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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____________________ to _____________________
 
Commission File Number: 0-23702 
STEVEN MADDEN, LTD.
(Exact name of registrant as specified in its charter) 
Delaware 13-3588231
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)  

52-16 Barnett Avenue, Long Island City, New York 11104
(Address of principal executive offices) (Zip Code)
(718) 446-1800
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per share
SHOOThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ☒   No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  ☒   No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filer☒Accelerated filer☐Emerging growth company☐
Non-accelerated filer☐Smaller reporting company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ☐   No ☒ 

As of November 4, 2024, there were 72,191,024 shares of the registrant’s common stock, $0.0001 par value, outstanding.


STEVEN MADDEN, LTD.
TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q
September 30, 2024


 
 
  
 
   
 
   
 
   
 
 
   
 
  
   
   
  
 
  
   
 





PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30,
2024		December 31,
2023		September 30,
2023
(in thousands, except par value)(unaudited) (unaudited)
ASSETS   
Current assets:   
Cash and cash equivalents$139,414 $204,640 $191,804 
Short-term investments11,064 15,173 14,641 
Accounts receivable, net of allowances of $4,068, $4,828 and $4,513
56,297 40,246 58,538 
Factor accounts receivable426,408 320,723 342,871 
Inventories268,669 228,990 205,693 
Prepaid expenses and other current assets28,041 29,009 24,334 
Income tax receivable and prepaid income taxes14,950 16,051 15,702 
Total current assets944,843 854,832 853,583 
Note receivable – related party— — 100 
Property and equipment, net52,906 47,199 44,920 
Operating lease right-of-use asset148,391 122,783 113,058 
Deposits and other20,166 16,250 10,567 
Deferred tax assets609 609 1,570 
Goodwill181,905 180,003 168,612 
Intangibles, net108,308 126,267 99,817 
Total Assets$1,457,128 $1,347,943 $1,292,227 
LIABILITIES   
Current liabilities:   
Accounts payable$225,586 $161,140 $140,623 
Accrued expenses150,067 154,751 129,754 
Operating leases – current portion43,812 40,342 36,521 
Income taxes payable12,435 5,998 13,519 
Contingent payment liability – current portion7,716 3,325 1,153 
Accrued incentive compensation13,347 12,068 10,190 
Total current liabilities452,963 377,624 331,760 
Contingent payment liability – long-term portion11,200 9,975 — 
Operating leases – long-term portion118,674 98,536 91,916 
Deferred tax liabilities8,777 8,606 3,923 
Other liabilities5,448 5,170 10,914 
Total Liabilities597,062 499,911 438,513 
Commitments, contingencies and other (Note M)
STOCKHOLDERS’ EQUITY   
Preferred stock – $0.0001 par value, 5,000 shares authorized; none issued; Series A Junior Participating preferred stock – $0.0001 par value, 60 shares authorized; none issued
— — — 
Common stock – $0.0001 par value, 245,000 shares authorized,137,221, 136,471 and 136,430 shares issued, 72,192, 73,681 and 74,610 shares outstanding
7 7 8 
Additional paid-in capital607,511 586,155 579,473 
Retained earnings1,768,209 1,679,500 1,659,202 
Accumulated other comprehensive loss(38,259)(29,046)(33,428)
Treasury stock – 65,029, 62,790 and 61,820 shares at cost
(1,503,545)(1,407,018)(1,368,217)
Total Steven Madden, Ltd. stockholders’ equity833,923 829,598 837,038 
Noncontrolling interest26,143 18,434 16,676 
Total stockholders’ equity860,066 848,032 853,714 
Total Liabilities and Stockholders’ Equity$1,457,128 $1,347,943 $1,292,227 

See accompanying notes to condensed consolidated financial statements - unaudited.
1



STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2024202320242023
Net sales$621,170 $549,846 $1,693,446 $1,454,420 
Licensing fee income3,505 2,886 7,163 7,448 
Total revenue624,675 552,732 1,700,609 1,461,868 
Cost of sales (exclusive of depreciation and amortization)365,131 320,107 999,121 844,281 
Gross profit259,544 232,625 701,488 617,587 
Operating expenses178,915 149,887 507,343 444,298 
Change in valuation of contingent payment liability(2,584)— 5,616 — 
Impairment of intangibles8,635 — 10,335 — 
Income from operations74,578 82,738 178,194 173,289 
Interest and other income – net1,400 1,922 4,309 5,898 
Income before provision for income taxes75,978 84,660 182,503 179,187 
Provision for income taxes 19,390 19,552 44,404 42,219 
Net income56,588 65,108 138,099 136,968 
Less: net income attributable to noncontrolling interest1,310 695 3,510 1,295 
Net income attributable to Steven Madden, Ltd.$55,278 $64,413 $134,589 $135,673 
Basic net income per share$0.78 $0.88 $1.88 $1.84 
Diluted net income per share$0.77 $0.87 $1.87 $1.81 
Basic weighted average common shares outstanding70,806 72,943 71,516 73,679 
Effect of dilutive securities – options/restricted stock763 1,128 619 1,238 
Diluted weighted average common shares outstanding71,569 74,071 72,135 74,917 
Cash dividends declared per common share$0.21 $0.21 $0.63 $0.63 

See accompanying notes to condensed consolidated financial statements - unaudited.
2



STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
 
Three Months Ended September 30, 2024Nine Months Ended September 30, 2024
(in thousands)Pre-tax amountsTax benefitAfter-tax amountsPre-tax amountsTax expenseAfter-tax amounts
Net income$56,588 $138,099 
Other comprehensive income/(loss):  
      Foreign currency translation adjustment$(81)$— (81)$(9,446)$— (9,446)
(Loss)/income on cash flow hedging derivatives(1,039)261 (778)482 (121)361 
Total other comprehensive loss$(1,120)$261 (859)$(8,964)$(121)(9,085)
Comprehensive income55,729 129,014 
Less: comprehensive income attributable to noncontrolling interests1,964 3,638 
Comprehensive income attributable to Steven Madden, Ltd.$53,765 $125,376 
Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
(in thousands)Pre-tax amountsTax expenseAfter-tax amountsPre-tax amountsTax expenseAfter-tax amounts
Net income$65,108 $136,968 
Other comprehensive income/(loss):
      Foreign currency translation adjustment$(3,897)$— (3,897)$1,182 $— 1,182 
Income on cash flow hedging derivatives2,104 (769)1,335 1,087 (398)690 
Total other comprehensive income /(loss)$(1,793)$(769)(2,562)$2,269 $(398)1,872 
Comprehensive income62,546 138,840 
Less: comprehensive income attributable to noncontrolling interests577 886 
Comprehensive income attributable to Steven Madden, Ltd.$61,969 $137,954 

See accompanying notes to condensed consolidated financial statements - unaudited.
3


STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
(in thousands)
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - June 30, 202472,606 $7 $600,222 $1,728,102 $(36,746)64,574 $(1,483,306)$24,077 $832,356 
Common stock repurchased and net settlements of restricted stock awards(455)— — — — 455 (20,239)— (20,239)
Exercise and net settlement of stock options8 — 337 — — — — — 337 
Issuance of restricted stock, net of forfeitures33 — — — — — — — — 
Stock-based compensation— — 6,952 — — — — — 6,952 
Foreign currency translation adjustment— — — — (735)— — 654 (81)
Cash flow hedge (net of tax benefit of $261)
— — — — (778)— — — (778)
Dividends on common stock ($0.21 per share)
— — — (15,171)— — — — (15,171)
Divestiture of business— — — — — — — 102 102 
Net income— — — 55,278 — — — 1,310 56,588 
Balance - September 30, 202472,192 $7 $607,511 $1,768,209 $(38,259)65,029 $(1,503,545)$26,143 $860,066 
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - December 31, 202373,681 $7 $586,155 $1,679,500 $(29,046)62,790 $(1,407,018)$18,434 $848,032 
Common stock repurchased and net settlements of restricted stock awards(2,219)— — — — 2,219 (95,681)— (95,681)
Exercise and net settlement of stock options34 — 1,825 — — 20 (846)— 979 
Issuance of restricted stock, net of forfeitures696 — — — — — — — — 
Stock-based compensation— — 19,531 — — — — — 19,531 
Foreign currency translation adjustment— — — — (9,574)— — 128 (9,446)
Cash flow hedge (net of tax expense of $121)
— — — — 361 — — — 361 
Dividends on common stock ($0.63 per share)
— — — (45,880)— — — — (45,880)
Investment of noncontrolling interest— — — — — — — 3,969 3,969 
Divestiture of business— — — — — — — 102 102 
Net income— — — 134,589 — — — 3,510 138,099 
Balance - September 30, 202472,192 $7 $607,511 $1,768,209 $(38,259)65,029 $(1,503,545)$26,143 $860,066 

4


STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
(in thousands)
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - June 30, 202375,303 $8 $533,550 $1,610,487 $(30,984)59,523 $(1,288,545)$17,201 $841,717 
Common stock repurchased and net settlements of restricted stock awards(920)— — — — 920 (31,441)— (31,441)
Exercise and net settlement of stock options214 — 39,992 — — 1,377 (48,231)— (8,239)
Issuance of restricted stock, net of forfeitures13 — — — — — — — — 
Stock-based compensation— — 5,931 — — — — — 5,931 
Foreign currency translation adjustment— — — — (3,779)— — (118)(3,897)
Cash flow hedge (net of tax expense of $769)
— — — — 1,335 — — — 1,335 
Dividends on common stock ($0.21 per share)
— — — (15,698)— — — — (15,698)
Distributions to noncontrolling interests, net— — — — — — — (1,102)(1,102)
Net income— — — 64,413 — — — 695 65,108 
Balance - September 30, 202374,610 $8 $579,473 $1,659,202 $(33,428)61,820 $(1,368,217)$16,676 $853,714 
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - December 31, 202276,796 $8 $520,441 $1,571,123 $(35,709)57,660 $(1,224,310)$12,310 $843,863 
Common stock repurchased and net settlements of restricted stock awards(2,781)— — — — 2,781 (95,591)— (95,591)
Exercise and net settlement of stock options248 — 40,863 — — 1,379 (48,316)— (7,453)
Issuance of restricted stock, net of forfeitures347 — — — — — — — — 
Stock-based compensation— — 18,169 — — — — — 18,169 
Foreign currency translation adjustment— — — — 1,591 — — (409)1,182 
Cash flow hedge (net of tax expense of $398)
— — — — 690 — — — 690 
Dividends on common stock ($0.63 per share)
— — — (47,594)— — — — (47,594)
Investment of noncontrolling interest— — — — — — — 4,582 4,582 
Distributions to non-controlling interests, net— — — — — — — (1,102)(1,102)
Net income— — — 135,673 — — — 1,295 136,968 
Balance - September 30, 202374,610 $8 $579,473 $1,659,202 $(33,428)61,820 $(1,368,217)$16,676 $853,714 

See accompanying notes to condensed consolidated financial statements - unaudited.
5


STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended September 30,
(in thousands)20242023
Cash flows from operating activities:  
Net income$138,099 $136,968 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation19,531 18,169 
Depreciation and amortization14,736 11,138 
Loss on disposal of fixed assets112 204 
Impairment of intangibles10,335 — 
Loss on divestiture of business3,199 — 
Impairment of lease right-of-use asset— 95 
Accrued interest on note receivable - related party— (6)
Notes receivable - related party— 307 
Change in valuation of contingent payment liability5,616 — 
Other operating activities(48)417 
Changes, net of acquisitions, in:
Accounts receivable(15,794)(20,601)
Factor accounts receivable(108,276)(93,274)
Inventories(39,064)23,541 
Prepaid expenses, income tax receivables, prepaid taxes, and other assets(864)(264)
Accounts payable and accrued expenses66,853 4,991 
Accrued incentive compensation1,382 (1,598)
Leases and other liabilities(1,572)(2,331)
Net cash provided by operating activities94,245 77,756 
Cash flows from investing activities: 
Capital expenditures(16,642)(13,899)
Purchases of short-term investments(12,840)(15,979)
Maturity/sale of short-term investments16,654 16,335 
Acquisition of business(4,259)— 
Other investing activities372 — 
Net cash used in investing activities(16,715)(13,543)
Cash flows from financing activities: 
Common stock repurchased and net settlements of stock awards(95,788)(104,215)
Proceeds from exercise of stock options1,086 1,171 
Investment of noncontrolling interest— 4,582 
Cash dividends paid on common stock(45,880)(47,594)
Distribution of noncontrolling interest— (1,102)
Net cash used in financing activities(140,582)(147,158)
Effect of exchange rate changes on cash and cash equivalents(2,174)36 
Net decrease in cash and cash equivalents(65,226)(82,909)
Cash and cash equivalents – beginning of period204,640 274,713 
Cash and cash equivalents – end of period$139,414 $191,804 

See accompanying notes to condensed consolidated financial statements - unaudited.
6
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)

Note A – Basis of Reporting

The accompanying unaudited condensed consolidated financial statements of Steven Madden, Ltd. and subsidiaries (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the financial position of the Company, the results of its operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results for the full year. These financial statements should be read in conjunction with the financial statements and related disclosures for the year ended December 31, 2023 included in the Annual Report of Steven Madden, Ltd. on Form 10-K filed with the SEC on March 4, 2024.

Note B – Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Significant areas involving management estimates include variable consideration included in revenue, allowances for bad debts, inventory valuation, and valuation of goodwill and intangible assets. The Company estimates variable consideration for future customer chargebacks and markdown allowances, discounts, returns, and other miscellaneous compliance-related deductions that relate to current-period sales. The Company evaluates anticipated chargebacks by reviewing several performance indicators of its major customers. These performance indicators, which include retailers’ inventory levels, sell-through rates, and gross margin levels, are analyzed by management to estimate the amount of the anticipated customer allowances.

Note C – Acquisitions, Divestitures, and Purchases and Sales of Joint Ventures

Almost Famous

On October 20, 2023, Daniel M. Friedman & Associates, Inc. (“Buyer”), a New York corporation and a wholly-owned subsidiary of the Company, acquired substantially all of the assets and certain liabilities (the “Business”) of Turn On Products Inc. d/b/a Almost Famous (“Seller” or “Almost Famous”), pursuant to an Asset Purchase Agreement, by and among Buyer, the Company, Seller, and the holders of capital stock of Seller. Almost Famous is a designer and marketer of women’s junior apparel. Almost Famous distributes its products to wholesale customers, including mass merchants, department stores, off-price retailers, and chain stores within the United States. Almost Famous markets products under its own brands, primarily Almost Famous, as well as private label brands for various retailers. This Business was acquired for cash consideration of $73,228 and a future payment contingent on the Almost Famous business achieving certain earnings before interest and tax ("EBIT") targets. In connection therewith, we recorded an initial short-term liability of $3,325 and a long-term liability of $9,975 as of the date of acquisition to reflect the estimated fair value of the contingent purchase price. The fair value of the contingent payments liability was estimated on the date of acquisition using the risk neutral simulation method, which included significant unobservable Level 3 inputs, such as projected EBIT over the earn-out period and a discount rate of 20.3%. Changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The maximum consideration which can be paid over the consideration period of four years is $68,000 and there are no minimum payments required. The liability will be remeasured at each reporting period with changes in fair value recorded in earnings. After the effect of closing adjustments, the total purchase price of the acquisition was $86,528.
7
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
The results of the Business have been included in the consolidated financial statements since the date of acquisition within the Wholesale Accessories/Apparel segment.

The following table summarizes the fair value of the assets acquired and liabilities assumed as of the October 20, 2023 acquisition date:

(in thousands)Fair Value
Accounts receivable$1,394 
Inventories22,718 
Factor accounts receivable51,940 
Operating lease right-of-use asset2,902 
Prepaid expenses and other current assets172 
Property and equipment, net248 
Intangibles, net(1)
32,950 
Accounts payable(31,857)
Accrued expenses(1,699)
Operating leases - current portion(474)
Operating leases - long-term portion(2,703)
Total fair value excluding goodwill$75,591 
Goodwill10,937 
Net assets acquired$86,528 
(1) Consists of a trademark of $9,050 and customer relationships of $23,900, both of which are amortized over 20 years. During the third quarter of 2024, the Company determined that the trademark was impaired and recognized an impairment charge of $8,635 for the remaining carrying value of the trademark. See Note K – Goodwill and Intangible Assets for further information.
The acquisition was accounted for in accordance with Accounting Standards Codification (ASC) Topic 805 ("Business Combinations"), which requires that the total cost of an acquisition be allocated to tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the date of acquisition.

The Company recorded goodwill for the acquisition based on the amount by which the purchase price exceeded the fair value of the net assets acquired, which consists largely of the synergies expected from the acquisitions. For tax purposes, goodwill will be amortized over a 15 year period.

The fair value of the trademark was estimated using the relief-from-royalty method, which presumes the owner of the asset avoids hypothetical royalty payments that would need to be made for the use of the asset if the asset was not owned. Key assumptions and estimates used are forecasted revenue, a royalty rate of 3.0%, and a discount rate of 21.8%. Such assumptions included significant unobservable inputs and changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The useful life of the trademark was estimated to be 20 years and amortization for the trademark has been recorded in operating expenses in our Consolidated Statements of Income. During the third quarter of 2024, the Company determined that the trademark was impaired and recognized an impairment charge of $8,635 for the remaining carrying value of the trademark. See Note K – Goodwill and Intangible Assets for further information.

The fair value of the customer relationships was estimated using the multi-period excess earnings method. The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the customer relationships, net of charges for the use of other identifiable assets of the business including working capital, fixed assets, and other intangible assets. Key assumptions and estimates used in deriving the projected cash flows are forecasted revenue, earnings before interest, taxes, depreciation, and amortization ("EBITDA") margin of 8.8%, customer attrition rate of 5.0%, and discount rates in the range of 21.0% to 23.5%. Such assumptions include significant unobservable inputs and such changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The
8
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
useful life of the customer relationships was estimated to be 20 years and amortization for these intangible assets has been recorded in operating expenses in our Consolidated Statements of Income.

Transaction costs of $1,505 for the year ended December 31, 2023 have been recorded within operating expenses in the Consolidated Statements of Income.

Hosiery Business

On March 1, 2024 Daniel M. Friedman & Associates, Inc. acquired the Steve Madden and Betsey Johnson hosiery division ("hosiery business") of Gina Group LLC (“Gina”). Gina has been the exclusive licensee of the hosiery category for Steve Madden and Betsey Johnson brands and such license agreements were terminated in conjunction with the acquisition. The assets of the hosiery business were acquired for a cash consideration of $4,259 and the assets acquired included inventories of $2,168, reacquired rights of $1,450, and goodwill of $641.

The results of the business have been included in the consolidated financial statements since the date of acquisition within the Wholesale Accessories/Apparel segment.

Joint Ventures

On May 15, 2024, the Company, through its subsidiary, Madden Europe Holding BV, formed a joint venture ("SM Fashion d.o.o. Beograd") with Milija Babovic. The Company owns 50.01% interest in SM Fashion d.o.o. Beograd and paid an initial nominal contribution. SM Fashion d.o.o. is the exclusive distributor of the Company's products in various countries throughout Southeastern Europe. Since the Company has a controlling financial interest in the joint venture, the assets, liabilities and results of operations of SM Fashion d.o.o. Beograd are consolidated and included in the Company’s consolidated financial statements. The other member's interest is reflected in “Net income attributable to noncontrolling interests” in the Consolidated Statements of Income and “Noncontrolling interests” in the Consolidated Balance Sheets.

On June 1, 2024, the Company, through its subsidiary, Madden Asia Holding Limited, formed a joint venture ("SM Distribution Latin America S. de R.L.") with Steve International Inc. The Company owns 51.0% interest in SM Distribution Latin America S. de R.L. and paid a contribution of $4,131. SM Distribution Latin America S. de R.L. is the exclusive distributor of the Company's products in various countries throughout Latin America. Since the Company has a controlling financial interest in the joint venture, the assets, liabilities and results of operations of SM Distribution Latin America S. de R.L. are consolidated and included in the Company’s consolidated financial statements. The other member's interest is reflected in “Net income attributable to noncontrolling interests” in the Consolidated Statements of Income and “Noncontrolling interests” in the Consolidated Balance Sheets.

Divestiture of GREATS® Business

On August 13, 2024, the Company completed the sale of substantially all of the assets and liabilities related to one of its subsidiaries, Greats Brand Inc. ("GREATS®"), to an unrelated third party, Unified Commerce Group Ltd. ("UCG"), in exchange for a minority interest in UCG with an estimated fair value of approximately $4,020.

The Company determined that GREATS® met the definition of a business under ASC 805, Business Combinations. The transaction resulted in the deconsolidation of GREATS® from the Company’s consolidated financial statements and the recognition of a loss on sale in the amount of $3,199, which was included within operating expenses in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2024. Prior to the divestiture, GREATS® was part of our Direct-to-Consumer segment.

The Company determined that its minority interest in UCG does not give the Company significant influence over UCG. Consequently, the Company accounted for the investment under ASC 321, Investments – Equity Securities, and elected to apply the measurement alternative, which allows the Company to initially record the investment at cost and subsequently
9
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
remeasure the investment at fair value upon observable price changes in orderly transactions for the identical or a similar investment of the same issuer or impairment, if any. The investment was included within deposits and other on our Condensed Consolidated Balance Sheet as of September 30, 2024.

Note D – Short-Term Investments

As of September 30, 2024 and December 31, 2023, short-term investments consisted of certificates of deposit. These securities are classified as current based upon their maturities and as of the balance sheet date have original maturities less than or equal to one year. As of September 30, 2024 and December 31, 2023, short-term investments amounted to $11,064 and $15,173, respectively.

Note E – Fair Value Measurements

The accounting guidance under Accounting Standards Codification 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), requires the Company to make disclosures about the fair value of certain of its assets and liabilities. ASC 820-10 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. ASC 820-10 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. A brief description of those three levels is as follows:
 
•Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
•Level 3: Significant unobservable inputs; inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement.

The Company’s financial assets and liabilities subject to fair value measurements as of September 30, 2024 and December 31, 2023 were as follows:
 September 30, 2024December 31, 2023
 Fair valueLevel 1Level 2Level 3Fair valueLevel 1Level 2Level 3
Assets:    
Forward contracts$317 — $317 — $708 — $708 — 
Total assets$317 $— $317 $— $708 $— $708 $— 
Liabilities:    
Contingent payment liability(1)(2)
$18,916 $— $— $18,916 $13,300 $— $— $13,300 
Forward contracts961 961 — 1,904 — 1,904 — 
Total liabilities$19,877 $— $961 $18,916 $15,204 $— $1,904 $13,300 

(1) On September 30, 2024, $7,716 was recorded in Contingent payment liability - current portion and $11,200 was recorded in Contingent payment liability - long-term portion.

(2) On December 31, 2023, $3,325 was recorded in Contingent payment liability - current portion and $9,975 was recorded in Contingent payment liability - long-term portion.

Forward contracts are used to manage the risk associated with the volatility of future cash flows (see Note L – Derivative Instruments). Fair value of these instruments is based on observable market transactions of spot and forward rates.

10
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
The Company's recurring Level 3 balance consists of a contingent payment liability related to an acquisition. The changes in the Company's Level 3 liabilities for the periods ended September 30, 2024 and December 31, 2023 were as follows:

Balance at
January 1, 2024		Acquisitions
Adjustments(1)
Balance at
September 30, 2024
2024
Liabilities:
     Contingent payment liability$13,300 $— $5,616 $18,916 
2023Balance at
January 1, 2023		AcquisitionsAdjustmentsBalance at
December 31, 2023
Liabilities:
     Contingent payment liability$— $13,300 $— $13,300 
(1) In 2024, amount consists of an adjustment of $5,616 that was included as an expense related to the change in valuation of the contingent payment liability in connection with the acquisition of Almost Famous. The adjustment was recorded in the Wholesale Accessories/Apparel segment.

At September 30, 2024 and December 31, 2023, the fair value of the contingent payment liability was $18,916 and $13,300, respectively, in connection with the October 20, 2023 acquisition of Almost Famous. The fair value of the contingent payments was estimated using a risk neutral simulation method to model the probability of different financial results of Almost Famous during the earn-out period, utilizing a discount rate of 17.0% and 20.3% at September 30, 2024 and December 31, 2023, respectively. The change in valuation for the contingent payment liability was a result of updates to the forecasted operating results for the earn-out period.

The fair values of goodwill and intangibles are measured on a non-recurring basis and are determined using Level 3 inputs, including forecasted cash flows, discount rates, and implied royalty rates (see Note C – Acquisitions, Divestitures, and Purchases and Sales of Joint Ventures and Note K – Goodwill and Intangible Assets).

The fair values of lease right-of-use assets and fixed assets related to company-owned retail stores are measured on a non-recurring basis and are determined using Level 3 inputs, including estimated discounted future cash flows associated with the assets using sales trends, market rents and market participant assumptions (see Note F – Leases).

The carrying value of certain financial instruments such as cash equivalents, certificates of deposit, accounts receivable, factor accounts receivable, and accounts payable approximates their fair values due to the short-term nature of their underlying terms. Fair value of the notes receivable held by the Company approximates their carrying value based upon their imputed or actual interest rate, which approximates applicable current market interest rates. Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (non-recurring). These assets can include long-lived assets that have been reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.
Note F – Leases
The Company leases office space, sample production space, warehouses, showrooms, storage units, and retail stores pursuant to operating leases. The Company’s portfolio of leases is primarily related to real estate. Since most of its leases do not provide a readily determinable implicit rate, the Company estimates its incremental borrowing rate to discount the lease payments based on information available at lease commencement.
Some of the Company’s retail store leases provide for variable lease payments based on sales volumes at the leased location, which are not measurable at the inception of the lease and are therefore not included in the measurement of the right-of-use assets and lease liabilities. Under Topic 842, these variable lease costs are expensed as incurred.
11
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
Lease Position
The following table presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023:
 Classification on the Balance SheetSeptember 30, 2024December 31, 2023
Assets
Noncurrent(1)
Operating lease right-of-use asset$148,391$122,783
Liabilities
CurrentOperating leases – current portion$43,812$40,342
NoncurrentOperating leases – long-term portion118,67498,536
Total operating lease liabilities$162,486$138,878
Weighted-average remaining lease term4.7 years4.5 years
Weighted-average discount rate5.3 %5.1 %
(1) During the three and nine months ended September 30, 2023, the Company recorded a pre-tax impairment charge related to its right-of-use assets of $0 and $95, recorded in the Wholesale Footwear Segment.

Lease Costs

The following table presents the composition of lease costs during the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Operating lease cost $12,852 $10,573 $36,163 $30,276 
Variable lease cost792 945 2,374 2,791 
Less: sublease income66 66 130 198 
Total lease cost$13,578 $11,452 $38,407 $32,869 

Other Information

The following table presents supplemental cash and non-cash information related to the Company's operating leases during the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows used for operating leases$13,069 $11,311 $37,155 $32,704 
Noncash transactions
Right-of-use asset obtained in exchange for new operating lease liabilities$15,628 $6,180 $58,348 $50,769 
Right-of-use asset amortization expense(1)
$10,717 $9,993 $32,740 $27,880 
(1) Included in "Leases and other liabilities" in the Consolidated Statement of Cash Flows.
12
STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
Future Minimum Lease Payments

The following table presents future minimum lease payments for each of the first five years and the total for the remaining years as of September 30, 2024:

2024 (remaining three months)$13,467 
202549,020 
202639,962 
202728,167 
202820,857 
Thereafter32,893 
Total minimum lease payments184,366 
Less: interest21,880 
Total lease liabilities$162,486 
Note G – Share Repurchase Program

The Company's Board of Directors authorized a share repurchase program (the “Share Repurchase Program”), effective as of January 1, 2004. The Share Repurchase Program does not have a fixed expiration or termination date and may be modified or terminated by the Board of Directors at any time. On several occasions, the Board of Directors has increased the amount authorized for repurchase of the Company's common stock. On May 8, 2023, the Board of Directors approved an increase in the Company's share repurchase authorization of approximately $189,900, bringing the total authorization to $250,000. The Share Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases or in privately negotiated transactions at such prices and times as are determined to be in the best interest of the Company. During the three and nine months ended September 30, 2024, an aggregate of 449 and 2,090 shares of the Company's common stock, excluding net settlements of employee stock awards, were repurchased under the Share Repurchase Program, at a weighted average price per share of $44.56 and $43.15, for an aggregate purchase price of approximately $19,994 and $90,153, respectively. During the three and nine months ended September 30, 2023, an aggregate of 914 and 2,654 shares of the Company's common stock, excluding net settlements of employee stock awards, were repurchased under the Share Repurchase Program, at a weighted average price per share of $34.01 and $34.26, for an aggregate purchase price of approximately $31,094 and $90,905, respectively. As of September 30, 2024, approximately $85,310 remained available for future repurchases under the Share Repurchase Program.

The Steven Madden, Ltd. Amended and Restated 2006 Stock Incentive Plan (as further amended, the "2006 Plan"), which expired on April 6, 2019, and the Steven Madden, Ltd. 2019 Incentive Compensation Plan, as amended (the "2019 Plan"), both provide the Company with the right to deduct or withhold, or require employees to remit to the Company, an amount sufficient to satisfy any applicable tax withholding and/or option cost obligations applicable to stock-based compensation awards. To the extent permitted, employees may elect to satisfy all or part of such withholding obligations by tendering to the Company previously owned shares or by having the Company withhold shares having a fair market value equal to the employee's withholding tax obligation and/or option cost. During the three and nine months ended September 30, 2024, an aggregate of 6 and 149 shares were withheld in connection with the settlement of vested restricted stock to satisfy tax-withholding requirements and option costs, at an average price per share of $42.92 and $42.70, for an aggregate purchase price of approximately $245 and $6,374, respectively. During the three and nine months ended September 30, 2023, an aggregate of 1,383 and 1,506 shares were withheld in connection with the settlement of vested restricted stock to satisfy tax-withholding requirements and option costs, at an average price per share of $35.14 and $35.19, for an aggregate purchase price of approximately $48,578 and $53,003, respectively.

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STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
Note H – Net Income Per Share of Common Stock

Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period, which does not include unvested restricted common stock subject to forfeiture of 1,646 shares for the period ended September 30, 2024, compared to 2,142 shares for the period ended September 30, 2023. Diluted net income per share reflects: (a) the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options and the assumed proceeds, which are deemed to be the proceeds from the exercise plus compensation cost not yet recognized attributable to future services using the treasury method, were used to purchase shares of the Company’s common stock at the average market price during the period, and (b) the vesting of granted non-vested restricted stock awards for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost not yet recognized attributable to future services using the treasury stock method, to the extent dilutive.

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net income attributable to Steven Madden, Ltd.$55,278 $64,413 $134,589 $135,673 
Basic net income per share$0.78 $0.88 $1.88 $1.84 
Diluted net income per share$0.77 $0.87 $1.87 $1.81 
Weighted average common shares outstanding:
Basic70,80672,94371,51673,679 
Effect of dilutive securities:
Stock awards and options to purchase shares of common stock7631,1286191,238
Diluted71,56974,07172,13574,917

For the three and nine months ended September 30, 2024, options to purchase approximately 32 and 26 shares of common stock have been excluded from the calculation of diluted net income per share as the result would have been anti-dilutive. For the three and nine months ended September 30, 2023, options to purchase approximately 27 and 15 shares of common stock have been excluded from the calculation of diluted net income per share as the result would have been anti-dilutive. For the three and nine months ended September 30, 2024, 0 and 5 restricted shares were excluded from the calculation of diluted net income per share, as compared to approximately 43 and 56 shares that were excluded from the calculation of diluted net income per share for the three and nine months ended September 30, 2023, as the result would have been anti-dilutive. The Company had contingently issuable performance awards outstanding that did not meet the performance conditions as of September 30, 2024 and 2023 and, therefore, were excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2024 and 2023. The number of potentially dilutive shares that could be issued upon vesting for these performance awards were immaterial as of both September 30, 2024 and 2023. These amounts were also excluded from the computation of weighted average potentially dilutive securities.

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STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
Note I – Income Taxes

The Company’s provision for income taxes for the three and nine months ended September 30, 2024 and 2023 is based on the estimated annual effective tax rate, plus or minus discrete items. The following table presents the provision for income taxes and the effective tax rates for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Income before provision for income taxes$75,978$84,660$182,503 $179,187 
Income tax expense$19,390$19,552$44,404$42,219 
Effective tax rate25.5%23.1%24.3%23.6%

The difference between the Company’s effective tax rates of 25.5% and 23.1% and 24.3% and 23.6% for the three and nine months ended September 30, 2024 and September 30, 2023, respectively, is primarily due to an increase in pre-tax income in jurisdictions with higher tax rates.

The Company recognizes interest and penalties, if any, related to uncertain income tax positions in income tax expense. Accrued interest and penalties on unrecognized tax benefits, and interest and penalty expense are immaterial to the consolidated financial statements.

The Company files income tax returns in the U.S. for federal, state, and local purposes, and in certain foreign jurisdictions. The Company's tax years 2021 through 2023 remain open to examination by most taxing authorities.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which contains certain revisions to the Internal Revenue Code, including a 15% corporate minimum income tax for tax years beginning after December 31, 2022. While the 15% corporate minimum income tax has no effect on the Company’s results of operations in the near term, we will continue to evaluate its impact on future years. The IRA also assesses a 1% excise tax on repurchases of corporate stock which impacts the Company’s stock repurchases effective January 1, 2023. The excise tax is recorded as an incremental cost in treasury stock on the Company's Condensed Consolidated Balance Sheets and was $189 and $787 for the three and nine months ended September 30, 2024.

The Organization for Economic Cooperation and Development (“OECD”) has implemented the global minimum tax rate of at least 15% for large multinational companies as of 2024 (“Pillar Two”). Under Pillar Two, a top-up tax will be required for any jurisdiction that has enacted Pillar Two and whose effective tax rate falls below the 15% global minimum rate. Additionally, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Under the safe harbor, companies would be excluded from Pillar Two requirements provided certain criteria are met. Based on preliminary analysis, the enactment of Pillar Two legislation is not expected to have a material effect on the Company’s financial position. The Company will continue to monitor and reflect the impact of such legislative changes in future periods, as appropriate.

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STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
Note J – Equity-Based Compensation

The following table summarizes the number of shares of common stock authorized for issuance under the 2019 Plan, the number of stock-based awards granted (net of expired or cancelled awards) under the 2019 Plan and the number of shares of common stock available for the grant of stock-based awards under the 2019 Plan:

Common stock authorized(1)
19,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled awards(8,565)
Common stock available for grant of stock-based awards as of September 30, 202410,435
(1) On May 22, 2024, the stockholders of the Company approved amendments to the Steven Madden, Ltd. 2019 Plan to, among other things, increase the number of shares of Company common stock available for issuance under the 2019 Plan. As amended, the 2019 Plan provides that up to a total of 19,000 shares of the Company’s common stock may be issued thereunder.

In addition, vested and unvested options to purchase 45 shares of common stock and 200 shares of unvested restricted stock awarded under the 2006 Plan were outstanding as of September 30, 2024.

Total equity-based compensation for the three and nine months ended September 30, 2024 and 2023 is as follows:

 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Restricted and performance-based stock awards$6,305 $5,351 $17,734 $16,150 
Stock options647 579 1,797 2,019 
Total$6,952 $5,930 $19,531 $18,169 

Equity-based compensation is included in operating expenses in the Company’s Condensed Consolidated Statements of Income.

Stock Options
 
Cash proceeds and intrinsic values related to total stock options exercised during the three and nine months ended September 30, 2024 and 2023 are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Proceeds from stock options exercised$337 $371 $1,086 $1,171 
Intrinsic value of stock options exercised$34 $15,731 $540 $16,089 

During the three and nine months ended September 30, 2024, options to purchase 57 shares vested with a weighted average exercise price of $41.26 and options to purchase 195 shares vested with a weighted average exercise price of $34.91 vested, respectively. During the three and nine months ended September 30, 2023, options to purchase 57 shares vested with a weighted average exercise price of $30.72 and options to purchase approximately 206 shares vested with a weighted average exercise price of $34.95. As of September 30, 2024, there were unvested options relating to 213 shares of common stock outstanding with a total of $1,981 of unrecognized compensation cost and an average vesting period of 1.0 year.

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STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements – Unaudited
September 30, 2024
(in thousands except per share data)
The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of options granted, which requires several assumptions. The expected term of the options represents the estimated period of time until exercise and is based on the historical experience of similar awards. Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield is based on the Company's annualized dividend per share amount divided by the Company's stock price. The following weighted average assumptions were used for stock options granted during the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,
 20242023
Volatility
34.1% to 47.4%
 40.6% to 48.1%
Risk free interest rate
4.0% to 4.6%
3.7% to 4.0%
Expected life in years
3.0 to 4.0
3.0 to 5.0
Dividend yield2.0%2.5%
Weighted average fair value$13.22$10.95
Activity relating to stock options granted under the Company’s plans during the nine months ended September 30, 2024 was as follows:
 Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 2024