Steven Madden's (SHOO) CEO Ed Rosenfeld on Q1 2016 Results - Earnings Call Transcript

| About: Steven Madden, (SHOO)

Steven Madden, Ltd. (NASDAQ:SHOO)

Q1 2016 Results Earnings Conference Call

April 22, 2016 08:30 AM ET

Executives

Megan Crudele - IR

Ed Rosenfeld - Chairman and CEO

Derek Browe - Director of Finance and IR

Analysts

Jay Sole - Morgan Stanley

Corinna Van der Ghinst - Citi

Pallav Saini - Canaccord Genuity

Erinn Murphy - Piper Jaffray

Scott Krasik - Buckingham Research

Taposh Bari - Goldman Sachs

Jeff Van Sinderen - B. Riley

Eddie Plank - Jefferies

Jessica Schmidt - KeyBanc Capital Markets

Corinna Freedman - BB&T

Steve Marotta - C.L. King & Associates

Sam Poser - Sterne Agee

Operator

Good day, and welcome to the Steve Madden First Quarter 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, it is my pleasure to turn the conference over to Megan Crudele. Please go ahead.

Megan Crudele

Thank you. Good morning, everyone. Thank you for joining us today for the discussion of Steve Madden’s first quarter 2016 earnings results. Before we begin, I would like to remind you that statements made on this conference call that are not statements of historical facts constitute forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve risks and uncertainties and other unknown factors that could cause actual results to differ materially from historical facts or any future results expressed or implied by forward-looking statements. These statements contained herein are also subject to other risks and uncertainties as 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 information on the factors that could cause actual results to differ. Finally, please note that any forward-looking statements used on today’s call cannot be relied upon as current after this date.

I will now turn the call over to Ed Rosenfeld, Chairman and CEO of Steve Madden.

Ed Rosenfeld

Thanks Megan. Good morning, everyone. And thank you for joining us to review Steve Madden’s first quarter 2016 results. With me to discuss the business is Derek Browe, Company’s Director of Finance and Investor Relations. We are pleased to see a solid start to 2016 with first quarter net sales increasing 1.7% and diluted EPS of $0.33 per share up from $0.32 share a year ago.

Our number one priority this year as it is every year is to maintain and build upon our fashion leadership position in our core Steve Madden women’s footwear business. 2016 started strong on that front. Steve and his design team created an outstanding on trend product offering with strong performance styles across a range of product categories, most notably fashion sneakers and open dress shoes. Trend-right merchandises assortment drove results for the flagship brand in both the retail and wholesale channels. In retail, we had another great quarter with same-store sales increasing 10.7% on top of an 11.6% gain in last year’s first quarter. We accomplished this while being less promotional than a year ago, resulting in a 140 basis-point improvement in retail segment gross margin.

And importantly, we saw the strength in Steve Madden women’s footwear translate into results in the wholesale channel as well where our Steve Madden women’s division had its best quarter in the last two years, recording strong sales growth and increased gross margin compared to the prior year. Improved performance in Steve Madden women’s led the way to return to growth in our organic wholesale footwear business. First time we’ve seen growth in wholesale footwear excluding acquisition in Q1 2014.

Another highlight was the continued momentum in the Dolce Vita business. Dolce Vita brand has followed an outstanding fall season with an equally a strong spring season to-date, remaining a strong outperformer in terms of sell-through on the floor, which is in turn driving increased orders with its key wholesale customers. We also had a very successful launch of the Diffusion brand DV at Target. Altogether, Dolce Vita division net sales grew more than 30% for the second quarter in a row, and we’re growing the business profitably. We’re pleased to report that after the strong results in Dolce Vita in the first quarter, our trailing twelve-month operating margin for the business was 11%, exceeding the 10% goal we had established well ahead of our target date of the end of 2017.

In other hand, our wholesale accessories business was as expected, a drag on sales and earnings in the quarter, due to softer handbag sales. Handbag industry has been tough overall with significant excess inventory in the channel, and we felt the negative effects in our branded bag business, particularly in the off price channel where our customers pulled back on upfront orders from us for Q1. Fortunately, we believe the worst is behind us here, and we’re targeting second quarter wholesale accessory sales to be down low single digits compared to a year ago.

Overall, we’re pleased with our first quarter performance and the direction we are headed. Our core business has good momentum, and we’ve seen strong sell-through performance at our key whole sale partners and excellent results in our own retail stores.

As said, we remain cautious about the near-term outlook for growth. In wholesale, we expect our customers to continue to order conservatively in the midst of a choppy retail environment and following the challenging 2015.

In retail, we faced an extremely challenging comparison in the second quarter when our comp store sales increased 18.5% a year ago. As we look out a bit farther however, we’re more sanguine about our prospects for growth, given the underlying strength we’re seen in our flagship Steve Madden brand as well as the upper trajectory of our newer brands Dolce Vita and Blondo.

With that, I’ll now turn the call over to Derek to review our financial performance for the quarter in more detail.

Derek Browe

Thanks Ed, and good morning everyone. Turning to our financial results for the first quarter, consolidated net sales grew 1.7% to $329.4 million, compared to the prior year net sales of $323.9 million. During the quarter, sales growth in both our wholesale footwear and retail businesses were partially offset by a decline in our wholesale accessories business. Wholesale footwear net sales increased 2.7% to $228.9 million, led by strong increases in our Steve Madden women and Dolce Vita division. Overall, our fashion sneaker and open dress offerings continued their strong performance and both increased as a percentage of the total product category mix for the quarter.

In wholesale accessories, net sales were $46.9 million in Q1 compared to $53.3 million in the prior year period. The decline was primarily attributable to softness in our branded handbag business. In our retail division, net sales increased 12.2% to $53.6 million. As Ed mentioned, our comparable store sales for the quarter were 10.7%. The earlier Easter holiday and the extra day of February benefited our comparable store sales by approximately 200 basis points. During the quarter, we opened one full price store in Mexico and one outlet location in the U.S. We ended the quarter with a 171 company-operated retail stores including 41 outlets and 4 e-commerce stores.

Turning to other income, our commission and licensing income net of expenses was $2.2 million in the quarter versus $3.9 million in last year’s first quarter. Commission income was down due to a reduction of first cost business with certain private label footwear customers. And royalty income declined due primarily to timing shifts and the discontinuation of the Steve Madden eyewear license.

Despite continued headwinds from the environment, we increased our consolidated gross margin by 90 basis points to 35.3% compared to 34.4% in the prior year with increases in both wholesale and retail. Wholesale gross margin increased to 31.2% from 30.8% last year, driven by improved gross margin in our Dolce Vita division. Gross margins in retail division increased to 56.2% compared to 54.8%, as strong product performance resulted in higher full price selling and lower promotional activities compared to the prior year.

Operating expenses for the quarter were $88.5 million or 26.9% of net sales compared to operating expenses of $82.4 million or 25.4% of net sales for the same period last year. Operating expenses in last year’s first quarter included the benefit of $3 million related to the closure of the Fifth Avenue store location. Excluding that benefit, operating expenses were $85.5 million in the prior year or 26.4% of net sales.

Operating income for the quarter totaled $29.9 million or 9.1% of net sales compared to last year’s first quarter operating income of $29.8 million or 9.2% of net sales. Operating income for the first quarter of 2015 included the aforementioned benefit for the Fifth Avenue store. It also included a charge of $3 million related to the partial impairment of our Wild Pair trademark. As these items offset when excluded, operating income in the prior year remained at $29.8 million.

Our effective tax rate for the quarter was 32% compared to 34.3% in the same period last year as we are benefited from growing and investing in our international business. Net income for the quarter was $20 million or $0.33 per share diluted compared to $19.8 million or $0.32 per share diluted in the first quarter of 2015.

Our balance sheet remains strong as of March 31, 2016, we had a $192.9 million of cash and marketable securities and no debt. Inventory increased 5.7% to $80.4 million compared to $76 million in the prior year.

Our CapEx for the quarter was $4.4 million. And during the quarter, we repurchased approximately 400,000 shares for approximately $14 million.

Now turning to guidance, for the full year 2016, we continue to expect that net sales will increase 2% to 4% over net sales in 2015. Diluted EPS for full year 2016 is expected to be in the range of a $1.93 to $2.03. With respect to Q2, we expect sales and EPS growth on a percentage basis compared to the prior year to be similar to the percentage growth we had in Q1.

Now, I’d like to turn it over to the operator for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first question comes from Jay Sole with Morgan Stanley. Please go ahead.

Jay Sole

I just want to follow up on the last point that Derek just said made about the guidance for 2Q. When you’re saying the percentage change in sales and EPS will be similar to 1Q, I mean that’s roughly talking about the low single digit kind of increase, is that accurate? And then can you explain, the trends seem really strong, you talked about open toed shoes and different fashion trends are really working. It seems like that there’s -- seems like you might see some more momentum than you kind of anticipated on the last call. If you could just talk about those two things, that’d be helpful.

Ed Rosenfeld

Yes. In terms of the first part of your question, yes. I think we were up low singles in sales and between 4 and 5% in EPS in Q1 and that’s what Derek was indicating that we were expecting similar year-over-year growth in Q2.

In terms of the momentum, yes, we do continue to feel really good about the product. And if we focus on Steve Madden for a minute, I mean I think that this is the best we felt about our assortment in a few years and our performance on the floor. Our performance on our retail stores continues to be very strong but our wholesale sell-throughs are also better than they’ve been in a number of seasons, and we’re really seeing strength across a range of product categories. We called out opened up dress shoes and fashion sneakers and it’s been biggest drivers of growth but it’s a really -- the best, the most balanced collection that I’ve seen in Steve Madden in some time in terms of strength across categories because in addition to that we’ve got some really strong items in flat sandal category and what we call city sandals on block and stacked heels. We’ve got a couple of really strong products in the closed up casual category. So, overall, we feel really good about the merchandise assortment. And we are really outperforming on the floor with our key wholesale customers. We’re, we believe, the leader in our price grid in our departments. Challenge is however that the wholesale customers continue to be pretty darn cautious. And it’s still challenging even with the types of sell-throughs that we have to turn that into a lot of reorders and a lot of increased open to buy from the wholesale customers.

Jay Sole

Now just on inventory, I mean I don’t know if you mentioned this in the script, but do you feel like there’s a little bit too much inventory on your balance sheet, is it the right size, just with all the moving parts with some of the recent acquisitions and new lines and things like that. Where do you feel like your inventory stands?

Ed Rosenfeld

I feel very good about our inventory position; it was up 5.7% at the end of the quarter. You’ve seen that over the last few quarters continue to become more in line with sales growth and so, little bit ahead of sales. If you break it down by division, however, each of wholesale footwear and retail is either in line or below sales growth. Wholesale accessories is a little ahead. And that’s really a function of increasing the business that we do on replenishment with Walmart on a private label basis. And obviously when you do replenishment business, it requires you to hold inventory but the -- so we had some increased inventory just for that business at the end of March but it was -- we got those orders in April. So, it was good inventory and had a home. So overall, we feel very good about the composition and the amount of our inventory.

Jay Sole

Got it. And then, Ed, if I can ask you one more, just in this environment where retailers have maybe more inventory than they feel comfortable with, is it important to try and maybe get those orders placed with you earlier rather than kind of later as normally is the case, just to make sure you hit those open to buy dollars while they’re still there? Have you had to do that in this environment or can you still make sure that they’re leaving enough room for you when it comes to your place orders?

Ed Rosenfeld

What I’d say about that is it’s even more challenging to do that now in terms of getting those upfront orders because when the retailers are a bit cautious, what they’re trying to do not only with us but with everybody is to place fewer orders upfront and to try to chase more in season, so that they can take less risk and essentially push some of the inventory risk onto the brand. So, we’re pushing very hard to get those orders upfront but it’s challenging to do so right now.

Operator

Moving on, we’ll hear from Corinna Van der Ghinst from Citi.

Corinna Van der Ghinst

Hi, good morning. Hi Ed, hi Derek. I was just wondering as a follow-on to your previous comments, could you give us a little bit more color on your category penetration this spring or this year to date. How much are the fashion sneakers as a percentage of your sales versus last year and how do the dress shoes compare to be getting more on trend again?

Ed Rosenfeld

Yes, the fashion sneakers are in the low double digits as a percentage of our Steve Madden women’s footwear business, and they’re running I’d say 300 basis points to 400 basis points higher than they were a year ago, as a percentage of the total. The dress shoes were higher in first quarter, and you’re talking roughly a third of the business, a little bit more in wholesale. And that was up over last year, although we were already starting to -- particularly in Q2, I think it will be more in line with last year because we were really starting to see the dress shoes pick up in Q2 last year.

Corinna Van der Ghinst

Okay. And then I think -- I know you guys don’t give guidance on retail comps but the double digit comps were clearly very strong. Could you just talk a little bit more about what’s working at retail side from better merchandising, but is there something going on with maybe your regional penetration or are you seeing any pricing increases this year, retailer side from the promotions that have gone away year-over-year?

Ed Rosenfeld

It’s really -- I do really think that it’s really about the product. And in terms of -- if we dig a little bit deeper into the metrics, the AUR actually was down modestly and traffic is down. So, we’re really doing it through converting a higher percentage of people that walk into the door. And I think that’s really a function of the strong product assortment. And as I said, a well balanced product assortment with strength across a number of categories. Another highlight that I should point out was e-commerce. We saw a strong acceleration in that business. And we’re really pleased with what we’re seeing on stevemadden.com.

Corinna Van der Ghinst

And any updates on Amazon initiatives on the e-commerce site?

Ed Rosenfeld

Yes. Obviously that continues to be a focus for us. And we had -- won’t break out performance by customer but we had very strong growth selling to Amazon in first quarter and we expect that to continue going forward.

Operator

Moving on, we will hear from Camilo Lyon with Canaccord Genuity.

Pallav Saini

This is Pallav on for Camilo, thanks for taking our questions. My first question, Ed, is you mentioned that the retail performance has been great and the product looks great. But the wholesale customers still remain cautious. In your opinion, what can you do or what more do you think it will take for demand to increase in that channel, and are there any other alternate avenues of growth that you’re looking at?

Ed Rosenfeld

It’s a good question. I think that what we need to do is keep doing what we’re doing, which is delivering great product that’s selling through on the floor. I think if we continue to do that, that’s going to translate into increased stores from our wholesale customers. And we also do need to try to focus on the customers where the first trends aren’t quite so tight. So, we want to focus on growing with folks like Amazon for instance or some of the other pure-play e-commerce players, where their open-to-buy-dollars are a little bit easier to come by.

Pallav Saini

And just as a follow-up, in terms of reorders, have you seen any -- did you have any reorders in Q1? And you talked about the wholesale partners being cautious in terms of placing more orders upfront. Could that -- is that leading to any kind of shift in terms of timing or delivery of product?

Ed Rosenfeld

Answer to your first question, yes, we did have a reorders in Q1 and we felt actually pretty good about the level of reorder activity in Q1. In terms of going forward, I don’t really see it changing, it changes more when we get the orders that -- more than when we actually deliver the goods. So, I don’t see a major change in the timing of shipment. The only thing I would call out for people in terms of timing is that based on what happened in the boot and bootie category last year, we are seeing retailers are led to take boots and booties in later this year. So, a lot of those boot and bootie shipments that went out, 625 last year which is the end of the Q2, retailers walked in to take those in Q3 this year.

Operator

And with Piper Jaffray, we’ll hear from Erinn Murphy.

Erinn Murphy

I was hoping you guys could talk a little bit more about your SG&A in the quarter. It seems a little bit higher than we anticipated. So, I’ve got two questions. Is there any major buckets just to call out there, or was there any pull forward in Q1? And then, as we think about the cadence of sale for the year of 2% to 4% growth, it seemed a little bit more backend weighted. How should we just think about that SG&A line throughout the year?

Ed Rosenfeld

Derek, do you want to address that?

Derek Browe

I think the SG&A actually was in line with where we were expecting. We kind of have talked about our SG&A growth this year being kind of on a historical 4% to 5% growth rate. So, we came in about 3.7% for Q1. As we look at the year, we expect to be at that 4%, probably close to that 5% rate. And we always have a little bit of shifting between the quarters but I don’t think we’re seeing anything as we look at the year that’s going to change any one quarter drastically.

Erinn Murphy

Okay, still think about that 5% growth rate for the year would be…?

Derek Browe

Yes.

Erinn Murphy

Okay, got it. And then I guess can you help us [indiscernible] against the much tougher comp in Q2 as you kind of cautioned us; is that Easter benefited you guys in Q1 or earlier Easter as well as the extra day in February with 200 basis points benefit. So, [indiscernible] that’s going to roll off because what had been a later Easter last year, is there any other kind of cadence from the month’s prospective of April, May and June to just be kind of mindful of as we build our model down here?

Ed Rosenfeld

Definitely the Easter shift is going to cost about 100 basis points. But I think the bigger issue is just how difficult to compare is. And obviously doing at 18.5% last year, you look at the two-year stack to compare, I think it’s 1,500 to 1,600 basis points more challenging in Q2. And so, we just want people to keep that in mind.

Erinn Murphy

Okay, fair enough. And then just talk me a little bit more about comp performance in the year more tourist weighted stores versus your non-tourist stores; is there any deviation there, you still think pressure in the New York City area or are you starting to see that abate?

Ed Rosenfeld

Yes, it’s a good question. And we’re still feeling that impact. So, our weakest -- New York was again weaker region compared to the rest of the chain. And so we still are unfortunately seeing the negative impact produced towards traffic incentive.

Erinn Murphy

Is there any way to quantify that kind of delta between that whether it’s New York or I don’t know, if you look at your Florida stores, if you are seeing a hit there but just trying to disaggregate how incremental that headwind is going to be…

Ed Rosenfeld

It was a little bit better this time in couple of the past quarters in New York, it’s been 1,000 basis points below the rest of the chain; this time maybe it was 700 in there.

Erinn Murphy

Okay, got it. And then just a last question on the promotional payments, the impact that you guys been able to keep that pretty tight, just the broader macro headwinds. Are you planning second quarter and kind of the balance of the year to be last promotional as you saw in the first quarter at this point?

Ed Rosenfeld

It was really second quarter last year when we were able to start to really pull back the promotions in our own retail store. So, I think that at this point, we’re going assume that we’re going to be more in line with what we did a year ago. Q1, we were little bit -- still little bit more promotional last year and so, we were able to pull back on that this year. But going forward, I’d say, in the U.S., it’s going to be in line and but with last year.

Operator

And next, we’ll hear from Scott Krasik with Buckingham Research.

Scott Krasik

Ed, you said in your prepared remarks, you’re sanguine about some of the things coming up, of course like to look that up. So, thanks for that. But may be talk about, elaborate on what some of this optimism or positivity is towards?

Ed Rosenfeld

Sure, yes. We just wanted to help you expand your vocabulary, Scott with better words. We I think that the point that we’re making is that the brand momentum is very strong in our most important brands, Steve Madden and Dolce Vita, and that we had great product assortments and that we’re getting good sell-throughs at our wholesale customers, our retail stores are performing. So, those are really the underlying fundamentals of our business, and we feel good about the direction we’re headed.

Scott Krasik

So, one thing that has been a recurring issue has been some of the traditional wholesale being conservative, and I forgot who asked before, but basically related to Amazon. But may be collectively, can you talk about sort of etailing and like how aggressively your hitting that channel and what type of opportunity is and when the impact from some of the older non-growing parts of your whole sale distribution could be less impactful?

Ed Rosenfeld

Well, I don’t how to answer that with specifics other than that yes that’s a major focus for us. We built a dedicated team here. We focused not on our own retail e-commerce but it’s clearly a priority as well. But if we talk about wholesales e-commerce, we’ve built a dedicated team here that’s focused on driving that business. We’ve got an ex senior executive from Zappos that runs that and some other employees with backgrounds in that space. And it’s a real focus area. Amazon in particular is something that we’re putting a lot of energy behind. We’re participating in some new programs with them, one is called a Strategic Vendor Services, which is program where we put someone in there building that’s job is to help us maximize our business and take advantage of everything that we offer. We are participating in this hybrid program with them. We’re in addition selling them wholesale. We also display some of our retail exclusive styles or retail -- previously retail exclusive styles on their website and then drop ship them. So we’ve a lot of initiatives in place to try to grow that business. And it’s going to continue to be a focus for us.

Scott Krasik

And then, just last, I think consensus is looking for maybe a negative two or three comp for this quarter. I mean you are obviously talking about tough comparisons; is that in the neighborhood?

Ed Rosenfeld

I don’t think we’re going to continue with our practice of not providing comp guidance.

Operator

Next we’ll take Taposh Bari with Goldman Sachs.

Taposh Bari

So, on this issue of comp, [ph] I guess I will just try to ask the question differently. Are you expecting this to be positive or could it actually go negative?

Ed Rosenfeld

I think we’re not going to say anymore about it.

Taposh Bari

Okay, just wanted to double check. Okay, Ed, question on the first quarter business. Obviously things seem like they’re performing well and it sounded like the comp benefited from a couple of exogenous factors in the quarter. So generally speaking across the entire portfolio, do you think that whether played a role at all, given the fact that it was pretty mild in the month of February. I’m trying to figure out if there was any kind of pull forward in your view of demand, as you kind of look at the cadence throughout the quarter?

Ed Rosenfeld

Yes. I do think that weather was helpful particularly in February and early March. Hard to segregate exactly what that impact was. But certainly I do think that was helpful for some early spring selling.

Taposh Bari

Can you comment on the first cost business? I know it’s a small part of your business, but the decline was pretty meaningful. Trying to get a better sense for whether that was anomalous this quarter or if there is a bigger trend that we should be aware of there?

Ed Rosenfeld

Yes. I think that it’s going to continue to be a little of drag for the balance of this year. I don’t want to talk about the performance by any specific customer, but I will tell you that the largest customers that come in on that line, the commission income line, as opposed to the sales line on the private-label basis our Kohl’s, Sears and Kmart. And so, you can probably assume that that’s going to continue to be a little bit tougher business for us.

Operator

And moving on, we’ll hear from Jeff Van Sinderen with B. Riley.

Jeff Van Sinderen

Good morning. I wonder if you could give us any more color on kind of what you think the picture looks like relative to inventory in the channel, the domestic channel with your retail partners, just wonder, if you think it’s getting better. I think last quarter, you felt like maybe it was moving in the right direction, do you still think it is or any change there?

Ed Rosenfeld

If we think about the inventory in the channel with we will call the first tier, which includes the department stores, I think it’s, relatively speaking, in line. They obviously came out of fall with excess inventory but I think we’ve gotten rid of that now. If you go to the mid-tier and down, that’s the group that probably packed way more inventory. And so, there may be a little bit more inventory in that channel.

Jeff Van Sinderen

Okay. And just to clarify, you are speaking about just general inventory, not inventory in

Steve Madden product, correct?

Ed Rosenfeld

Yes. Thank you for that clarification. I’m talking about the overall inventory and the industry. In fact, our Steve Madden inventory in the channel is very healthy and the stock to sales basis were very healthy. In fact, we might be a little under inventoried in a number of cases.

Jeff Van Sinderen

Good to hear. And then maybe, if you could just update us on what you see in men’s. I know that was a call out last quarter and then if I could just go on one follow-up, if you could touch on international what you are seeing there?

Ed Rosenfeld

Yes. Men’s is tough. Men’s was down in the quarter. And I think it’s going to be a little bit of drag over the next quarter or two. Our Steve Madden men’s business is hanging in there pretty well. But our Diffusion brand Madden is down at the moment. And there is a couple of categories that have been important to that business, namely basic dress shoes and boat shoes, which have really down trended and we’re feeling that in the Madden business. Can you remind me what the second part of the question was?

Jeff Van Sinderen

Yes. I just wanted to see if there was anything to call out on developments in international?

Ed Rosenfeld

Yes. I mean we continue to work on some new things there. We’re hoping to have something to tell you about a new structure in parts of Europe. On this call, we’re not quite there yet, but we hope to be able to talk about that on the next call. Of course, one of the things that we are confronted within our international business right now is that exchange rates have move against us. So, our overall international sales in U.S. dollars were actually flat in the quarter; we were up 10% in constant currency. But that growth was Austin translation.

Operator

And Eddie Plank with Jefferies, your line is open.

Eddie Plank

Thanks. Good morning, guys. Thanks for taking the questions. I guess on the gross margin, it looks like maybe is a little bit better than expected in the first quarter. Is the expectation for the year still up modestly or should we think about that a little bit going out?

Ed Rosenfeld

I still think that’s the right way to think about the full year.

Eddie Plank

Okay, that’s helpful. And then, I know the handbag business has been pretty tough but maybe any specific comments around Betsey Johnson, if that’s outperforming relative to the rest of the group, or Steve Madden in particular?

Ed Rosenfeld

I would say Betsey is performing a little better than Steve but both felt pressure in the first quarter.

Eddie Plank

Okay. And then just lastly, maybe you touched on this and I apologize if I missed it. But, are you seeing any divergence across the different wholesale channels in terms of where the momentum is building or is it just really broad-based at this point?

Ed Rosenfeld

I think it’s pretty broad-based. Overall, we’re seeing pretty good performance across the channels.

Operator

And we’ll move next to Jessica Schmidt with KeyBanc Capital Markets.

Jessica Schmidt

Hi, thanks for taking my question. Just given that you’re wholesale partners are still cautious even with some of the improvements, it sounds like they’re seeing, I guess how should we think about your reorder business, particularly given I guess some of the weakness in last 2Q related to the West Coast port delays?

Ed Rosenfeld

Yes, I think that’s what we’ve been talking about which is that we’ve got good sell-through and got good product, which is what you need to generate reorders. So, we’re going to get some. But the challenge is at the moment, we’ve been a -- we’re finding it little bit challenging to get as many as we think that we should get, based on the caution of the retailers.

Operator

And moving on, we’ll hear from Corinna Freedman with BB&T.

Corinna Freedman

Hi. Good morning guys, great comp. I wanted to dig in a little on your comment, Ed, about the wholesale accessory business, particularly in off price channel. Should we expect that pressure to continue for the balance of the year or are there any other strategies that you’re putting in place to sort of make up that lost volume on the accessories front?

Ed Rosenfeld

Yes. We are seeing those retailers start to come back to us for the tail end of Q2 and going forward. So, we do think that as I said earlier that the worst is behind us here and that we can -- we’re targeting getting to down just low singles in Q2 in wholesale accessories versus the down 12 that we had in Q1.

Operator

And next, we have Steve Marotta with C.L. King & Associates.

Steve Marotta

Good morning, Ed and Derek. One quick question as it pertains to the open-to-buy-dollars and the wholesale channel, you’ve spoken on previous calls about the first half being challenged, first half of ‘16 that is. Can you comment at all about trends and what you’re hearing from an order basis with open-to-buy-dollar budgets for the back half of the year?

Ed Rosenfeld

Yes. I would say so far we’re seeing a cautious approach from the retailers towards fall as well. Keep in mind, most of these retailers did not have a good fall last year, most of them got hurt in the boot category, they had excess inventory, some cases they packed away inventory but we’re seeing a pretty conservative approach so far. And I would say that the majority of retailers are planning the boot and bootie business down versus 2015.

Steve Marotta

Okay. And one follow up, just extrapolating from your comments, I assume that the second quarter guidance that you’ve offered supposes an acceleration of business in May and June.

Ed Rosenfeld

No, it does not.

Steve Marotta

It does not? April is basically what you feel, you’d run in May and June?

Ed Rosenfeld

I mean there are I guess the Easter shift ad all sorts of stuff like that but I think the overall health of business, we have not expected, we have not assumed any change. Obviously we take into account seasonality and holiday weeks moving around and stuff like that.

Operator

And next, we’ll hear from Sam Poser of Sterne Agee.

Sam Poser

I just want to clarify, in your big wholesale account, you’re outperforming; is this a matter of sort of them getting over the hangover from last fall and then you potentially gaining share once they sort of get themselves in order and realize that there might be 10 vendors and they’re going to go to eight and then plan it down but you get disproportionately more; is there going to be a potential share gain there but they’re still sort of suffering from the hangover from last fall, is that a good way to think about it.

Ed Rosenfeld

I think that’s reasonable.

Sam Poser

And also, just to follow up on an earlier question, your ability to turn to get goods within 12 weeks really is an advantage to you especially with the Steve Madden line, correct?

Ed Rosenfeld

Yes, I think that remains an advantage. But again, we like those orders just as much as everybody else.

Sam Poser

Right. But I mean that the point is though that that if their business opens up, you’ll be one of the first people to go to?

Ed Rosenfeld

That’s right.

Sam Poser

And then, I mean I’m just going to go back. And can you give us any idea of -- the e-commerce is in your same-store sales. Can you give us any form of differentiation, given that the New York area stores, and those areas were weak; any differentiation between how strong that e-commerce business was relative to the brick and mortar?

Ed Rosenfeld

Yes. E-commerce was up almost 30% for the quarter, on a comp basis.

Sam Poser

And brick and mortar?

Ed Rosenfeld

So, I think it’s -- I don’t have in front of me but I think that it added almost 4 points to the comp, something like that.

Operator

That does conclude today’s question-and-answer session. I’d like to turn the conference back over to Ed Rosenfeld for any additional or closing remarks.

Ed Rosenfeld

Great. Well, thanks so much for joining us on today’s call. And we’ll look forward to speaking to you after Q2. Have a great day.

Operator

That does conclude today’s conference. We thank you all for your participation.

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