Steven Madden, Ltd.

Good morning, ladies and gentlemen, and welcome to the Steve Madden Limited Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, This conference's call is being recorded. I would now like to turn the conference over to your host, Danielle McCoy.

Thanks, Phyllis, and good morning, everyone. Thank you for joining our third quarter 2021 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. Such statements may include discussions involving the ongoing COVID-19 pandemic, including its current and expected impact on our business operations and results, as well as the company's plans to respond to such uncertain and dynamic events. Because these statements are based on current assumptions and expectations, they involve known and unknown risk, 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. 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 Zane Mazzuzzi, Chief Financial Officer. With that, I'll turn the call over to Ed. Ed?

Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's third quarter 2021 results. In the third quarter, we delivered the highest quarterly sales and earnings in our history, with revenue increasing 5% and diluted EPS increasing 22% compared to pre-pandemic third quarter 2019, results that demonstrate the company's disciplined execution of its key strategic priorities. Our number one priority, as always, is to create trend-right product and get it to market ahead of our competition, and I could not be happier with our team's performance on that front. We have relied on our proven model, which combines our talented design teams led by Steve, our test and react strategy, and our industry-leading speed to market capability to deliver trend-right product assortments that are winning with the consumer and enabling us to outperform the competition and take market share, particularly in our flagship Steve Madden brand. We are also supporting this great product with increased investment in marketing, In addition to continuing to scale our digital marketing efforts to drive our e-commerce business, last month we also launched our largest brand campaign in years. Called the Maddenverse, the campaign features 3D avatars of artists and social media favorites Normani, Sydney Sweeney, Nessa Barrett, Justine Skye, and Jordan Alexander. Bold, creative, empowered, and authentic women that embody the spirit of the Steve Madden brand. The campaign harkens back to our iconic big head girl ads from the 90s, reflecting the same fun and rebellious attitude, but with modern elements like avatars and immersive content that includes an augmented reality shoe try-on feature and Instagram filters that enable consumers to morph into the avatars of their favorite artist. This combination of outstanding product and enhanced marketing is driving deeper connections with consumers and which in turn is fueling our progress on our next strategic initiative, accelerating our direct-to-consumer business, led by digital. Our retail segment revenue grew 62% in the quarter compared to 2019, including outstanding performance in both digital and brick-and-mortar channels. Our e-commerce business continued its exceptional momentum, with revenue increasing 84% versus 2020 and 200% versus 2019. and our brick-and-mortar business accelerated meaningfully. Global brick-and-mortar comp store sales increased 16 percent compared to 2019, including a 23 percent comp store gain in our U.S. stores. The outstanding revenue performance, combined with strong gross margin due to low levels of promotional activity, as well as controlled expenses, resulted in EBIT contribution from the retail segment of $22.5 million in the quarter, compared to 3.5 million in the third quarter of 2019. Another of our strategic initiatives is to expand our business outside of footwear, and here we are focused on our largest non-footwear category of handbags, as well as our emerging apparel business. In handbags, our multi-year investment in our Steve Madden-branded handbag business continues to pay dividends, with that business reaching new heights this year in both wholesale and direct-to-consumer channels, in both domestic and international markets. While third quarter Steve Madden handbag revenue was down to 2019 due to wholesale shipments that moved out to Q4 as a result of supply chain delays, the Steve Madden bag business remains on track to increase approximately 20% for the full year compared to 2019, including more than 100% growth in direct-to-consumer channels. We also continue to gain traction in our BB Dakota Steve Madden apparel business, where we are seeing strong sell-through performance at our key wholesale accounts, driven by success with dresses, shirt jackets, and vegan leather across all classifications. Another key priority is to grow our international business, and we also continue to make progress on that initiative. Earlier this year, we acquired the remaining 49.9% share that we did not already own of our European joint venture, and that business remains our leading international growth driver. Revenue for our directly operated SM Europe business increased 45% in the quarter compared to 2019, despite significant wholesale shipment move-outs to Q4, as we continue to have exceptional momentum in the region, particularly in digital channels. Finally, even as we seek to capitalize on the distribution channel and product category expansion opportunities I've touched on, we remain focused on strengthening the U.S. wholesale footwear business that is the core of our business. This business saw market improvement in the third quarter as our wholesale customers reacted to our strong sell-through performance with increased orders. Due to shipments that moved out to Q4, our overall U.S. wholesale footwear revenue remained down low single digits to 2019 in Q3, but our Steve Madden brand U.S. wholesale footwear revenue was up 15% to 2019, including a 25% increase in Steve Madden women's, demonstrating the brand heat and trend right product assortment in our flagship brand. Looking to head to the fourth quarter, we are poised to deliver strong growth versus 2019 in the U.S. wholesale footwear business overall. As we do all of this, we also continue to embrace the opportunity and the responsibility we have to create positive change for our people and our communities. Highlights in the last three months included the establishment of a new employee resource group for Latinx employees called De La Sol, the launch of our new partnership with the business school at Howard University to reimagine its retail curriculum, and the launches of new collections for our Steve Madden Kids Adaptive Line, as well as for Cool Planet by Steve Madden. We also laid the groundwork to establish the Steve Madden Foundation by the end of the year to organize and enhance our charitable giving strategy as we seek to maximize our positive impacts going forward. In summary, I am very pleased with our performance in the third quarter and, more broadly, with the progress we are making on the key strategic initiatives that will enable us to continue to drive sustainable and profitable growth going forward. Now, I'll turn it over to Zine to review our third quarter financial results in more detail and provide our updated guidance for fiscal 2021.