Steven Madden, Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 and full-year 2020 Steve Madden Limited Earnings Conference. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to Ms. Danielle McCoy. Ma'am, you may begin.

Thanks, Denetris, and good morning, everyone. Thank you for joining our fourth quarter and full year 2020 earnings call and webcast. Before we begin, I'd like to remind you that during our call, we may make certain forward-looking statements as defined in the federal securities laws regarding our expectations or predictions about the future. Generally, these statements relate to projections involving anticipated revenues, earnings, or other aspects of the company's operating results. Because these statements are based on current assumptions and expectations, they involve known and unknown risks, uncertainties, and factors not within the company's control. And as such, our actual performance and results may differ materially from these statements. Our annual report and other reports filed with the SEC from time to time include detailed discussions of the risks the company faces, and we urge you to refer to these. Specifically, the COVID-19 pandemic has had and is currently having a significant impact on the company's business operations and results. Such forward-looking statements with respect to the COVID-19 pandemic include, without limitation, statements with respect to the company's plans in response to this pandemic. At this time, there is still significant uncertainty about the duration and extent of the impact of the pandemic. Due to the dynamic nature of these circumstances, statements made on this call regarding the company's response to the COVID-19 pandemic could change at any time. Any forward-looking statements represent our judgment as of the time of this call and cannot be relied upon as current after today's date. We disclaim any intent or obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except as required under applicable law. The financial results discussed are on an adjusted basis unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining the call today are Ed Rosenfeld, Chairman and Chief Executive Officer, and Gene Mazzuzzi, Chief Financial Officer. With that, I'll turn the call over to Ed.

Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's fourth quarter and full year 2020 results. While the COVID-19 pandemic continues to have a negative impact on our business, we were pleased with our results in fourth quarter, which exceeded our expectations and showed strong sequential improvement from third quarter. Overall, 2020 was in many ways the most challenging year in our company's history, but we relied on our strengths, an agile business model, a strong balance sheet, and our talented and resourceful employees to successfully navigate the crisis. We continued investing in our brands and our digital capabilities while reducing expenses in other areas, and we utilized our test and react strategy and speed to market capability to to quickly adjust our product mix to align with changing consumer preferences. We also made significant progress on our ESG initiatives. Let me briefly touch on the highlights. First and foremost, our top priority since the crisis began has been protecting the safety and well-being of our employees and the broader community. And I'm proud of the steps we took to safeguard the health of our employees and our customers including proactively closing our stores earlier and keeping them closed longer than most of our peers, and how we supported our communities through donations of medical-grade masks to hospitals, non-medical face coverings to homeless shelters, meals for healthcare workers, financial assistance for organizations combating hunger, and more. Second, when the severe impact of COVID-19 became clear, we moved quickly to implement a number of measures to preserve liquidity and enhance financial flexibility, including suspending dividends and share repurchases, cutting operating expenses, capital expenditures and inventory receipts, and putting in place a new $150 million asset-based revolving credit facility. While some of the expense savings were temporary in nature, a meaningful portion will have an ongoing benefit, including $25 million in annual savings from the restructuring we implemented in July, and $14 million of rent expense savings in 2021 compared to 2019. Overall, these actions enabled us to generate strong free cash flow through the crisis, and we ended 2020 with no debt and $287 million in cash and short-term investments. Based on our strong financial position, we announced today that the company's board of directors approved the reinstatement of our quarterly cash dividend of $0.15 per share. and we also plan to resume share of purchases in future periods. Third, we also took swift action to address the rapidly changing marketplace. In terms of product, we utilized our test and react strategy and industry-leading speed to market capability to quickly adjust our merchandise assortments to align with changed consumer preferences, successfully leaning into more casual and comfortable styles while de-emphasizing dressier products. And with respect to distribution, We significantly accelerated our digital commerce initiatives, increasing investment in that area even as we pulled back spending in other parts of the business. We added high-level talent to the organization, invested in our data science capabilities, ramped up digital marketing spend, launched our new try-before-you-buy payment option, rolled out buy online, pick up in store to all U.S. full-price retail stores, introduced new enhanced delivery and return options, and more. Overall, our company-operated e-commerce revenue grew nearly 50% in 2020 on top of 58% growth last year, including 55% growth in our Steve Madden e-commerce business on top of a 51% increase in the prior year. Importantly, company-operated e-commerce profit margins also expanded meaningfully for the third year in a row. And fourth, the challenges we all faced in 2020 emphasized to us our responsibility to all our stakeholders and the opportunity we have to create positive change for our people and our communities. In addition to the COVID-19 relief efforts I mentioned earlier, we made donations to Black Lives Matter, the NAACP, the Trevor Project, and more. And in December, we announced a partnership with the Fearless Fund to provide 50 women of color entrepreneurs free enrollment to their 12-month Get Ready Venture program, which provides training and mentorship to build the knowledge and skills needed to gain access to capital. We also made progress in lessening our environmental impact by, among other things, introducing new Steve Madden shoeboxes that are 100% recyclable, partnering with industry trade group FDRA on a pre-consumer waste management project, piloting a new shoe take-back program in our stores, and increasing the use of recycled and renewable materials in products across our business. This spring, we're excited to be launching Cool Planet by Steve Madden, a new brand offering fashion footwear using recycled, renewable, and other environmentally preferred materials. For every pair of Cool Planet shoes sold, we will plant a tree in partnership with One Tree Planted. a nonprofit organization dedicated to reforestation efforts around the world. Overall, we are committed to meaningful and measurable improvement in the impacts we have and to being transparent about our actions. In July, we published our first sustainability report, which outlines our overall corporate social responsibility roadmap and how we intend to ensure that CSR and sustainability are embedded in everything we do going forward. and we look forward to updating you on our progress when we publish our next report later this year. Overall, our company was tested like never before in 2020, and I couldn't be prouder of how our teams responded and all they were able to accomplish. As we look to 2021, our focus remains on creating trend-right products and getting it to market quickly, deepening connections with our consumers through enhanced marketing, driving our digital commerce agenda, expanding in international markets like Europe, where we have strong momentum and lots of runway, and efficiently managing our inventory and our expenses, all while working to create positive change for our people and our communities. And while we are cautious on the near-term outlook due to continued headwinds from COVID-19, we are confident that the steps we have taken during the crisis, combined with the strength of our brands and our business model, leave us well-positioned to capitalize on market share opportunities and create value for our stakeholders over the long term. I would now like to introduce Zine Mazzuzzi, who became our Chief Financial Officer on January 1st. Zine has been a key member of our executive team since the beginning of 2018, when he joined us as Chief Accounting Officer and Senior Vice President of Finance and Operations. His strong financial, operational, and leadership experience, combined with his deep understanding of footwear accessories and retail, make him a tremendous asset as we drive toward an accelerated recovery and a return to profitable and sustainable growth. I also want to thank Arvind Darya, who was our CFO for the past 28 years, and congratulate him on his retirement from that role. Arvind was instrumental in building Steve Madden into the company it is today, and I am extraordinarily grateful for his partnership over the past 15 years that we worked together. I also want to thank Arvind for agreeing to serve the company in an advisory capacity through the end of 2021. With that, I'll turn it over to Zine to review our fourth quarter and full year 2020 financial results in more detail.