Steven Madden Ltd (SHOO) 2010 Q4 法說會逐字稿

Good day, everyone, and welcome to the Steve Madden fourth-quarter 2010 earnings conference call.

Today's call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Melissa McKay.

Please go ahead, Ms.

McKay.

Think you.

Good morning, everyone.

Thank you for joining us for the discussion of Steve Madden's fourth-quarter and full-year 2010 earnings results.

Before we begin, I would like to remind you that statements in this conference call that are not statements of historical or current fact constitute forward-looking statements under the meaning of the Private Securities and (sic) Litigation Reform Act of 1995.

Such forward-looking statements involve known and unknown risks and uncertainties and other unknown factors that could cause actual results to materially different (sic) from historical results or any future results expressed or implied by such forward-looking statements.

Statements contained herein are also subject to generally (sic) other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the SEC.

Also, please refer to today's earnings release for more information on risk factors that could cause actual results to differ.

Finally, please note that any forward-looking statements used in this conference call cannot be relied upon as current after this date.

I would like to now turn the call over to Ed Rosenfeld, Chairman and CEO of Steve Madden.

Ed?

Thanks, Melissa.

Good morning and thank you for joining us today.

We are pleased to have delivered record sales and earnings for both the fourth quarter and the fiscal year 2010.

The fourth quarter, consolidated net sales rose 15.4% to $161 million, and operating profit grew 30.3% to $27.3 million or 17% of net sales.

Our strong performance reflects double-digit top-line gains in both wholesale and retail, combined with increased licensing royalty income and disciplined expense control.

This morning, I will first take you through our fourth-quarter results, and then we will touch upon some highlights from fiscal year 2010, discuss our key growth strategies going forward, and finally, provide our guidance for 2011.

Before I begin, I would like to point out that we transitioned our private-label footwear business with Target from a buying agency model to a wholesale model for the tail end of fourth quarter.

While this transition has absolutely no impact on operating income or cash flow, the results from this business are now recorded in our sales, cost of goods, and operating expense lines instead of our commission income line.

Our wholesale business continued its strong momentum with net sales increasing 17.7% to $115.8 million as compared to $98.4 million in the fourth quarter of last year, including gains in both the footwear and accessories businesses.

On the footwear side, sales grew 18.7% to $92.4 million versus $77.8 million last year, driven by strong gains in international and Madden Girl, as well as contributions from our newer businesses, including Madden, Material Girl and Big Buddha.

Net sales also benefited from the transition of our private-label business with Wal-Mart and Target from the buying agency model to the wholesale model, which combined, added approximately $4.7 million to our net sales line in the quarter.

In wholesale accessories, net sales grew 13.7% to $23.4 million in the quarter compared to $20.6 million a year ago, driven by Big Buddha, which continues to perform ahead of expectation.

In our retail division, net sales rose 10.1% to $45.3 million versus $41.1 million in last year's fourth quarter, despite five net store closings since the end of fourth quarter last year.

Comparable store sales increased 14.1% for the quarter on top of a 7% increase last year, driven by higher AURs and improved conversion.

Boots and booties were the main product drivers.

For the 12 months ended December 31, 2010, our retail stores did $742 in sales per square foot.

This compares to $640 in sales per square foot for the 12 months ended December 31, 2009.

We opened one full price store and our first outlet store in the quarter, ending the year with 84 Company-owned retail locations, including our Internet store.

Consolidated gross margin for fourth quarter decreased 90 basis points to 43.2% from 44.1% in the comparable period last year, as a decline in wholesale gross margin was partially offset by an increase in retail gross margin.

Wholesale gross margin was 35.7% in the fourth quarter compared to 37.9% in the same period last year.

This decline was primarily driven by mix shifts, including the transition of our private-label footwear businesses with Target and Wal-Mart into the sales line and the growth in our international business, as well as a decline in Steven division gross margin compared to the prior year.

Gross margin in our retail division increased to 62.5% in the fourth quarter of 2010 compared to 58.7% in the fourth quarter of last year.

The 380 basis point increase was driven primarily by increased full-price selling and reduced discounting compared to last year.

Turning to other income, commission and licensing income net of expenses increased 17.6% to $4.6 million in the quarter as compared to $3.9 million in last year's fourth quarter.

Licensing royalty income net of expenses increased from $600,000 last year to $2.3 million this year as a result of our acquisition of the Betsey Johnson brand, as well as organic growth in our Steve Madden licensing business.

This growth more than offset the decline in commission income from our private-label business from $3.4 million last year to $2.3 million this year, which resulted primarily from the transition of our private-label footwear businesses with Target and Wal-Mart from the buying agency model to the wholesale model.

Operating expenses totaled $46.9 million in the fourth quarter or 29.1% of net sales compared to $44.4 million or 31.8% of net sales a year ago, reflecting leverage on higher sales.

Operating income for the fourth quarter of 2010 rose to $27.3 million or 17% of net sales compared to $21 million or 15% of net sales in last year's fourth quarter.

Net income increased 30% in the quarter to $17.6 million or $0.62 per diluted share compared to $13.6 million or $0.49 per diluted share in the fourth quarter of 2009.

Now I would like to briefly touch on our full-year results.

Net sales for the full year increased 26.2% to $635.4 million.

Gross margin improved 50 basis points to 43.4% in the fiscal year 2010 as compared to 42.9% in fiscal 2009.

Operating margin improved to 19.1% in fiscal 2010 from 15.7% in fiscal 2009.

And net income totaled $75.7 million or $2.68 per diluted share for the year as compared to $50.1 million or $1.82 per diluted share in fiscal 2009.

Turning to our balance sheet, as of December 31, 2010, we had approximately $193.8 million in cash and marketable securities and no debt.

Inventory was $39.6 million, up from $30.5 million at the end of last year.

Over two-thirds of the increase in inventory was driven by three factors.

One, inventory related to new businesses, such as Big Buddha and Material Girl; two, inventory for January handbag shipments to Wal-Mart, which we did not have last year; and three, increased open stock replenishment business in men's, which requires us to maintain inventory and our warehouse, but drives high-margin sales with minimum markdown allowances.

If we exclude inventory related to those three factors, inventory was up approximately 9% year over year, a level we are comfortable with given the growth in our top line versus a year ago.

Our consolidated turn for the last 12 months was 9.4 times as we turned our inventory approximately once a month in wholesale and approximately once a quarter in retail in 2010.

Accounts Receivable and due from factor totaled $70.9 million at the end of the year, reflecting average collection of 56 days.

And total stockholders equity as of December 31, 2010, was $357.3 million.

Overall, 2010 was a record year for Steve Madden as we delivered the highest sales and earnings in our Company's history.

But as we look ahead, we see ample opportunity to continue to grow on both the top and bottom line.

And now I would like to touch upon our strategic initiatives for 2011 and beyond.

First and foremost, our top priority will be maintaining the momentum in our core business, which we identify as Steve Madden, Steven, and Madden Girl footwear.

We have gained significant market share in these brands over the last few years, and we must continue our focus on delivering trend-right fashions to our customers in a timely fashion under these brands.

We believe that our model, which combines a best-in-class design team led by Steve, a proven test and react strategy, and an industry-leading speed to market will enable us to stay ahead of the fashion curve and keep our core brands hot.

Second, we will continue to develop our new brands.

In addition to our core brands, we have a diversified portfolio of other brands with distribution and retailers spanning the retail spectrum from value to luxury.

In the last two years, we've added seven new brands to our portfolio.

These new brands contributed approximately $50 million in net sales in 2010, and we believe that sales contribution should grow to $150 million over the next three years.

In addition, we are constantly evaluating opportunities to add additional brands to our stable.

Our third area of focus is continuing to drive profitability improvements in our retail segment.

We've made tremendous strides in this part of our business, improving from an operating loss of $3.7 million in 2009 to operating income of $9.1 million or 6.8% of sales in 2010.

We're targeting a 10% operating margin in retail by 2012.

Additionally, we are testing a new outlet concept, which we believe may provide us with an exciting new growth vehicle within our retail segment.

We opened our first outlet store in the Tanger Outlet Center in Riverhead, New York, in the fourth quarter of 2010, and we currently have five outlet leases signed for 2011.

Growing our e-commerce business is another important initiative for us going forward.

In 2010, we did a total of approximately $51 million in net sales in e-commerce channel, including approximately $23 million on SteveMadden.com and approximately $28 million in wholesale sales to online retailers.

Combined, these businesses were up 38% in 2010, and longer term, we believe this channel had the potential to become $100 million business.

Next, we continue to grow our business outside of the footwear category, both through our in-house accessories platform and through our licensing business.

Our wholesale accessories business reached $99 million in net sales in 2010, up from $70 million the year before.

We expect to see continued strong growth there based on our momentum with Steve Madden, Big Buddha and private-label handbags and belts.

Our licensing business was also up substantially with royalty income net of expenses going from $3.1 million in 2009 to $5.4 million in 2010.

The addition of the Betsey Johnson brand as well as the growth we're seeing in our Steve Madden licensing portfolio, licensing should be another meaningful growth vehicle for us over the next few years.

And finally, we remain committed to continuing our international expansion.

Our international business grew 58% in 2010 to just under $35 million in net sales or about 5% of our total sales.

In addition to achieving strong gains in existing territories like Asia, Canada and Mexico, we are aggressively moving to enter new geographies.

2010, we launched businesses with new partners in Saudi Arabia, Australia, Russia and Central America.

Early 2011, we will launch the United Arab Emirates and Benelux.

And by the end of 2011, we will enter India.

We're very excited with the progress we have made here and the opportunities we see ahead.

We believe this business can reach $100 million over the next three to four years.

Before I turn to our sales and earnings guidance, I would like to provide an update regarding rising costs in China and gross margin expectations.

We continue to see increases in our cost of goods from southern China averaging approximately 5% to 8%.

As I discussed in the last call, we continue to work to mitigate this pressure by moving more production to the north of China, where costs remain lower, and to a lesser extent, by shifting some production to other countries, such as Mexico.

We are also raising prices on select items with fresh materials or styling and have so far not seen resistance to these price increases.

Our goal is a net neutral impact to gross margin from all these changes in 2011.

Achievement of this goal is partially dependent on customer acceptance of additional price increases, which remains an unknown.

I do want to point out that we expect overall 2011 gross margin to be approximately 200 to 300 basis points lower than 2010 due to mix shifts.

There are three principal mix shifts which will reduce consolidated gross margin.

One, the inclusion of the Target business in the top line is expected to dilute gross margin by approximately 210 basis points.

Two, the growth of the international business is expected to dilute gross margin by approximately 40 basis points.

And three, the growth of the Madden Zone private-label accessories business is expected to dilute gross margin by approximately 30 basis points.

The impact of these mix shifts will be more pronounced in the first half, particularly in first quarter, in which their total impact is expected to be approximately 340 basis points.

Now, onto sales and earnings guidance.

For fiscal 2011, we currently expect net sales will increase 20% to 22% compared to fiscal 2010.

Excluding the transition of our Target and Olsenboye businesses from the other income line to the net sales line, we expect sales growth to increase 10% to 12% compared to fiscal 2010.

Diluted EPS for 2011 is expected to be in the range of $3 to $3.10.

Capital expenditures are planned to be approximately $10 million in 2011 as compared to $3.4 million in 2010.

We plan to open six to eight stores and to close between five and seven locations in 2011.

In closing, as we head into 2011, we are excited about what lies ahead.

We believe the Company is better positioned than ever before, with a solid core business and an increasingly diversified platform that provides us with a host of meaningful growth vehicles.

We look forward to reporting back to you throughout the year on our progress with the initiatives we discussed this morning.

Now I would happy to answer any questions that you may have.

(Operator Instructions).

Scott Krasik, BB&T Capital Markets.

Since you were so helpful in giving us the impact in terms of the gross margin in the first quarter, can you also give us sort of how the moving parts will affect the -- your sales expectations for the first quarter?

Well, I think that for the full year, the change of target in Olsenboye is between $60 million and $65 million, and that's going to be spread pretty evenly throughout the quarters.

I think there's no sort of meaningful seasonality there.

So I guess why is the impact on gross margins higher in the first quarter than the sales impact?

Well, the impact of the Target shift is not meaningfully higher in first quarter, but the growth of the Madden Zone business, the private-label accessories business, particularly with Wal-Mart, is largest in first quarter.

Okay.

And then also, the other reason that the impact is a little bit bigger is because first quarter is our smallest sales quarter, and so if the sales of Target are spread even and Olsenboye are spread evenly throughout the quarters, it makes up a higher percentage of the total in first.

Okay.

Can you give us what the contribution from shift of Wal-Mart or Target were in the fourth quarter to sales?

Yes.

That was $4.7 million from the two of them combined because you only had about one month of Target in there.

Okay.

So, if I look at your guidance for the full year, you're still implying a slow down relative to what the core business even grew in the fourth quarter?

Is that correct?

I'm thinking that maybe there's upside, that maybe it's a little bit conservative because you are growing faster than that.

The core business grew at 12%.

If you exclude those businesses, it grew at 12% in fourth quarter.

Our guidance is to grow from 10% to 12% in 2011.

Okay.

All right, that's helpful.

And then, your comment on the retail operating margin getting to 12% in 2012?

I mean that's even (multiple speakers)

It was 10%.

I'm sorry?

Oh it was 10%.

Right, 10% by 2012.

That's even better than back in 2002 and 2003 when you guys probably weren't allocating expenses right, so how do you achieve that?

Where is the visibility on that coming from?

Well, look, we've made some pretty meaningful improvement there.

We ended the year at 6.8%.

So, if we can bring up a couple -- some continued comp store gains, if we can get kind of mid-single-digit comp store gain this year, which we believe we can, that should get us awfully close.

But that's really the key, as you know, is going to be continuing to get top-line gains, which allow us to leverage the operating expenses.

There's some room on gross margin, but the real meaningful gains are going to come by leveraging the operating expenses.

Oh, okay.

All right.

Thanks.

Camilo Lyon, Wedbush Securities.

So just wanted to quickly follow up on the sourcing commentary that you made.

I think you talked earlier about how much production you had already moved to the northern part of China.

If you could just update us on where that stands and where you think that will end up by the end of the year.

Yes, I would say we're in sort of between 25% and 30% right now of goods that we're placing now are going to the north.

And again, a year from now, we really hope to get that up to about half of our production.

We're also, of course, expanding in some other countries.

In Steve Madden Women's, for instance, probably 20% to 25% of our business in the back half of this year will be in Mexico.

In Steven, we're doing a -- about three-quarters of our business in fourth quarter was in Brazil.

We're doing a little bit out of India in certain of our divisions, including Steve Madden.

But, as you know, the vast majority is in China, and we are moving -- the movement is within China up to the north.

And what's the cost savings by making that move?

The north is at least 10% cheaper than the south on average, I would say 10% to 15% is what we're seeing.

Okay, got it.

And then I guess shifting gears a little bit to Big Buddha, it seems like that was -- that's just a business that's -- or a brand that's just starting to get some traction.

It seems like there's a lot more product being devoted to it.

Maybe you could talk a little bit about the strategy around expanding the retail distribution or the wholesale distribution of the brand?

Sure.

Are we talking about Big Buddha shoes?

Yes.

Yes; well, yes, if we could take a step back, the brand overall is performing great.

The handbags continue to do very, very well, but we are extremely excited about the shoe opportunity.

We think that we should be able to do at a minimum, $10 million in 2011, and we're getting a lot of sort of new sponsorship from new retailers that are looking to pick that up.

It's going to be in department stores, as well as the specialty retailers where we started it.

And we just feel -- we feel very good about it.

It's a different product from anything else we have in the building.

And we don't believe it cannibalizes Steve Madden or Madden Girl at all because it's very, very different looking.

We're using some different kinds of constructions, more around toes, very junior product.

And the response has been very, very good.

And that $10 million compares to what in 2010?

We did about a little under $3 million.

Great.

And then the last question I had was relating to some of the shop-in-shops changes that you have ongoing with Macy's, if you would just update us on that and how you think about improving the retail -- the profitability of the business at retail.

Sure.

Yes.

We're -- what we're doing is increasing the number of our shop in shops.

So if we take a step back, what we were doing previously was we were essentially shipping our full Steve Madden assortment to Macy's to about 350 Macy's stores, of which 44 were shop in shops, where our goods are all merchandised together on a couple tables, and where we tend to be most effective.

And then, we were taking a couple styles, maybe three, four styles a season to 600 doors.

What we have decided to do is pull back that full assortment from 350 doors to 161 doors, but make it all of them shop in shops, so we can really drive the productivity in those top 161 doors.

Then we will take the sort of 434 styles that might used to have gone to 600 to the 350, and we will pull Steve Madden out of those bottom 250 doors.

The idea will be to make up that volume with increased Madden Girl shipments and Material Girl shipments, because we believe those brands will perform better at retail in those doors.

And so the net effect of all of this is the Steve Madden brand at Macy's may be down a little bit in volume but should be more profitable, and our overall business with Macy's, because we pick up that volume with Material Girl and Madden Girl, should be up in sales and hopefully dramatically up in profitability.

So we're pretty excited about this new plan because it's something that we've been trying to get Macy's to sign off on for a while, and they have agreed.

Great.

That's it.

Thanks a lot.

Good luck.

Sam Poser, Sterne Agee.

Good morning, Ed.

Can you give us the breakout by Steve Madden, Steven and so on, for the quarter in total -- in revenue?

No, we don't do that any more.

We haven't done that for a couple of years.

You know that.

How about men's?

You do -- you have been giving men's and that does -- you have been giving men's.

The overall men's business was 10.5% last year in the quarter.

And this year, it was -- it looks like 11.2%.

Okay.

And then how do we -- how should we think about SG&A in 2011 right now?

Well, I think we should be able to get a couple 100 basis points of leverage there.

That's certainly the plan.

So you're looking sort of in the range of about $200 million?

Yes, that's in the range.

Okay.

And then, can you talk about some of the other growth opportunities, for instance, you have Superga which you just signed, and some of these other areas.

Because this year ended up significantly better than the initial guidance, and where are sort of your bug question marks now, especially as you look to the back half of the year sort of built into the guidance that you're giving us?

The first part of the question was about the growth opportunities.

I think that the Betsey Johnson footwear line is certainly one that we're excited about.

I know you've been, Sam, by to see the product, and we've gotten a great initial response to that.

We've already gotten orders from Nordstrom and Dillard's and Lord and Taylor, and Apples and Amazon and others.

In fact, we shipped our first product to Nordstrom a couple weeks ago under Betsey Johnson, and the sellthroughs have been very strong.

So we're pretty excited about that, and that's an important growth opportunity.

We've outlined to Target of doing about $10 million in the first year in net sales in Betsey Johnson footwear, and we think that that should be a $20 million to $25 million brand over the next couple years.

International continues to be a big growth opportunity.

I think there's potentially some upside there from the guidance if we can continue to perform the way we have.

We talked about Big Buddha shoes, which is something that's -- really seems to be gaining a lot of traction.

Material Girl, of course, is going to grow versus last year.

And then you asked about Superga; Superga is -- just for those of you who don't know, this is a heritage sneaker brand out of Italy, really the number-one sort of fashion sneaker brand out of Italy.

And we have taken the license for North America and we will start shipping Superga product in the back half of this year.

I don't think that's going to be any kind of -- we are going to require a line in anyone's model for this year.

It's really -- the important launch there will be spring 2012 because it's really spring product.

So, we will do probably $1 million at the most in the back half here under Superga, but we're excited about that opportunity for 2012 and beyond.

I think that's -- those are most of the new things.

I think the Madden brand on the men's side, we've just gone all door at Macy's.

We just got Belk to sign up for 130 doors for the fall.

So we think that brand should be a nice growth vehicle for us this year.

I think those are the highlights.

And then lastly, when you look at the boot business in the back half of the year, because some of the commentary from added platform and so on was that people like what they were seeing from boots, but that's where there was going to be some inflation.

How are you looking at that within your guidance right now and within the response you've gotten to product at the shows lately?

Well, the response to the product has been very good, and we also got some very good late in season tests on new boots in New York and LA and some of our higher fashion areas, which tends to be a very good indicator for the fall in boot season, so we do feel good about that.

That being said, in the interest of being prudent or conservative, we plan the boot business down modestly in the guidance.

So certainly if there's another gang busters boot year, that could potentially be upside.

Okay, thank you.

Good luck.

Steve Marotta, CL King.

Very quickly, planning the boot business down modestly, is that weighted towards the back half versus the front half?

And can you talk a little bit about booties AUR versus normal boots AUR?

Yes, I mean that's really a back half issue is what we were talking about, planning that down modestly.

It doesn't affect the first half at all.

Okay.

And in terms of boots and booties, yes, booties are lower AUR, and that impacted the AUR a little bit in Q3 of 2010.

But whereas it was all about booties early in the boot season, the tall shaft boots really picked up in the tail end of the boot season here.

So, we didn't see a real impact from that in Q4 or in Q1 at retail.

And on a year-over-year basis for spring, that's, again, you just intimated that boots are planned slightly up, I believe?

Yes, well obviously, in the wholesale business, boots are a very small part of the business in spring.

At retail, we obviously -- we're still selling boots in first quarter at retail and still a meaningful piece, but it doesn't move the needle on wholesale.

Okay.

From an inventory standpoint, you mentioned that one part of the slug of inventory being up year over year was Wal-Mart handbags.

I'm assuming that's unrelated due to the accounting change that's going on there?

Right.

The accounting change was only for shoes.

Handbags, this is just -- we're just growing that business -- this is -- with the our private label accessories group, Madden Zone.

And they've just really ramped up what they're doing with Wal-Mart handbags, which is great.

Okay.

Lastly, can you talk about the CapEx differential from 2011 to 2010?

Yes, the meaningful part of the increase is that we -- it is time for us to do some investment in our systems.

So we're looking -- after spending only about $1 million last year, we've got $7 million in the budget, including the purchase of a new ERP system and a few other things.

Anything else you want to talk about today?

I don't think so.

Oh, on the systems?

Yes, I'd be happy to tell you.

There's a data center upgrade, a new disaster recovery site.

There are some hardware upgrades in the distribution center.

That's really the three big buckets.

Got you.

Excellent.

Thank you very much.

Jeff Van Sinderen, B.

Riley.

Good morning.

Ed, can you give us a little more on what you've seen in your own retail stores in January and February?

And then also, kind of what you are hearing from your retail partners in terms of their business in January and February?

Yes, I mean we continue to be pleased with the trends.

Obviously, at retail, boots and booties continue to be strong, the military looks, the engineer looks, and, as we talked about, the tall shaft leather boots have picked up.

But, also, in terms of more spring product and what we're selling into wholesale, we're very pleased so far.

Wedges are doing very, very well, particularly raffia and rope materials.

Pumps continue to be good.

Flat sandals, while it's a smaller percentage of the mix than it was a year ago, it's obviously still an important part of the spring business, and we've got some very good flat sandals.

So, bow treatments are doing well for us.

Leopards are doing well.

So, overall, we are very pleased with what's going on from a product perspective.

And we think that we're going to be able to achieve a nice positive comp in our retail stores again, certainly not to the level of what we did in Q4 because the comparison is so much tougher.

We're going up against a 13.6% comp from Q1 of 2010, but we still feel that a mid-single digit number should be very achievable for us for our first quarter 2011.

Okay, great.

And then, any other flavor or color you can give us in terms of the tone that you picked up at the most recent tradeshows from some of the accounts you met with there?

Well, I think generally speaking, people were fairly optimistic.

Certainly our goods have been selling through for people for a couple years now, and so they are -- they've perhaps been a little bit better mood in our booth than in some others, but, I think the tone was overall pretty positive.

Okay, good.

And then, I know you mentioned the Betsey Johnson shoe initiative.

Any other thoughts on just kind of the core Betsey Johnson business and your expectations there for 2011?

Yes, we're -- so far we're very pleased with how the acquisition is going.

We have -- we probably got about $0.03 of accretion in Q4 from the transaction.

The Betsey Johnson licensing portfolio performed even a little better than we had anticipated.

We've got some very strong categories with license partners in jewelry, intimate apparel, and some others.

So the key is going to be to continue to drive those.

We're also -- the Betsey Johnson LLC, which is our licensee for apparel and retail, Betsy just recently introduced her new, more moderately priced collection, which she is calling Pink Patch, where the dresses are roughly $100 versus the $400 dresses that are in her what she calls Black Tag collection.

And, she was at a fashion show I believe it was last week and introduced that product, so we're excited to see where that goes.

And then the real key for us is going to be to grow the shoes and to improve the bag business.

We're changing the strategy a little bit in the bags, bringing the prices down a touch and need to get that business really turned around.

Got it.

Okay.

And then, in terms of acquisitions that you're looking at, are you finding anything that's of interest these days?

We're actively evaluating acquisitions as always.

There are some interesting things in the market.

But, as you know, most deals you look at don't happen, so we don't really have a heck of a lot to report on that front right now, but hopefully, by next quarter, we will have something to talk about there.

Okay, great.

Thanks very much and good luck for the rest of the quarter.

Ali Zipf, Telsey Advisory Group.

Thanks for taking my question.

Just wanted to know what -- if you had plans for the cash that you ended the year with.

It looks like $6.80 per share.

Yes.

Well, I think that the first priority is acquisitions, if we can continue to find things like Betsey Johnson or Big Buddha, that would be our first -- our preference would be to spend the cash that way because we feel those are transactions where we are going to get a better ROI even than buying our own stock.

To the extent we don't buy -- find acquisitions like that, then we will probably turn to returning capital to shareholders.

We still have $45 million on our share repurchase authorization.

And of course, in the past, we've been pretty active.

We've done Dutch auctions.

We've done one-time dividends.

We've done open market repurchases.

So all those things would be on the table, to the extent we don't find acquisitions that meet our criteria.

And I guess following into that acquisition, would you think of buying back any of your international distributors given how well the international business is performing for you?

There may be one or two that we would consider buying in.

I think for the most part, we would like to continue to grow those businesses under the licensee model.

We think that's the right sort of risk reward-model for us right now, and then down the road, we would be interested in buying them back.

But certainly, there are one or two in territories that we've been in longer that may be closer to us that we would be interested in taking a look at.

Great, thanks.

Heather Boksen, Sidoti & Company.

A lot of mine have been answered, but, of the six to eight store openings for 2011, how many of those are outlets?

Well, we've got five outlet leases signed, and we've got one full-price store lease signed.

So, those are the only six definites.

All right.

So, are you still looking for more for this year?

Can it be if you open more than six to eight stores?

Or, is that -- you've pretty much -- what you are going to do at this point?

We're still looking for more, but I don't anticipate we would get -- we would end up more than eight.

I don't think we are going to add more than two to what we already have signed.

All right.

Sounds good.

Thanks.

(Operator Instructions).

We do have a follow-up question from Sam Poser with Sterne Agee.

Ed, in the acquisition front, what -- you have been looking for that fashion athletic brand for quite some time.

As you look -- what is the next piece of the puzzle if -- conceptually that you see as an acquisition here, given that you have sort of filled in a lot of the holes now?

You know what, there's so many different ways we could go.

I think there are a lot of places where we still have a lot of opportunity.

Certainly, we continue to be interested in additional brands that we can add to the portfolio that help us to penetrate certain channels where we are not as well penetrated.

Unlikely we're going to buy something that's right on top of Steve Madden right now in terms of distribution, but, we'd love to have another brand for the mid tier or the mass channel.

We certainly would look at brands that would -- or excuse me, at businesses that would provide us with category expertise in complementary categories.

But, you know, there's it's -- there's a whole host of different things we're looking at.

And then, with the Betsey Johnson, I guess those $100 dresses will start shipping this like in a couple of months.

Is that right theoretically?

Fall.

For fall.

For fall.

So you won't have any reads there.

And, what about the Betseyville line?

What's happening with that?

Because you're doing some handbags there, but it doesn't sound like anything else is going on with that.

Is that an opportunity for Target or how are you looking at that business going forward?

Right now, Betseyville is only a handbag brand, and that's certainly under evaluation, what we want to do with that brand going forward.

And when do you expect to have that evaluation evaluated?

I would say over the next six months, we will come up with a strategy for Betseyville.

All right.

Thanks, again.

Good luck.

Scott Krasik, BB&T Capital Markets.

Thanks.

Ed, did you update the $0.10 accretion number from Betsey Johnson that you had originally put out, or what's implied in the new FY 2011 guidance?

We didn't.

I think that, perhaps, given the initial read on the shoes, it should be a little bit more than $0.10, maybe somewhere between $0.10 and $0.15.

But keep in mind, that's not all incremental to 2010 because we got $0.03 of accretion in Q4 2010.

Yes, that's fair.

And then, in terms of some of your -- you called out licensing your brand as a growth vehicle.

What's going on with Steve Madden sportswear?

I think jewelry launched.

What other categories will we see in 2011 or early 2012?

Yes, I think the key right now is to grow the ones we have because we have signed a lot of new ones over the last few years.

Jewelry is just now rolling out.

We continue to be pleased with our bedding and bath with Revman.

We got real nice growth in outerwear this year, have gotten some real traction there.

Our sunglasses business continues to be good.

And our cold-weather accessories business is stronger, so we've got a lot of good things happening there.

And we're going to continue to evaluate new licensing opportunities as well.

In terms of new licenses though, nothing imminent.

The thing that we're closest on is actually a Betsey license.

We're close to a new children's apparel deal for Betsey Johnson.

Could you -- but specifically on Steve Madden sportswear, is that a work in progress or --?

Yes, that's -- you know, we're in about 100 doors, Macy's, Belk's, Bon-Tons, Dillards, and it's a work in progress.

All right.

Thanks, Ed.

Steve Marotta, CL King.

Really quickly on your inventory, can you talk a little bit about how current it is versus a year ago?

I know you mentioned excluding those three items to 9% on a year-over-year basis, but as a percent of the total inventory, can you talk about dated versus last year, something along those lines?

Yes, I don't have numbers for you, but we feel very good about the quality of the inventory and the age.

As you know, we don't keep inventory around very long.

We're turning our wholesale inventory 12.5 times a year.

So, we feel very comfortable with where we are there.

Okay.

All right.

Thanks.

And with no further questions in the queue, I'll turn the call back over to the presenters for any additional or closing remarks.

Great.

Well, thanks so much for joining us on today's call, and we look forward to reporting back to you after Q1.

And again, that does conclude today's conference.

We do thank you for your participation.