, we feel pretty good about that.

On the wholesale side there are really two factors, one was a change in order patterns from our customers versus a year ago our orders for January were up year-over-year and orders for February were down and we attribute this again to the strength of boots this year. People wanted to bring in additional boots, but when customers want to bring in boots in first quarter they are going to obviously want to bring them in a January as oppose to February.

So, our year-end inventory was higher in order to support that increased January business. That’s the first factor and then the second factor was the decision that we made to carry a little bit of inventory in Madden Girl to support the growth of our business with Macy's there. As you know historically that's been a cut to order business, it remains the cut to order business but in order to grow with Macy's we do need to carry a little bit of inventory and so we have taken some inventory in a couple of key proven styles there in order to grow with that account. Keep in mind that at the end of the year '08 we were in 300 Macy's stores with Madden Girl a year prior to that we were only 80 Macy's stores with Madden Girl.

Sam Poser - Sterne, Agee & Leach

Okay, thank you. And then within your guidance when you are looking ,at I mean it sounds like business is pretty decent right now, you said that January is up in both cases both wholesale and retail and then I am not sure where February is, but I guess comp in quarter to-date up 8% is pretty strong. When you are looking in your guidance down I guess three to five ex the Candies move. Is that because of lack of visibility towards the back half of the year, is that the way the order flow look through I guess May or June where you are right now?

Ed Rosenfeld

Well I think that on a year-over-year basis we are assuming the back half is going to be a little bit worse than the first half. We are shaping up a little bit better than that for first half, but we had seen softening of orders. Obviously I don’t need to tell you what's going on out in the world and you have got most of our big wholesale customers talking about planning their businesses down 10%. Overall, we don't feel that we are going to be down 10% because of our strong recent performance. But we do think it's reasonable to assume that we are going to be down year-over-year.

Sam Poser - Sterne, Agee & Leach

And then have you seen any improvement in the reaction to the Men's business at all and to the Men's product for the back half because that went a little further out.

Ed Rosenfeld

Yes, we are seeing some glimmers hope there, as you know we got back in to Journeys and Underground Stations. We are going to be in, or we are now in about 300 Journeys and 100 Underground Stations, which are important accounts for us and I think that's due to the improvement that we made to the product, and some of the younger looking product that was introduced on the casual side, some of the boots. So, we feel that we are starting to see some encouraging signs in Men's, of course the, of course the other side of that is the men's business itself overall remains very-very challenging right now.

Sam Poser - Sterne, Agee & Leach

Okay. And then just last thing. Again back to the guidance. When we are looking at it by category, you are going to get growth, where are you seeing the major slowdowns within the guidance by category, because you do have some new categories as well, or I guess you have the new one with the Fabulosity. So, where are you seeing the weakness within the guidance if we would look at it by division or category?

Ed Rosenfeld

Well, I think you have to assume that most of our wholesale divisions are going to be down modestly year-over-year with the exception of Madden Girl. The existing wholesale divisions should be down year-over year.

Sam Poser - Sterne, Agee & Leach

Okay, thanks Ed.

Operator

We will take our next question from Mr. Jeff Mintz with Wedbush. Please go ahead, sir. Your line is open.

Jeff Mintz - Wedbush Morgan Securities

Thanks. Good morning, Ed.

Ed Rosenfeld

Good morning.

Jeff Mintz - Wedbush Morgan Securities

Can we talk a little bit about operating expenses for 2009? And in particular you talked about the $1.3 million reserve to close the two stores. Can you talk a little bit about what the cost might be to close the additional stores in 2009?

Ed Rosenfeld

Yes. For the most part, the remaining store closures, there is not going to be cash expense associated with them. These are stores that we either have a kick-out provision in the lease or we have come to the end of the lease. So, there maybe some with regard to the stores where we are exercising to kick-out there maybe a non-cash charge loss on disposal of the fixed assets, but in terms of the cash charges we don’t anticipate much.

Jeff Mintz - Wedbush Morgan Securities

Okay. And then kind of looking at the operating expenses overall. I mean is that something that you can trying to keep inline on a dollar basis with 2008 as you look at slightly lower revenues and kind of belt tightening in general in this environment?

Ed Rosenfeld

Yes, I think flat operating expenses is a reasonable target.

Jeff Mintz - Wedbush Morgan Securities

Okay, great. And then on the inventory, where do you expect that to be as we go through the year here, I mean, you are targeting inventory to be flat to down inline with sales or do you anticipate taking a little bit more aggressive position on that?

Ed Rosenfeld

Yes, I think when we get through the end of Q1, we are going to be modestly high or low to mid-single digits higher than a year-ago in retail. And we are going to be below a year-ago in wholesale. And I think that’s consistent with our plans to balance the year.

Jeff Mintz - Wedbush Morgan Securities

Okay, great. And then finally can you talk a little bit about what are you seeing in terms of pricing your product out there. How much pressure are you getting from your retail accounts to kind of move prices down and then try and be even, obviously you guys do well on pricing but to be perhaps even tighter on pricing in this environment.

Ed Rosenfeld

It’s not a lot of pressure from our wholesale accounts, we are ourselves very focused on value right now but again value for us doesn’t always mean compete on price. It means having trend right styling with good quality at a reasonable price point. And that’s what we are really focusing on, we think the customer is very focused on value and perceived value right now. That’s one of the reasons that we really drove the under $100 boots in the fall and we had a lot of success with that.

Jeff Mintz - Wedbush Morgan Securities

Okay, great. Thanks very much and good luck.

Operator

(Operator Instructions). Our next question comes from Mr. Jeff Van Sinderen from B. Riley Please go ahead sir, you line is open.

Jeff Van Sinderen - B. Riley & Company

Can you guys hear me?

Ed Rosenfeld

Hey Jeff.

Jeff Van Sinderen - B. Riley & Company

Hi. Okay. So, I guess one question I had, I was just looking into the second half of this year and thinking about the strength you guys have had in boots which has really been seemingly phenomenal. Just wondering, if you are thinking that boots ease on a year-over-year basis and the second half of this year, and if so, is there anything that you are looking at in terms of the category, or what have you, that could replace the strength of boots?

Ed Rosenfeld

I think its shaping up to be, we believe it's going to be another good boot season, we did some late in season testing of new boots, here that we got some good reads on, but that’s part of the reason that we assumed in our guidance that the back half at least relative to the year ago period will be slightly weaker than the front half, due to the tougher comparisons with the boots.

Jeff Van Sinderen - B. Riley & Company

Okay, fair enough. And then, I know you mentioned your focus on cash flow, you are trying to control expenses. Just wondering, how we should think about your approach to expenses this year, are there any specific areas that you are looking at cutting, things of that nature.

Ed Rosenfeld

Sure. We have implemented a number of cost savings initiatives already. We have let go of approximately 25 people at corporate headquarters, we have negotiated some savings ocean freight, air freight, UPS savings, we have gotten a couple of rent reductions on some of our stores, about three to four stores that were up for renewal.

So when you put all that together it could mean about $2 million to $2.5 million of savings in '09, more on an annual basis, we are not going to get catch of the full benefit in '09 and those were the main thing they were working on.

Jeff Van Sinderen - B. Riley & Company

Okay, and then anything to update us on in terms of sourcing? Are you guys seeing any price eases anywhere there, or is it pretty much status quo?

Ed Rosenfeld

Yeah, I guess suppose that's one of the silver linings in all this bad news is that prices are getting a little bit better from the factories. It really varies from product-to-product and factory-to-factory, but in some cases we are seeing price decreases of 5% to 10% out of China.

Jeff Van Sinderen - B. Riley & Company

All right good to hear. Thanks very much and good luck.

Ed Rosenfeld

Thanks.

Operator

We will take our next call from Heather Boksen with Sidoti & Company. Please go ahead.

Heather Boksen - Sidoti & Company

Good morning. guys. I guess your first question regarding the fourth quarter, the gross margin at wholesale, any brands are particularly stronger gross margin or weaker that you could call out?

Ed Rosenfeld

The increases were pretty much across the board. And again, the driving factor was the reduction in markdown allowances. Our going in margin was basically flat to the year before, but the give back was so much less. We had price increases in men and women's we had an increase in Steven, Candies etcetera.

Heather Boksen - Sidoti & Company

And I guess looking ahead to spring, obviously a lot of the guys you sell to are hurting, but your sell-through still remain pretty strong, what kind of feedback are you guys getting from them with regards to markdown?

Ed Rosenfeld

Yeah, right now we continue to lead the pack in terms of sell-through, so there is no real change there.

Heather Boksen - Sidoti & Company

Okay. And with regards to the inventory position, I guess boots being more expensive, what the inventory look like maybe on pair's basis?

Ed Rosenfeld

I would have to get back to you on that, I don't know that of the top of my head.

Heather Boksen - Sidoti & Company

Okay. And the cash position at the end of the year, I guess what's the plans for all that cash?

Ed Rosenfeld

Sure. Well, maybe we should just spend a moment on the cash, because there is something a little bit unusual here. We are a factored company. And historically, we have never used our factor as a financing vehicle. So we have never borrowed from the factor against our receivables. And we did do that in Q4 that's one of the reasons that you saw cash balance increase dramatically, and so if we could just spend a moment on why we did that?

Our factor is GMAC. And during the fourth quarter there was some uncertainty surrounding GMAC. And at the time they had not yet qualify for bank holding status and there were some speculation that they might file for bankruptcy.

Now the way our factoring agreement worked with them at the time we were selling our receivables to GMAC, at that time we invoiced our customers and not collecting women, GMAC would pay us once they have collected the receivable from the customer.

So, the concern for us was that in GMAC bankruptcy, we would end up an unsecured creditor to GMAC and would have a potential loss of some, or all of the cash collections on those receivables.

So, in the fourth quarter, we began advancing the maximum amount allowable everyday against our receivables from GMAC, and thereby mitigating a potential loss in the bankruptcy. The potential loss is obviously reduced by the amount that we advanced from the factor.

And that amount was $30.2 million that we advanced from the factor as of the end of the year. So, that's why our cash was $124.8 million as of the end of the year. On a net basis after accounting for the events, we're talking about $95 million of cash.

There are two things have happened since the end of the year. One, GMAC qualified for bank holding status and received the government money, which obviously makes the likelihood of they are going bankrupt in the near-term more remote.

And two and more importantly, we modified our arrangement with them such that we no longer transfer title of the receivables to GMAC until those receivables have been collected. And therefore if GMAC were to file, instead of the old scenario where our customers would have owned GMAC and GMAC would owned us, our customers would just owe us the money, and so we have reduced that exposure.

So, that was a long-winded explanation. But, since then we have allowed the receivables to pay down the advance. We no longer owe the factor any money and our cash back is down to roughly $90 million.

In terms of plans for that cash, right now, we are really in capital preservation mode, given all the uncertainty in the economy and in the financing markets. Certainly, we are looking at some small acquisitions. And if something interesting came up, and provided us with a great return, we would be interested. But absent that, we are going to keep the cash in the balance sheet. We like having the strong financial foundations in these times.

Heather Boksen - Sidoti & Company

That's actually very helpful. So, we should expect that the when we see the March quarter, the cash position to go back, and what it looked like last year?

Ed Rosenfeld

Right.

Heather Boksen - Sidoti & Company

Alright, that's helpful.

Ed Rosenfeld

And there should be no debt.

Heather Boksen - Sidoti & Company

Alright, thank you very much.

Operator

(Operator Instructions) We will take our next question from Sam Poser with Stern Agee. Please go ahead.

Sam Poser - Sterne, Agee & Leach

Hi, just got a quick follow-up. What is the timing of the store closings?

Ed Rosenfeld

It's really throughout the year, and it's going to be a couple of next quarter.

Sam Poser - Sterne, Agee & Leach

When we were looking at the retail business, which seems to be pumping up now? I mean how much did those 8 to 13 stores, I mean how much can we take off the top there? And if you take low singles down on retail and wholesale, and then take off those stores, do we get to that 6% percent range, is that conceptually am I thinking about it right?

Ed Rosenfeld

On the eight stores that we are closing for the most part are not big dollar volume stores. I would say the average 700,000, may be 600,000 on those stores. So you want to take those off the top as you said, and then the 6% that sounded high, what was that?

Sam Poser - Sterne, Agee & Leach

You said it is negative 6 to 8 ex the Candies.

Ed Rosenfeld

The overall guidance?

Sam Poser - Sterne, Agee & Leach

The overall guidance.

Ed Rosenfeld

The retail guidance will be higher than that. We are talking about let's say 1% to 3% sales growth for retail this year.

Sam Poser - Sterne, Agee & Leach

Even with the closures?

Ed Rosenfeld

Yup.

Sam Poser - Sterne, Agee & Leach

All right. Thanks, Ed.

Operator

We will take our next question from Susan Sainsbury of Miller Tabak. Please go ahead.

Susan Sainsbury - Miller Tabak

Hi, yes. Ed, can you update us on what's going on with your

l.e.i. initiative at Wal-Mart?

Ed Rosenfeld

Yes, that's something that we are really excited about. The first shipment went out in December. We shipped to about 600 doors and we are now expanding the business to about 24,000 doors, we’lll be in 24,000 doors by the end of next month.

Initial sale through have been very good and Wal-Mart is very pleased as is Jones, as are we and so that's something we are excited about. I think we are going to exceed our first year budget there.

Susan Sainsbury - Miller Tabak

Can you refresh me on what that first year budget was?

Ed Rosenfeld

We've talked about a $1.5 million to $2 million of other income in year one. And I think we can do a little better than that.

Susan Sainsbury - Miller Tabak

And if the initial sell through is good, can you put.

Ed Rosenfeld

We never give the sell-through percentages; they have told us that it's exceeding the other brands they are selling.

Susan Sainsbury - Miller Tabak

Okay, great. I appreciate it thank you.

Operator

At this time, Mr. Rosenfeld, there are no other questions in queue.

Ed Rosenfeld

Okay, great. Well, thank a lot for joining us and we look forward to speaking with you on the next call.

Operator

That does conclude today's Steven Madden Limited Conference call. We appreciate your participation. Have a wonderful day.

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