2008 ANALYST AND INVESTOR EVENT
SAFE HARBOR STATEMENT
Except for the historical information contained
herein, this presentation contains forward-looking
statements that involve known and unknown risks,
uncertainties and other unknown factors that
could cause the actual results of the Company to
be materially different from the historical results or
from any future results expressed or implied by
such forward-looking statements.
2
STEVEN MADDEN, LTD. MANAGEMENT
• Ed Rosenfeld
Chairman & Chief Executive
Officer
• Awadesh Sinha
Chief Operating Officer
• Arvind Dharia
Chief Financial Officer
• Steve Madden
Creative & Design Chief
• Rob Schmertz
Brand Director
• Amelia Newton Varela
Executive Vice President
Wholesale & Retail
• Ian Gomar
President - Retail
3
AGENDA
COMPANY OVERVIEW
Ed Rosenfeld, Chairman & Chief Executive Officer
BRANDS & BUSINESS MODEL
Rob Schmertz, Brand Director
DIVISIONAL OVERVIEW
Ed Rosenfeld, Chairman & Chief Executive Officer
Rob Schmertz, Brand Director
Ian Gomar, President - Retail
BREAK
OPERATIONS OVERVIEW
Awadhesh Sinha, Chief Operating Officer
CREATIVE OVERVIEW
Steve Madden, Creative & Design Chief
Rob Schmertz, Brand Director
FINANCIAL OVERVIEW
Ed Rosenfeld, Chairman & Chief Executive Officer
4
COMPANY OVERVIEW
Ed Rosenfeld
Chairman & Chief Executive Officer
5
GROWTH HERITAGE: SALES SINCE IPO
450
400
$ in millions
350
300
250
200
150
100
50
0
1993
2008E
6
FINANCIAL PERFORMANCE
2007 EBITDA Margin = 14.7%
2007 ROIC = 27.5%
3 Year
CAGR
10 Year
CAGR
Net Sales
8.4%
21.9%
EBITDA
37.1%
27.6%
Diluted EPS
42.8%
23.6%
7
LONG-TERM VALUE CREATION
SHOO
S&P 500
Since IPO
11.9%
7.2%
10 Year
15.8%
1.8%
3 Year
22.3%
2.0%
8
STRATEGIC PRIORITIES
Leveraging our
Core Assets
Diversifying our
Business
Optimizing our
Growth
Platform
9
LEVERAGING OUR CORE ASSETS
STEVE MADDEN BRAND
• Diffusion brands (e.g. Madden Girl, Steven by Steve Madden,
Steve Madden’s Fix*)
• International expansion
• Category extensions
• Strengthening core channels
FOOTWEAR/ACCESSORIES EXPERTISE
• Private label
• Betsey Johnson / Betseyville
• Fabulosity
• l.e.i.
10
DIVERSIFYING OUR BUSINESS
2008E Sales by Segment
2008E Sales by Channel
5%
17%
21%
23%
5%
6%
53%
11%
21%
Wholesale
Retail
Adesso Madden "First Cost"
Licensing
20%
18%
Specialty Retailers
Mass Merchants
Mid-Tier Retailers
Off-Price and Other
Note: Figures are current year company estimates; sales figures shown as if the Company reported
sales from its “first cost” and licensing businesses
Department Stores
Shoe Chains
Internet
11
DIVERSIFYING OUR BUSINESS
2008E Sales by Category
2008E Sales by Brand
12%
23%
41%
2%
1%
2%
4%
5%
3%
10%
8%
9%
Steve Madden Women's
Steven by Steve Madden
Betsey Johnson / Betseyville
Stevies
Private Labels
70%
10%
Steve Madden Men's
Madden Girl
Candie's
Other Brands
Women's Footwear
Men's Footwear
Kids' Footwear
Other Licensed Categories
Accessories (DMF)
Note: Figures are current year company estimates; sales figures shown as if the Company reported
sales from its “first cost” and licensing businesses
12
OPTIMIZING OUR GROWTH PLATFORM
Wholesale Footwear
Madden Girl
Steve Madden’s Fix*
Fabulosity
International
Asia
New territories
Private Label
l.e.i.
Growth
Opportunities
Retail
Full-price
Internet
Outlet
Accessories
Steve Madden
& Steven Handbags
Licensing
New categories
(apparel, jewelry,
bedding & bath, etc.)
13
BRANDS AND BUSINESS MODEL
Rob Schmertz
Brand Director
14
OWNED BRANDS
15
LICENSED BRANDS
Footwear
Accessories
16
BRAND HISTORY
17
BRAND STRENGTH
Steve Madden has been 2nd most preferred footwear brand, behind
Nike, among teenagers nationally every year from 2002 - 2007
Brand
% Total
1
Nike
29%
2
Steve Madden
7%
3
Adidas
6%
4
Puma
5%
5
Vans
4%
6
Footlocker
3%
7
Coach
2%
8
DC Shoes
2%
9
Rainbow
2%
10
Payless Shoes
2%
Source: Piper Jaffray Taking Stock With Teens Survey; Fall 2007
Students were asked to list their favorite brands; responses were unaided
Survey Inception: 2002
18
MARKET SHARE
#4 in 2007 Department
Store Sales
#1 in 2007 Juniors Department
Store Sales
Brand
Sales
Market Share
1
Steve Madden
$114,987,241
27.6%
3.4%
2
Jessica Simpson
$90,296,839
21.7%
$115,949,593
3.0%
3
Skechers
$59,058,834
14.2%
Steve Madden
$114,987,241
3.0%
4
Rampage
$31,747,980
7.6%
5
Clarks England
$114,496,536
3.0%
5
Report
$21,464,440
5.1%
6
BCBG Girl
$104,690,566
2.7%
6
Rocket Dog
$17,704,630
4.3%
7
Cole-Haan
$100,416,367
2.6%
7
Mia
$15,335,360
3.7%
8
UGG
$91,110,831
2.4%
8
Roxy
$15,272,270
3.7%
9
Jessica Simpson
$90,296,839
2.3%
9
Chinese Laundry
$13,315,420
3.2%
10
Franco Sarto
$83,625,090
2.2%
10
Unlisted By Kenneth Cole
$10,496,130
2.5%
11
Easy Spirit
$83,146,094
2.2%
11
Mudd Footwear
$6,027,227
1.4%
12
Bandolino
$80,175,635
2.1%
12
Madden Girl
$4,701,982
1.1%
13
AK Anne Klein
$69,206,143
1.8%
13
Diesel
$4,386,931
1.1%
14
Born
$61,088,259
1.6%
14
Baby Phat
$3,434,603
0.8%
15
Skechers
$59,058,834
1.5%
15
Me Too
$1,721,581
0.4%
16
Guess
$57,419,622
1.5%
16
Volatile
$1,547,564
0.4%
17
Kenneth Cole Reaction
$56,920,551
1.5%
17
Rhino Red
$1,438,155
0.3%
18
LifeStride
$56,479,450
1.5%
18
Dr. Martens
$1,288,350
0.3%
19
Merrell
$55,934,311
1.5%
19
Penny Loves Kenny
$1,236,901
0.3%
20
Stuart Weitzman
$52,723,147
1.4%
20
Rebels
$674,883
0.2%
Brand
Sales
Market Share
1
Coach
$193,134,189
5.0%
2
Nine West
$132,543,915
3
Naturalizer
4
Source: The NPD Group, Inc.
19
“TOP” LISTS
20
HOW WE STAY COMPETITIVE
Design Expertise and Relentless Focus on Product
Test and React Strategy
Speed to Market
Innovative Marketing
21
DESIGN EXPERTISE
Our top 8 designers have been with Steven Madden, Ltd. for an average of 11 years
Creative and Design Chief
Steve Madden
Brand Director
Rob Schmertz
Steve Madden
Women’s
Steve Madden
Men’s
2 Designers
2 Linebuilders
1 Product Development
Coordinator
6 Design Associates
1 Designer
1 Linebuilder
1 Design Associate
Stevies
Steven by
Steve Madden
2 Designers
1 Linebuilder
1 Product Development
Coordinator
1 Design Associate
Candie’s
1 Designer
1 Linebuilder
1 Product Development
Coordinator
Madden Girl
1 Designer
1 Linebuilder
Steve Madden’s
Fix*
Accessories
(DMF)
1 Designer
1 Linebuilder
1 Design Associate
1 Designer
3 Linebuilders
16 Design Associates
1 Designer
1 Linebuilder
3 Design Associates
Retail
1 Linebuilder
1 Associate Linebuilder
Adesso
Madden
2 Linebuilders
1 Design Associate
22
TEST…
Design
Team
Retail SellThrough Data
Product
Designs
Retail Stores/
Internet
Sample
Factory
Product Samples
and Small-Scale
Production
23
…AND REACT
“Test”
Results
Successful
Styles
Wholesale
Customers
Successful
Styles
Retail
Stores
Private Label
Versions of
Successful Styles
Adesso
Madden
Customers
24
SAMPLE FACTORY
Steve Madden’s “Secret Weapon”
25
CLASSIC STEVE MADDEN ADVERTISING
26
PRODUCT PLACEMENT
27
PRODUCT PLACEMENT
28
FRESH STEVE MADDEN BRANDING
29
INNOVATIVE MARKETING
30
INNOVATIVE MARKETING
31
INNOVATIVE MARKETING
32
EMPLOYEE E-COMMERCE INITIATIVE
33
Divisional Overview
Ed Rosenfeld
Chairman & Chief Executive Officer
Rob Schmertz
Brand Director
Ian Gomar
President - Retail
34
WHOLESALE OVERVIEW
• LTM net sales = $304 million
• 8 footwear brands
• 6 accessories brands
• Tiered distribution strategy from better department stores
through mid-tier retailers as well as specialty stores
• Carefully select top selling products from retail for
wholesale business
35
FOOTWEAR PORTFOLIO
Bloomingdales
Better
Department
Stores
Shoe
Chains
Mid-Tier
Retailers
Mass
Market
Retailers
Nordstrom
Dillards
Macy’s
Branded
Wholesale
DSW
Famous Footwear
JCPenney
Kohl’s
Target
Wal-Mart
Private Labels
Adesso
Madden
“First Cost”
36
STEVE MADDEN WOMEN’S
• LTM wholesale net sales = $122
million
• Target consumer – women 16
to 35 years old
• Average retail price points
– Shoes: $60 to $100
– Boots: $90 to $160
• Distribution through better
department stores and
specialty stores
• 4,900 doors
37
STEVE MADDEN MEN’S
• LTM wholesale net sales = $47
million
• Target consumer – men 20 to
40 years old
• Average retail price points of
$70 to $100
• Distribution through better
department stores and
specialty stores
• 4,800 doors
38
STEVEN BY STEVE MADDEN
• LTM wholesale net sales =
$16 million
• Target consumer – women
25 to 45 years old
• Average retail price points
– Shoes: $90 to $160
– Boots: $200 to $290
• Distribution through better
department stores and
specialty stores
• 800 doors
39
MADDEN GIRL
• LTM net sales = $37 million
• Target consumer – young
women 13 to 20 years old
• Average retail price points of
$30 to $50
• Distribution through department
stores, mid-tier retailers and
specialty stores
• 6,300 doors
40
STEVIES
• LTM net sales = $6 million
• Target consumer – young girls
6 to 9 years old and “tweens”
10 to 12 years old
• Average retail price points of
$30 to $45
• Distribution through better
department stores and
specialty stores
• 2,800 doors
41
STEVE MADDEN’S FIX*
• New fashion sneaker brand
launched in late 2007
• Target consumer – women 16
to 35 years old
• Average retail price points of
$60 to $80
• Distribution through better
department stores and
specialty stores
• 750 doors
42
CANDIE’S
• LTM net sales = $17 million
• Target consumer – girls and
young women 6 to 20 years old
• Average retail price points of $30
to $50
• Distribution through Kohl’s
• 900 doors
43
FABULOSITY
• New urban lifestyle brand
created by Kimora Lee
Simmons
• Target consumer – young
women 13 to 25 years old
• Average retail price points of
$40 to $50
• Distribution through JC Penney
• Launching Spring 2009
44
DANIEL M. FRIEDMAN & ASSOCIATES
• LTM net sales = $57 million
• Accessories business acquired
February 2006
2008E Sales by Category
24%
76%
Handbags
Belts
45
ACCESSORIES PORTFOLIO
Handbags
Brand
Distribution
Price Points
Doors
Steven
Department / Specialty Stores
$98 - $298
160
Steve Madden
Department / Specialty Stores
$38 - $128
520
Betsey Johnson
Department / Specialty Stores
$165 - $395
130
Betseyville
Department / Specialty Stores
$25 - $145
721
Fabulosity
JC Penney
$28-$48
TBD
Daisy Fuentes
Kohl's
$36 - $68
945
Private Labels
Kohl's, Shopko, Costco, Payless
$9.99 - $58
2,500
Brand
Distribution
Price Points
Doors
Steven
Department / Specialty Stores
$28-$42
643
Betsey Johnson
Department / Specialty Stores
$38-$68
273
JC Penney
$20-$24
TBD
Kohl's, Shopko, Costco, Payless
$12.99 - $24.00
2,500
Belts
Fabulosity
Private Labels
46
2008-2009 WHOLESALE FOCUS
Goal: Optimize Penetration Across Channels
• Continue to stay ahead of fashion curve in Steve
Madden Women’s and Steven
• Increase penetration of Madden Girl in department
stores
• Improve product in Steve Madden Men’s, particularly in
sport category
• Grow new brands (Steve Madden’s Fix* and Fabulosity)
• Expand product assortment for Steve Madden Kids
• Grow Steve Madden and Steven handbags
47
RETAIL OVERVIEW
•LTM net sales = $122 million
•99 stores
− 93 Steve Madden
stores
− 5 Steven by Steve
Madden stores
− 1 Internet store
•Strong brand building
platform
48
U.S. STORE LOCATIONS
49
STORE AVERAGES
Steve Madden Stores
Steven by Steve Madden Stores
Net Sales
$1.1 mm
Net Sales
$1.8 mm
Square Footage
1,701
Square Footage
1,575
Sales per square $623
foot
Sales per square $1,146
foot
50
NEW STORE ECONOMICS
Targeted
Performance
• Net Sales
$1,000,000
• Cash Flow Contribution Margin
15 - 18%
• Investment (Includes Inventory)
$400,000
• Targeted ROI (Before Tax)
37.5 - 45%
51
STORE DESIGN: OLD WORLD
52
STORE DESIGN: NEW PROTOTYPE
53
E-COMMERCE
• Largest retail “store”
• Broad online product
assortment
• LTM net sales = $15.4 million
• YTD net sales growth = 26%
• Average monthly visits = 1.2
million
• E-mail list = 865,000 people
54
2008-2009 RETAIL FOCUS
Goal: Improve Profitability and Leverage Brand Building Tool
• Leverage systems enhancements and new personnel to
improve store performance
• Close underperforming locations
• Continue to open stores opportunistically in select markets
• Further enhance e-commerce business
• Explore outlet opportunity
55
ADESSO MADDEN
• “First cost” commission-based business with no
inventory risk or investment
• LTM net commission income = $10.6 million
Adesso Madden
“First Cost”
Private Label
International
56
PRIVATE LABEL
• Allows Company to leverage its product design
capabilities and sourcing relationships in order to
generate additional income
• Key customers = Target, Wal-Mart
• Candie’s transitioning to “first cost” model
• l.e.i. will be growth vehicle
57
INTERNATIONAL
• Company operates
internationally through retail
and/or wholesale distribution
agreements with local partners
• Company’s products currently
distributed in 47 countries
• Company currently has 47 freestanding retail stores and 52
concessions (shop-in-shops)
internationally
58
INTERNATIONAL REACH
Wholesale
Retail
Both
59
2008-2009 ADESSO MADDEN FOCUS
Goal: Deliver Consistent Growth by Maximizing Mass Market and
International Channels
Private Label
• Transition Candie’s to new design team and “first cost” model
• Build l.e.i. business with Wal-Mart
International
• Expand in Asia through partnership with GRI
• Explore partnerships for Europe, Brazil, and India
60
LICENSING
• LTM royalty income = $3.2 million
• Current licenses:
− Cold weather and other
fashion accessories
− Outerwear
− Hosiery
− Sunglasses and eyeglasses
• Significant growth opportunity
61
2008-2009 LICENSING FOCUS
Goal: Effectively Leverage/Monetize our Powerful Brand
• Build infrastructure to support licensing program
• Sign additional licenses – targeted areas include:
– Bedding and bath
– Loungewear
– Jewelry
– Swimwear
– Apparel
62
BREAK
10 minutes
63
INVESTING FOR GROWTH AND
DRIVING EFFICIENCIES
Awadhesh Sinha
Chief Operating Officer
64
KEY OPERATING INITIATIVES
• Sourcing initiatives
• IT / Systems upgrades and planned improvements
• Logistics accomplishments and future enhancements
• Website initiatives
• Tax savings – 42.5% to 39.0%
65
SOURCING INITIATIVES
• Currently source about 95% of products from China
through agents
• Recently opened sourcing office in China
– Plan to source 40% of products direct to factory through
sourcing office by end of 2010
• Increasing production from Mexico, India, Brazil
• Exploring possibility of Texas warehouse to reduce freight
costs and transit time from Mexico
66
IT / SYSTEMS UPGRADES
Infrastructure:
2006
• New Data Center
X
• New Emergency Generator
X
• Mainframe Computer
X
2007
– 3 AS400 – New
• Real Time Private Network
• New Phone System
X
X
– VOIP
67
IT / SYSTEMS UPGRADES
Wholesale:
2006
2007
• New EDI System
X
• In Transit Inventory Control System
X
Retail:
• POS Systems Upgrade
X
• Centralized Credit Approval
X
• Trickle Polling
X
• Warehouse & Distribution Systems
X
(Location based Inventory)
• Send Sale
X
• Traffic Counter
X
68
FUTURE IT / SYSTEMS INITIATIVES
• Planning & Allocation – Retail Stores
• Budgeting, Forecasting & Financial Systems
• Retail ERP
• Web PDM
• B 2 B – International & Wholesale
• Call center technology refresh
• Integrated retail payroll management implementation
69
LOGISTICS ACCOMPLISHMENTS
• Added 3rd distribution center
• Reduced compliance chargebacks
• Achieved better freight rates from factory to distribution
center (while cutting down transit time)
• Achieved better freight rates from distribution center to
retail stores
• Implemented pre-custom clearance
• Established 24-hour turnaround time at distribution center
70
FUTURE LOGISTICS INITIATIVES
• Further improve supply chain environment:
– Improved reporting/visibility
– Transportation management
– Cross docking and yard management
– Forecasting systems for warehouse labor allocation
71
WEBSITE INITIATIVES
• Automation of pre-order/back order status
• Gift card offering
• Marketing database segmentation
• In-store pick-up
• More efficient use of call center personnel
72
INFRASTRUCTURE & SYSTEMS COSTS
• Investments of $4.2 and $3.8 million for 2006 and 2007
respectively
• Anticipate investment of $3.0 to $4.0 million per year for
2008 and 2009
• Approximately $1.5 to $2.0 million per year after 2009
73
2008-2009 INFRASTRUCTURE FOCUS
Goal: Create Superior Infrastructure to Support our Growth
• Further improve sourcing capabilities including
diversification of production
• Implement next stage of IT / systems upgrades for
Corporate, Retail and Supply Chain
• Leverage supply chain improvements
• Complete website upgrades for enhanced functionality
and improved customer service
74
CREATIVE OVERVIEW
Steve Madden
Creative & Design Chief
Rob Schmertz
Brand Director
75
PRODUCT WALK-THROUGH
15 Minute Webcast Break – On-site Merchandise Review
76
FINANCIAL OVERVIEW
AND CLOSING REMARKS
Ed Rosenfeld
Chairman & Chief Executive Officer
77
RECENT FINANCIAL HIGHLIGHTS
(Dollars in Millions, Except Per Share Data)
Net Sales
% Growth
Gross Profit
% Margin
EBITDA
% Margin
EBIT
2007
$375.8
$475.2
$431.1
11.1%
26.4%
$139.2
$198.4
$173.4
$87.6
$85.8
$171.5
37.0%
41.8%
40.2%
40.8%
40.9%
40.3%
$37.7
$86.8
$63.2
$37.5
$25.1
$50.8
10.0%
18.3%
14.7%
17.5%
11.9%
11.9%
$31.6
$78.3
$54.1
$33.2
$19.9
$40.9
8.4%
16.5%
12.6%
15.4%
9.5%
9.6%
$19.2
$46.3
$33.6
$20.1
$12.7
$26.2
5.1%
9.7%
7.8%
9.3%
6.0%
6.2%
$0.92
$2.09
$1.58
$0.92
$0.67
$1.32
59.5%
128.0%
(24.7%)
--
(27.5%)
% Margin
Diluted EPS
% Growth
LTM
6/30/08
2006
% Margin
Net Income
Six Months Ended
6/30/07
6/30/08
2005
(9.3%)
$214.9
--
$209.9
(2.4%)
$426.0
--
--
All data excludes non-recurring items
78
BALANCE SHEET AND CASH FLOW
Cash and Securities = $46.3 million (as of 6/30/08)
Average Free Cash Flow (2005-2007) = $37.8 million
Returning Capital to Shareholders
• Dutch Auction for 2.6 million shares (12.9%) of Company
completed in 1Q08 at $17.00 per share
• $145 million returned to shareholders in share repurchases
and dividends since 2005
79
LOOKING AHEAD
Full Year 2008
Guidance
Implied Back
Half Guidance
0-2%
2-6%
Diluted EPS
$1.55-$1.65
$0.88-$0.99
Diluted EPS
Growth
(2)-5%
38-54%
Sales Growth
80
WELL POSITIONED FOR FUTURE
Leveraging our
Core Assets
Diversifying our
Business
Steve Madden
brand
Brands
Design and
marketing expertise
Channels
Optimizing our
Growth
Platform
Poised for longterm growth and
value creation
Products
Geographies
81
Q&A
82
2008 ANALYST AND INVESTOR EVENT