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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 March 31, 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 filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller 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 April 26, 2024, there were 73,378,158 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
March 31, 2024


 
 
  
 
   
 
   
 
   
 
 
   
 
  
   
   
  
 
  
   
 






PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31,
2024
December 31,
2023
March 31,
2023
(in thousands, except par value)(unaudited) (unaudited)
ASSETS   
Current assets:   
Cash and cash equivalents$131,501 $204,640 $209,979 
Short-term investments11,556 15,173 13,740 
Accounts receivable, net of allowances of $4,874, $4,828 and $7,208
44,457 40,246 46,138 
Factor accounts receivable380,613 320,723 283,893 
Inventories201,960 228,990 179,937 
Prepaid expenses and other current assets28,324 29,009 22,267 
Income tax receivable and prepaid income taxes8,883 16,051 12,079 
Total current assets807,294 854,832 768,033 
Note receivable – related party  301 
Property and equipment, net47,490 47,199 41,519 
Operating lease right-of-use asset127,464 122,783 112,501 
Deposits and other15,991 16,250 11,750 
Deferred tax assets609 609 1,963 
Goodwill180,869 180,003 168,228 
Intangibles, net124,436 126,267 100,826 
Total Assets$1,304,153 $1,347,943 $1,205,121 
LIABILITIES   
Current liabilities:   
Accounts payable$170,154 $161,140 $101,678 
Accrued expenses109,173 154,751 112,395 
Operating leases – current portion40,020 40,342 33,977 
Income taxes payable4,474 5,998 3,934 
Contingent payment liability – current portion3,738 3,325 1,153 
Accrued incentive compensation4,953 12,068 4,105 
Total current liabilities332,512 377,624 257,242 
Contingent payment liability – long-term portion11,212 9,975  
Operating leases – long-term portion102,637 98,536 95,797 
Deferred tax liabilities9,016 8,606 3,923 
Other liabilities5,169 5,170 10,461 
Total Liabilities460,546 499,911 367,423 
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,136,996, 136,471 and 134,746 shares issued, 73,324, 73,681 and 76,011 shares outstanding
7 7 8 
Additional paid-in capital592,115 586,155 526,844 
Retained earnings1,708,018 1,679,500 1,591,814 
Accumulated other comprehensive loss(30,549)(29,046)(34,863)
Treasury stock – 63,672, 62,790 and 58,735 shares at cost
(1,444,355)(1,407,018)(1,262,761)
Total Steven Madden, Ltd. stockholders’ equity825,236 829,598 821,042 
Noncontrolling interest18,371 18,434 16,656 
Total stockholders’ equity843,607 848,032 837,698 
Total Liabilities and Stockholders’ Equity$1,304,153 $1,347,943 $1,205,121 

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




STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
 
Three Months Ended March 31,
(in thousands, except per share data)20242023
Net sales$550,567 $461,737 
Licensing fee income1,814 2,097 
Total revenue552,381 463,834 
Cost of sales (exclusive of depreciation and amortization)327,566 268,742 
Gross profit224,815 195,092 
Operating expenses166,369 148,581 
Impairment of intangible1,700  
Income from operations56,746 46,511 
Interest and other income – net1,555 2,020 
Income before provision for income taxes58,301 48,531 
Provision for income taxes 13,739 11,745 
Net income44,562 36,786 
Less: net income attributable to noncontrolling interest628 56 
Net income attributable to Steven Madden, Ltd.$43,934 $36,730 
Basic net income per share$0.61 $0.49 
Diluted net income per share$0.60 $0.48 
Basic weighted average common shares outstanding72,292 74,498 
Effect of dilutive securities – options/restricted stock573 1,357 
Diluted weighted average common shares outstanding72,865 75,855 
Cash dividends declared per common share$0.21 $0.21 

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 March 31, 2024
(in thousands)Pre-tax amountsTax expenseAfter-tax amounts
Net income$44,562 
Other comprehensive income/(loss):  
      Foreign currency translation adjustment$(3,426)$ (3,426)
Income on cash flow hedging derivatives1,687 (455)1,232 
Total other comprehensive loss$(1,739)$(455)(2,194)
Comprehensive income42,368 
Less: comprehensive loss attributable to noncontrolling interests(63)
Comprehensive income attributable to Steven Madden, Ltd.$42,431 
Three Months Ended March 31, 2023
(in thousands)Pre-tax amountsTax benefitAfter-tax amounts
Net income$36,786 
Other comprehensive income/(loss):
      Foreign currency translation adjustment$939 $ 939 
Loss on cash flow hedging derivatives(463)174 (289)
Total other comprehensive income$476 $174 650 
Comprehensive income37,436 
Less: comprehensive loss attributable to noncontrolling interests(140)
Comprehensive income attributable to Steven Madden, Ltd.$37,576 

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



STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)

Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-Controlling InterestTotal Stockholders' Equity
(in thousands except per share data)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(882)— — — — 882 (37,337)— (37,337)
Exercise and net settlement of stock options9 — 222 — —   — 222 
Issuance of restricted stock, net of forfeitures516 — — — — — — — — 
Stock-based compensation— — 5,738 — — — — — 5,738 
Foreign currency translation adjustment— — — — (2,735)— — (691)(3,426)
Cash flow hedge (net of tax expense of $455)
— — — — 1,232 — — — 1,232 
Dividends on common stock ($0.21 per share)
— — — (15,416)— — — — (15,416)
Net income— — — 43,934 — — — 628 44,562 
Balance - March 31, 202473,324 $7 $592,115 $1,708,018 $(30,549)63,672 $(1,444,355)$18,371 $843,607 

Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-Controlling InterestTotal Stockholders' Equity
(in thousands except per share data)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(1,075)— — — — 1,075 (38,451)— (38,451)
Exercise and net settlement of stock options11 — 264 — — — 264 
Issuance of restricted stock, net of forfeitures279 — — — — — — — — 
Stock-based compensation— 6,139 — — — — — 6,139 
Foreign currency translation adjustment— — — — 1,135 — — (196)939 
Cash flow hedge (net of tax benefit of $174)
— — — — (289)— — — (289)
Dividends on common stock ($0.21 per share)
— — — (16,039)— — — — (16,039)
Investments of noncontrolling interests— — — — — — — 4,486 4,486 
Net income— — — 36,730 — — — 56 36,786 
Balance - March 31, 202376,011 $8 $526,844 $1,591,814 $(34,863)58,735 $(1,262,761)$16,656 $837,698 

See accompanying notes to condensed consolidated financial statements - unaudited.
4



STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended March 31,
(in thousands)20242023
Cash flows from operating activities:  
Net income$44,562 $36,786 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation5,738 6,139 
Depreciation and amortization4,631 3,366 
Loss on disposal of fixed assets74 15 
Impairment of intangible1,700  
Impairment of lease right-of-use asset 95 
Deferred taxes410  
Accrued interest on note receivable - related party (2)
Notes receivable - related party 102 
Change in valuation of contingent payment liabilities1,650  
Other operating activities861 623 
Changes, net of acquisitions, in:
Accounts receivable(5,681)(8,201)
Factor accounts receivable(60,006)(35,665)
Inventories28,398 47,710 
Prepaid expenses, income tax receivables, prepaid taxes, and other assets6,539 4,791 
Accounts payable and accrued expenses(37,160)(60,461)
Accrued incentive compensation(7,115)(7,683)
Leases and other liabilities(306)(890)
Net cash used in operating activities(15,705)(13,275)
Cash flows from investing activities: 
Capital expenditures(3,979)(3,791)
Purchases of short-term investments(790)(6,722)
Maturity/sale of short-term investments4,084 8,087 
Acquisition of business(4,259)— 
Other investing activities326 — 
Net cash used in investing activities(4,618)(2,426)
Cash flows from financing activities: 
Common stock repurchased and net settlements of stock awards(37,337)(38,451)
Proceeds from exercise of stock options222 264 
Investment of noncontrolling interest 4,486 
Cash dividends paid on common stock(15,416)(16,039)
Net cash used in financing activities(52,531)(49,740)
Effect of exchange rate changes on cash and cash equivalents(285)707 
Net decrease in cash and cash equivalents(73,139)(64,734)
Cash and cash equivalents – beginning of period204,640 274,713 
Cash and cash equivalents – end of period$131,501 $209,979 

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

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 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 months ended March 31, 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

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.
6

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 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.
The acquisition was accounted for in accordance with FASB Topic ASC 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.

Preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revision, which may result in adjustments to the preliminary values recorded during the measurement period (a period not to exceed 12 months from acquisition date).

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.

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
7

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The 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.

Note D – Short-Term Investments

As of March 31, 2024 and December 31, 2023, short-term investments consisted of certificates of deposit. These securities are classified as current based upon their maturities. As of March 31, 2024 and December 31, 2023, short-term investments amounted to $11,556 and $15,173, respectively, and have original maturities less than or equal to one year as of the balance sheet date.

Note E – Fair Value Measurement

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.

8

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
The Company’s financial assets and liabilities subject to fair value measurements as of March 31, 2024 and December 31, 2023 were as follows:
 March 31, 2024December 31, 2023
 Fair valueLevel 1Level 2Level 3Fair valueLevel 1Level 2Level 3
Assets:    
Forward contracts1,242  1,242  708 — 708 — 
Total assets$1,242 $ $1,242 $ $708 $ $708 $ 
Liabilities:    
Contingent consideration(1)(2)
$14,950 $ $ $14,950 $13,300 $ $ $13,300 
Forward contracts792  792  1,904  1,904  
Total liabilities$15,742 $ $792 $14,950 $15,204 $ $1,904 $13,300 

(1) On March 31, 2024, $3,738 was recorded in Contingent payment liability - current portion and $11,212 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.

The Company's recurring Level 3 balance consists of contingent consideration related to acquisitions. The changes in the Company's Level 3 liabilities for the periods ended March 31, 2024 and December 31, 2023 were as follows:

Balance at
January 1, 2024
Acquisitions
Adjustments(1)
Balance at
March 31, 2024(2)
2024
Liabilities:
     Contingent consideration$13,300 $ $1,650 $14,950 
2023Balance at
January 1, 2023
Acquisitions
Adjustments(1)
Balance at
December 31, 2023
Liabilities:
     Contingent consideration$ $13,300 $— $13,300 
(1) In 2024, amount consists of an adjustment of $1,650 that was included as an expense in operating expenses, related to the change in valuation of the contingent consideration in connection with the acquisition of Almost Famous.

At March 31, 2024 and December 31, 2023, the liability for contingent consideration was $14,950 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 19.3% and 20.3% at March 31, 2024 and December 31, 2023, respectively.

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 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.
9

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
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.
Lease Position
The following table presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023:
 Classification on the Balance SheetMarch 31, 2024December 31, 2023
Assets
Noncurrent(1)
Operating lease right-of-use asset$127,464$122,783
Liabilities
CurrentOperating leases – current portion$40,020$40,342
NoncurrentOperating leases – long-term portion102,63798,536
Total operating lease liabilities$142,657$138,878
Weighted-average remaining lease term4.5 years4.5 years
Weighted-average discount rate5.2 %5.1 %
(1) During the three months ended March 31, 2023, the Company recorded a pre-tax impairment charge related to its right-of-use assets of $95, recorded in the Wholesale Footwear Segment.

Lease Costs

 The following table presents the composition of lease costs during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,
20242023
Operating lease cost $11,509 $9,138 
Variable lease cost630 739 
Less: sublease income64 66 
Total lease cost$12,075 $9,811 
10

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
Other Information
The following table presents supplemental cash and non-cash information related to the Company's operating leases during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,
20242023
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows used for operating leases$11,760 $10,014 
Noncash transactions
Right-of-use asset obtained in exchange for new operating lease liabilities$16,028 $30,528 
Right-of-use asset amortization expense(1)
$11,347 $8,196 

(1) Included in "Leases and other liabilities" in the Consolidated Statement of Cash Flows.

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 March 31, 2024:

2024 (remaining nine months)$35,155 
202541,478 
202631,779 
202720,280 
202813,351 
Thereafter18,530 
Total minimum lease payments160,573 
Less: interest17,916 
Total lease liabilities$142,657 
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 months ended March 31, 2024, an aggregate of 773 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 $42.25, for an aggregate purchase price of approximately $32,644. During the three months ended March 31, 2023, an aggregate of 967 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 $35.77, for an aggregate purchase price of approximately $34,580. As of March 31, 2024, approximately $142,818 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 (the "2019 Plan") both provide the
11

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
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 months ended March 31, 2024, an aggregate of 109 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 $42.75, for an aggregate purchase price of approximately $4,693. During the three months ended March 31, 2023, an aggregate of 108 shares were withheld in connection with the settlement of employee stock awards to satisfy tax-withholding requirements and option costs, at an average price per share of $35.96, for an aggregate purchase price of approximately $3,871.

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 1,557 shares for the period ended March 31, 2024, compared to 2,161 shares for the period ended March 31, 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 March 31,
20242023
Net income attributable to Steven Madden, Ltd.$43,934 $36,730 
Basic net income per share$0.61 $0.49 
Diluted net income per share$0.60 $0.48 
Weighted average common shares outstanding:
Basic72,29274,498
Effect of dilutive securities:
Stock awards and options to purchase shares of common stock5731,357
Diluted72,86575,855

For the three months ended March 31, 2024, options to purchase approximately 4 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 months ended March 31, 2023, options to purchase approximately 6 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 months ended March 31, 2024, 8 restricted shares were excluded from the calculation of diluted net income per share, as compared to approximately 58 shares that were excluded from the calculation of diluted net income per share for the three months ended March 31, 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 March 31, 2024 and 2023 and, therefore, were excluded from the calculation of diluted net income per common share for the three months ended March 31, 2024 and 2023. The number of potentially dilutive shares that
12

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
could be issued upon vesting for these performance awards were immaterial as of both March 31, 2024 and 2023. These amounts were also excluded from the computation of weighted average potentially dilutive securities.

Note I – Income Taxes

The Company’s provision for income taxes for the three months ended March 31, 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 months ended March 31, 2024 and 2023:

Three Months Ended March 31,
20242023
Income before provision for income taxes$58,301$48,531
Income tax expense$13,739$11,745
Effective tax rate23.6%24.2%

The difference between the Company’s effective tax rates of 23.6% and 24.2% for the three months ended March 31, 2024 and 2023, respectively, is primarily due to a decrease 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 2020 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 $267 for the three months ended March 31, 2024.

The Organization for Economic Cooperation and Development (“OECD”) has proposed to enact a global minimum tax rate of at least 15% for large multinational companies beginning in 2024 (“Pillar Two”). Under Pillar Two, a top-up tax will be required for any jurisdiction 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.

13

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 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 authorized11,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled awards(7,970)
Common stock available for grant of stock-based awards as of March 31, 20243,030

In addition, vested and unvested options to purchase 204 shares of common stock and 67 shares of unvested restricted stock awarded under the 2006 Plan were outstanding as of March 31, 2024.

Total equity-based compensation for the three months ended March 31, 2024 and 2023 was as follows:

 Three Months Ended March 31,
 20242023
Restricted stock$5,192 $5,393 
Stock options546 746 
Total$5,738 $6,139 

We calculate an estimated forfeiture rate annually based on historical forfeitures and expectations about future forfeitures. 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 months ended March 31, 2024 and 2023 were as follows:
 Three Months Ended March 31,
 20242023
Proceeds from stock options exercised$222 $264 
Intrinsic value of stock options exercised$142 $134 

During the three months ended March 31, 2024, options to purchase 73 shares vested with a weighted average exercise price of $32.58. During the three months ended March 31, 2023, options to purchase 79 shares vested with a weighted average exercise price of $36.63. As of March 31, 2024, there were unvested options relating to 118 shares of common stock outstanding with a total of $902 of unrecognized compensation cost and an average vesting period of 2.0 years.

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. New shares are issued upon option exercise. The following weighted average assumptions were used for stock options granted during the three months ended March 31, 2024 and 2023:
14

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
Three Months Ended March 31,
 20242023
Volatility
47.4%
 47.7%
Risk free interest rate
4.0%
4.0%
Expected life in years
4.0
5.0
Dividend yield2.0%2.6%
Weighted average fair value$15.69$11.86

Activity relating to stock options granted under the Company’s plans during the three months ended March 31, 2024 was as follows:
 Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 20241,119$35.62   
Granted842.00   
Exercised(9)26.10   
Outstanding at March 31, 20241,118$35.73 3.0 years$7,776 
Exercisable at March 31, 20241,000$35.75 2.8 years$6,943 
Activity relating to stock options granted under the Company’s plans during the three months ended March 31, 2023 was as follows:
 Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 20232,766 $29.82   
Granted8 31.96   
Exercised(11)24.26   
Forfeited(3)46.28   
Outstanding at March 31, 20232,760 $29.83 1.8 years$19,529 
Exercisable at March 31, 20232,612 $29.36 1.6 years$19,417 
Restricted Stock
 
The following table summarizes restricted stock activity during the three months ended March 31, 2024 and 2023:

 20242023
 Number of SharesWeighted Average Fair Value at Grant DateNumber of SharesWeighted Average Fair Value at Grant Date
Outstanding at January 1,1,278$35.44 2,111$28.45 
Granted53442.14 28433.69 
Vested(237)34.90 (229)34.58 
Forfeited(18)36.76 (5)38.15 
Outstanding at March 31,1,557$37.78 2,161$28.47 

15

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
As of March 31, 2024, the Company had $50,417 of total unrecognized compensation cost related to restricted stock awards granted under the 2019 Plan and the 2006 Plan. This cost is expected to be recognized over a weighted average period of 3.6 years. The Company determines the fair value of its restricted stock awards based on the market price of its common stock on the date of grant.

The fair values of the restricted stock that vested during the three months ended March 31, 2024 and 2023 were $8,268 and $7,928.

Note K – Goodwill and Intangible Assets

The following is a summary of the carrying amount of goodwill by reporting unit as of March 31, 2024:
Wholesale  Net Carrying  Amount
 FootwearAccessories/ Apparel
Direct-to-Consumer
Balance at January 1, 2024$90,663 $73,625 $15,715 $180,003 
Acquisitions 641  641 
Translation141  84 225 
Balance at March 31, 2024$90,804 $74,266 $15,799 $180,869 

The following table details identifiable intangible assets as of March 31, 2024:
 Estimated Lives
Cost Basis(2)
Accumulated Amortization
Impairment & Other(1)(3)
Net Carrying Amount
Trademarks
10 - 20 years
$32,195 $(16,263)$(2,743)$13,189 
Customer relationships
1020 years
62,580 (27,926)(1,545)33,109 
Re-acquired rights2 years1,450 (66) 1,384 
96,225 (44,255)(4,288)47,682 
Re-acquired rightindefinite35,200  (9,357)25,843 
Trademarksindefinite58,833  (7,922)50,911 
 $190,258 $(44,255)$(21,567)$124,436 
(1) During the quarter ended March 31, 2024, the Company recorded impairment charges of $1,700 related to the GREATS® trademark.
(2) During the quarter ended March 31, 2024, the Company changed its estimate of useful life of its GREATS® trademark to 10 years and the remaining balance of $4,450 of the GREATS® trademark will be amortized over that time frame starting in the second quarter of 2024.

(3) Includes the effect of foreign currency translation related primarily to the movements of the Canadian dollar and Mexican peso in relation to the U.S. dollar.
16

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
The following table details identifiable intangible assets as of December 31, 2023:
 Estimated Lives
Cost Basis(1)
Accumulated Amortization
Impairment & Other(2)(3)
Net Carrying Amount
Trademarks
20 years
$27,745 $(16,263)$(2,545)$8,937 
Customer relationships
1020 years
62,580 (27,267)(1,382)33,931 
90,325 (43,530)(3,927)42,868 
Re-acquired rightindefinite35,200  (8,862)26,338 
Trademarksindefinite63,283  (6,222)57,061 
 $188,808 $(43,530)$(19,011)$126,267 
(1) During the year ended December 31, 2023, the Company acquired Almost Famous, which consisted of a trademark of $9,050 and customer relationships of $23,900, both of which are amortized over 20 years.
(2) During the year ended December 31, 2023, the Company recorded impairment charges of $6,520 related to the GREATS® trademark.
(3) Includes the effect of foreign currency translation related primarily to the movements of the Canadian dollar and Mexican peso in relation to the U.S. dollar.
The Company evaluates its goodwill and indefinite-lived intangible assets for indicators of impairment at least annually in the beginning of the third quarter of each year and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The Company also periodically performs a quantitative test to assess its goodwill and indefinite-lived intangibles for impairment in lieu of using the qualitative approach in order to reassess the fair values. A quantitative assessment of goodwill and indefinite-lived intangible assets was performed as of July 1, 2023. In conducting the quantitative impairment assessments for goodwill and indefinite-lived intangibles, the Company concluded that the fair values of its reporting units exceeded their carrying values and the fair values of its indefinite-lived intangibles exceeded their respective carrying values. In the fourth quarter of 2023, certain circumstances occurred that indicated potential impairment and the Company performed a valuation of the GREATS® trademark. The estimated fair value of this trademark was determined using an excess earnings method, incorporating the use of projected financial information and a discount rate of 14.8% which was developed using market participant based assumptions. Changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. As a result of this assessment, the GREATS® trademark was written down from the carrying value of $12,670 to its fair value of $6,150, resulting in a pre-tax non-cash impairment charge of $6,520. Subsequently, in the first quarter of 2024, circumstances occurred that caused a change in the estimated useful life of the GREATS® trademark from an indefinite life to an estimated useful life of 10 years, and as a result, the Company performed an impairment test. The estimated fair value of this trademark was determined using an excess earnings method, incorporating the use of projected financial information and a discount rate of 14.0% which was developed using market participant based assumptions. Changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. As a result of this assessment, the GREATS® trademark was written down from the carrying value of $6,150 to its fair value of $4,450, resulting in a pre-tax non-cash impairment charge of $1,700.

These impairment charges were recorded in impairment of intangibles in the Company’s Consolidated Statements of Income and recognized in the Direct-to-Consumer segment.

The Company evaluates its goodwill and indefinite-lived intangible assets for indicators of impairment at least annually in the third quarter of each year and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. A quantitative assessment of goodwill and indefinite-lived intangible assets was performed as of July 1, 2023. In conducting the quantitative impairment assessments for goodwill and indefinite-lived intangibles, the Company concluded that the fair values of its reporting units exceeded their carrying values and the fair values of its indefinite-lived intangibles exceeded their respective carrying values. In conducting the qualitative impairment assessment for goodwill and indefinite-lived intangibles, the Company concluded that it is more likely than not that the fair values of its reporting units exceeded their carrying values and the fair values of its indefinite-lived intangibles exceeded their respective carrying values. Therefore, in 2023, as a result of the annual test, no impairment charges were recorded for goodwill and intangibles.
17

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
The amortization of intangible assets amounted to $941 for the three months ended March 31, 2024 compared to $423 for the three months ended March 31, 2023 and is included in operating expenses in the Company's Condensed Consolidated Statements of Income. The estimated future amortization expense for intangibles as of March 31, 2024 was as follows:

2024 (remaining nine months) $3,465 
20254,619 
20263,855 
20273,607 
20283,571 
Thereafter28,565 
Total$47,682 
 
Note L – Derivative Instruments

The Company uses derivative instruments, specifically, forward foreign exchange contracts, to manage the risk associated with the volatility of future cash flows. The foreign exchange contracts are used to mitigate the impact of exchange rate fluctuations on certain forecasted purchases of inventory and are designated as cash flow hedging instruments. As of March 31, 2024, the Company's entire net forward contracts hedging portfolio consisted of a notional amount of $78,464, with current maturity dates ranging from January 2024 to December 2024 and the fair value included on the Company's Condensed Consolidated Balance Sheets in other current assets of $1,242 and other current liabilities of $792. For the three months ended March 31, 2024, a loss of $9 was reclassified from accumulated other comprehensive income and recognized in cost of sales on the Consolidated Statements of Income. For the three months ended March 31, 2023, the Company's hedging activities were considered effective, and, thus, no ineffectiveness from hedging activities was recognized during the first quarter of 2023.
Note M – Commitments, Contingencies and Other
Future Minimum Royalty and Advertising Payments:

The Company has minimum commitments related to a license agreement. The Company sources, distributes, advertises, and sells certain of its products pursuant to a license agreement with an unaffiliated licensor. Royalty amounts under the license agreement are based on stipulated minimum net sales and the payment of minimum annual royalty amounts. The license agreement has various terms and renewal options, provided that minimum sales levels, and certain other conditions are achieved. As of March 31, 2024, the Company had future minimum royalty and advertising payments of $16,500. Royalty expenses are recognized in cost of sales on the Consolidated Statements of Income.

Legal Proceedings:
The Company has been named as a defendant in certain lawsuits in the normal course of business. In the opinion of management, after consulting with legal counsel, the liabilities, if any, resulting from these matters should not have a material effect in the Company's financial position or results of operations.
Letters of Credit:
As of March 31, 2024, the Company had $505 in letters of credit outstanding unrelated to the Company's Credit Agreement.

18

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
Note N – Operating Segment Information
The Company operates the following operating segments, which are presented as reportable segments: Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to-Consumer, and Licensing. Our Wholesale Footwear segment designs, sources, and markets our brands and sells our products to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, and through our joint ventures and international distributor network. Our Wholesale Accessories/Apparel segment designs, sources, and markets our brands, and sells our products to department stores, mass merchants, off-price retailers, online retailers, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe and through our joint ventures and international distributor network. Our Direct-to-Consumer segment consists of Steve Madden® and Dolce Vita® full-price retail stores, Steve Madden® outlet stores, Steve Madden® concessions in international markets, and our directly-operated digital e-commerce websites. We operate retail locations in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Europe, Israel, South Africa, Taiwan, China, and the Middle East. Our Licensing segment is engaged in the licensing of the Steve Madden® and Betsey Johnson® trademarks for use in the sale of select apparel, accessory, and home categories as well as various other non-core products.
Our Corporate activities do not constitute a reportable segment and include costs not directly attributable to the segments. These costs are primarily related to expenses associated with corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cyber security, and other shared services. The Chief Operating Decision Maker does not review asset information by segment; therefore we do not present assets in this note.
As of and for the three months ended,Wholesale FootwearWholesale Accessories/ApparelTotal WholesaleDirect-to-ConsumerLicensing
Corporate(1)
Consolidated
March 31, 2024  
Total revenue$295,660 $142,576 $438,236 $112,331 $1,814 $ $552,381 
Gross profit108,297 45,150 153,447 69,554 1,814  224,815 
Income/(loss) from operations$63,115 $18,171 $81,286 $(2,225)$1,314 $(23,629)$56,746 
Capital expenditures$897 $94 $991 $2,211 $ $777 $3,979 
March 31, 2023    
Total revenue$282,321 $79,816 $362,137 $99,600 $2,097 $ $463,834 
Gross profit107,522 26,514 134,036 58,959 2,097  195,092 
Income/(loss) from operations$62,056 $9,438 $71,494 $(4,247)$1,818 $(22,554)$46,511 
Capital expenditures$137 $60 $197 $1,955 $ $1,639 $3,791 

(1) Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments. These costs are primarily related to expenses associated with corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cyber security, and other shared services.

Revenues by geographic area were as follows:
Three Months Ended March 31,
 20242023
Domestic (1)
$454,790 $378,141 
International97,591 85,693 
Total$552,381 $463,834 
(1) Includes revenues of $82,458 and $57,007, respectively, for the three months ended March 31, 2024 and March 31, 2023 related to sales to U.S. customers where the title is transferred outside the U.S. and the sale is recorded by the Company's international entities.

19

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)
Note O – Credit Agreement

On July 22, 2020, the Company entered into a $150,000 secured revolving credit agreement (as amended to date, the “Credit Agreement”) with various lenders and Citizens Bank, N.A., as administrative agent (the “Agent”), which replaced the Company’s existing credit facility provided by Rosenthal & Rosenthal, Inc. (“Rosenthal”). The Credit Agreement provides for a revolving credit facility (the “Credit Facility”) scheduled to mature on July 22, 2025.

The initial $150,000 maximum availability under the Credit Facility is subject to a borrowing base calculation consisting of certain eligible accounts receivable, credit card receivables, inventory, and in-transit inventory. Availability under the Credit Facility is reduced by outstanding letters of credit. The Company may from time-to-time increase the maximum availability under the Credit Agreement by up to $100,000 if certain conditions are satisfied.

On March 25, 2022, an amendment to the Credit Agreement (the “Amendment”) replaced the London Interbank Offering Rate (“LIBOR”) with the Bloomberg Short-Term Bank Yield Index (“BSBY”) as the interest rate benchmark. Borrowings under the Credit Agreement generally bear interest at a variable rate equal to a specified margin, which is based upon the average availability under the Credit Facility from time to time, plus, at the Company’s election (i) BSBY for the applicable interest period, or (ii) the base rate (which is the highest of (a) the prime rate announced by the Agent, (b) the sum of the federal funds effective rate plus 0.50%, and (c) the sum of the one-month BSBY rate plus 1.00%). Furthermore, the Amendment reduced the specified margin used to determine the interest rate under the Credit Agreement and reduced the commitment fee paid by the Company to the Agent, for the account of each lender. Additionally, the Amendment reduced the frequency of the Company’s borrowing base reporting requirements when no loans are outstanding. The Amendment also extended the maturity date of the Credit Agreement to March 20, 2027. As amended on April 3, 2023, on October 23, 2023, the Credit Agreement was further amended to accommodate changes made to the Company’s factoring arrangement with CIT pursuant to the Notification Factoring Rider as described in Note P – Factoring Agreements.

Under the Credit Agreement, the Company must also pay (i) a commitment fee to the Agent, for the account of each lender, which accrues at a rate equal to 0.25% per annum on the average daily unused amount of the commitment of such lender, (ii) a letter of credit participation fee to the Agent, for the account of each lender, ranging from 1.25% to 2.50% per annum, based upon average availability under the Credit Facility from time to time, multiplied by the average daily amount available to be drawn under the applicable letter of credit, and (iii) a letter of credit fronting fee to each issuer of a letter of credit under the Credit Agreement, which will accrue at a rate per annum separately agreed upon between the Company and such issuer.

The Credit Agreement contains various restrictions and covenants applicable to the Company and its subsidiaries. Among other requirements, availability under the Credit Facility must, at all times, (i) prior to the occurrence of the permanent borrowing base trigger (as defined in the Credit Agreement), equal or exceed the greater of $22,500 and 15% of the line cap (as defined in the Credit Agreement), and (ii) after the occurrence of the permanent borrowing base trigger, equal or exceed the greater of $15,000 and 10% of the line cap (as defined in the Credit Agreement). Other than this minimum availability requirement, the Credit Agreement does not include any financial maintenance covenants.

The Credit Agreement requires the Company and various subsidiaries of the Company to guarantee each other’s obligations arising from time to time under the Credit Facility, as well as obligations arising in respect of certain cash management and hedging transactions. Subject to customary exceptions and limitations, all borrowings under the Credit Agreement are secured by a lien on all or substantially all of the assets of the Company and each subsidiary guarantor.

The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the Agent may, and at the request of the required lenders shall, terminate the loan commitments under the Credit Agreement, declare any outstanding obligations under the Credit Agreement to be immediately due and payable, or require the Company to adequately cash collateralize outstanding letter of credit obligations. If the Company or, with certain exceptions, a subsidiary becomes the subject of a proceeding under any bankruptcy, insolvency, or similar law, then the loan commitments under the Credit Agreement will automatically terminate, and any outstanding obligations under the Credit Agreement and the cash collateral required under the Credit Agreement for any outstanding letter of credit obligations will become immediately due and payable.

As of March 31, 2024, the Company had no cash borrowings and no letters of credit outstanding under the Credit Agreement
20

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
March 31, 2024
(in thousands except per share data)

Note P – Factoring Agreements

In conjunction with the Credit Agreement described in Note O – Credit Agreement, on July 22, 2020, the Company and certain of its subsidiaries (collectively, the “Madden Entities”) entered into an Amended and Restated Deferred Purchase Factoring Agreement (the “Factoring Agreement”) with Rosenthal & Rosenthal, Inc. ("Rosenthal"). Pursuant to the Factoring Agreement, Rosenthal serves as the collection agent with respect to certain receivables of the Madden Entities and is entitled to receive a base commission of 0.20% of the gross invoice amount of each receivable assigned for collection, plus certain additional fees and expenses, subject to certain minimum annual commissions. Rosenthal will generally assume the credit risk resulting from a customer’s financial inability to make payment of credit-approved receivables, which are classified as Factor Receivables. The initial term of the Factoring Agreement is twelve months, subject to automatic renewal for additional twelve-month periods, and the Factoring Agreement may be terminated at any time by Rosenthal or the Madden Entities on 60 days' notice and upon the occurrence of certain other events. The Madden Entities pledged all of their rights under the Factoring Agreement to the Agent under the Credit Agreement to secure obligations arising under the Credit Agreement.

On April 3, 2023, in conjunction with a related amendment to the Credit Agreement, the Madden Entities also entered into a Credit Approved Receivables Purchasing Agreement (the “CARPA”) with CIT Group/Commercial Services, Inc. (“CIT”). Pursuant to the CARPA, in addition to Rosenthal, CIT will serve as a non-exclusive collection agent with respect to certain of the Madden Entities’ receivables and will generally assume the credit risk resulting from a customer’s financial inability to make payment with respect to credit approved receivables. Additionally, CIT shall compensate the Madden Entities for 50% of the losses sustained for limiting or revoking a credit line during production for any made-to-order goods that have work-in-progress coverage. For its services, CIT will be entitled to receive (1) a base fee of 0.15% of the gross face amount of each receivable assigned for collection having standard payment terms, (2) certain additional fees for receivables with non-standard payment terms or arising from sales to customers outside of the United States, and (3) reimbursement for certain expenses incurred in connection with the CARPA. The Company, on behalf of the Madden Entities, and CIT may each terminate the CARPA as of the last day of the month occurring one year after the date of the CARPA and at any time thereafter by giving the other party at least 60 days’ notice. CIT may also terminate the CARPA immediately upon the occurrence of certain events. The Madden Entities pledged all of their right, title, and interest in and to monies due and to become due under the CARPA in favor of the Agent to secure obligations arising under or in connection with the Credit Agreement.

On October 23, 2023, the Company and Daniel M. Friedman & Associates, Inc. (“DMFA”), a wholly-owned subsidiary of the Company, entered into a Notification Factoring Rider to the Credit Approved Receivables Purchasing Agreement (“Notification Factoring Rider”) that amended and supplemented the Factoring Agreement, dated April 3, 2023, among the Company, DMFA and certain of the Company’s other subsidiaries party thereto (collectively with the Company, the “Madden Entities”), and added CIT. The Notification Factoring Rider enables certain receivables generated from assets acquired by DMFA from Turn On Products Inc. d/b/a Almost Famous (“Post-Acquisition Receivables”), which assets were acquired by DMFA on October 20, 2023, to be subject to the Factoring Agreement.

The Notification Factoring Rider modifies the Factoring Agreement to require, in respect of certain Post-Acquisition Receivables, payment to CIT of a base fee ranging from 0.10% to 0.20% of the gross face amount of such Post-Acquisition Receivables assigned to CIT for collection. CIT will generally assume the credit risk resulting from a customer’s financial inability to make payment with respect to certain credit approved Post-Acquisition Receivables. The Company or DMFA may terminate the Notification Factoring Rider, separately from the Factoring Agreement, by giving CIT at least 10 days’ prior written notice of termination. As with monies due and to become due under the Factoring Agreement generally, monies due and to become due to the Company and DMFA under the Notification Factoring Rider are pledged in favor of the Agent to secure obligations under or in connection with the Credit Agreement.