Steven Madden, Ltd.

Good morning, everyone, and welcome to the Q1 2023 Steve Madden Limited Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please see a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please note today's event is being recorded. At this time, I'd like to turn the floor over to Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Thanks, Jamie, and good morning, everyone. Thank you for joining our first quarter 2023 earnings call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. We disclaim any obligation to update these forward-looking statements which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call 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 me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer, and Dean Mazzuzzi, Chief Financial Officer. With that, I'll turn the call over to Ed. Ed?

Thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steve Madden's first quarter 2023 results. When we spoke to you on the last earnings call, we talked about the challenging setup we faced in the first quarter, including a choppy retail environment as consumers were pulling back on discretionary spending, conservative order patterns from our wholesale customers as they were prioritizing inventory control, and extremely tough comparisons with the prior year, as we were lapping a quarter where revenue was up 35% and diluted EPS was up 121% to pre-COVID 2019. In light of the difficult backdrop, we were pleased to deliver Q1 revenue and earnings slightly ahead of expectations. We also significantly reduced our inventory levels, while driving strong gross margin performance despite a promotional retail landscape. demonstrating the benefits of our business model, including our industry-leading inventory turns in challenging operating environments. As we move forward, we remain focused on executing our strategic initiatives. Most importantly, we are leaning into our proven model, which combines our talented design teams led by Steve, test and react strategy, and speed-to-market capability to create trend-right products and bring them to market quickly. This agile model enables us to run lean on inventory and chase goods in season when needed, a critical advantage in periods of economic uncertainty and when wholesale customers are cautious about placing significant orders upfront. We also continue to support our brands and products with targeted marketing investment in order to drive closer connections with our consumers and increased brand relevance across the globe. These remain our foundational initiatives and the enablers of our four key long-term business drivers, driving our direct-to-consumer business led by digital, expanding in categories outside of footwear like handbags and apparel, growing in international markets, and strengthening our core U.S. wholesale footwear business. So turning to our performance by business in Q1. In wholesale, revenue was under pressure due to the combination of conservative initial spring orders from our wholesale customers and very tough comparisons with the prior year. In the first quarter of 2022, we had our largest ever quarter in wholesale shipping, with revenue up 29% versus pre-COVID 2019. Against that record performance, this year's first quarter wholesale revenue declined 19%. On the positive side, We did see a number of wholesale customers pull forward orders on key items and trends from the second quarter into March, which enabled us to come in ahead of our expectations for wholesale revenue for Q1. Our direct-to-consumer business, on the other hand, came in below expectations for the quarter. Consistent with what's been reported by others in the industry, we saw sales trends decelerate in the latter part of the quarter, particularly in March. DTC revenue was down 8% in Q1, and so far in Q2, we have seen a similar year-over-year decline. Across both wholesale and DTC, our international business was a bright spot in Q1. International revenue increased 13% in the quarter and accounted for over 18% of consolidated revenue for the third consecutive quarter. Looking ahead, we expect the operating environment to remain turbulent in the near term, That said, we have a proven ability to navigate difficult market conditions and a track record of taking share during challenging economic periods. And looking out further, we remain as confident as ever that by leveraging our core strengths, our people, brands, and business model, and executing on our strategy, we can drive growth and create significant value for our stakeholders over the long term. Now, I will turn it over to Zine to review our first quarter financial results in more detail and provide our outlook for 2023.