Steve Madden at Citi Consumer Conference Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$SHOO at Citi Consumer Conference Notes

“in a recent survey upper income teens, when asked their favorite footwear brand, girls named Steve Madden number two, behind only Nike.”

“Our success in all of these brands, channels and business models is predicated on our unique ability to create trend-right footwear and accessories and get them to market in a timely fashion.”

“how we’ve been able to do that so consistently, season after season? Number one, it is a testament to our design team. We believe we’ve assembled the best design team in our industry, led of course by our founder, Steve Madden. But in addition to that, there are a couple things about our business model that helps to differentiate us from our competitors and help us to mitigate fashion risk.”

“The first is our test and react model; where we test products in our retail stores and leverage selected winners into the wholesale channel. That has been absolutely critical to our ability to hit the trends over the years, and then we have married that up with an industry leading speed to market capability. We have managed to shorten leadtimes, to short at six to eight weeks, versus the industry standard of three to four months, which has been another primary competitive advantage in the fast moving trend business in which we operate.”

“We do focus primarily on the younger fashion forward woman customer, that’s our primary customer.”

“we turn our inventory about once a month in wholesale…we managed to shorten our lead times to about six to eight weeks, we make a lot of progress out of Mexico, for instance, which enables us to work faster than if we are working out of China, and enable us to be a little bit more nimble; and when we do see changes happening in season, we are able to adjust our inventory levels, and we have been able to do that, and we feel pretty comfortable about where we are, in terms of inventory.”

“I would say on the direct to consumer side, our biggest competitor is probably Aldo. Within the wholesale channel, they are obviously not as big a player. There are a number of big competitors there, one of them would be the Camuto Group, which is a private company that does brands for people like Jessica Simpson, BCBG, Tory Burch, their Vince Camuto brand, etcetera”

“overall, I think it is a fairly promotional environment right now, that’s one of the challenges that we are all facing, and that’s something that we talked about on our last earnings call, that we were expecting the promotional’s second quarter due to the late start to spring selling, because of the challenging weather.”

“If it’s a real fashion forward item, in that very first few months… the real fashion forward customer…will pay virtually whatever the price is, so we can typically 200, 150, in that range for newness. When you then go into the second season…then typically $99 for an item like that is going to be a magic price point…In terms of the gross margin, I think it’s important to understand that we build the product differently…so there is not a big gross margin deterioration, when we take prospects back to $99…we have made adjustment to the materials…etcetera such that we can price it out.”

“One of the interesting things that we can do now in terms of testing is to utilize the internet, and we have always utilized our stores for testing”

“we think that over time, there is going to be an opportunity to have significantly better profitability or profit margins in the outlets, than in our full price stores.”

“That single brand in small footprint shoe store is a challenging model, in the B and C mall. I think it works quite well in the A malls, but I think you also have a lot of customers who like to go to the multi-branded environments for shoes, like in Nordstrom or DSW or Zappos online. So we want to be careful about that. But you’re right, that it may create an opportunity at some of the other guys, reduce their footprint.”