Steven Madden Ltd (SHOO) 2012 Q2 法說會逐字稿

Good day, everyone, and welcome to the Steven Madden, Limited second quarter fiscal 2012 earnings conference call.

Today's call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Jean Fontana of ICR.

Please go ahead, ma'am.

Thank you.

Good morning, everyone.

Thank you for joining us today for the discussion of Steve Madden's second quarter 2012 earnings results.

Before we begin, I would like to remind you that statements made in this conference call that are not statements of historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act Of 1995.

Such forward-looking statements involve risks and uncertainties and other unknown facts that could cause actual results of the Company to differ materially from historical results or any future results expressed or implied by forward-looking statements.

The statements contained herein are also subject generally to other risks and uncertainties as describe from time to time in the Company's reports and registration statements filed with the SEC.

Also, please refer to the 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 today's call cannot be relied upon as current after this date.

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

Thanks, Jean.

Good morning, everyone, and thank you for joining us today as we review our second quarter results and discuss our outlook for the remainder of the year.

The second quarter of 2012 was, in some respects, a more challenging quarter than we have seen in some time.

The overall retail environment softened somewhat during the quarter, and fashion footwear, in particular, was challenged by weakness in the sandal category.

Nevertheless, we delivered strong financial results, with net sales increasing 38% from the prior year to $288.7 million, and net income up 13.1% to $26.9 million or $0.61 per diluted share.

We believe this solid performance in the face of a challenging environment is a testament to the power of our brands, the talents of Steve and his design team, and the enduring strength of our business model.

Importantly, we also continue to make progress in each of the four major growth areas we outlined at the beginning of the year -- one, new brands; two, direct to consumer; three, categories outside footwear; and four, international.

Before I get into the details of our second quarter performance, I'd like to touch briefly on the highlights with regard to each of those growth opportunities.

The first growth area is expanding new brands.

For Spring of this year, we launched Superga, a fashion sneaker brand out of Italy for which we are the licensee for North America.

Superga is a 101-year-old brand with a great heritage and an iconic style, the classic canvas sneaker called the 2750.

While Superga is well-known throughout Europe, prior to our involvement it had very little presence in North America.

We knew we needed to do some creative marketing to position the brand in the United States.

After signing the license agreement, we installed Ashley Olsen and Mary-Kate Olsen as creative directors for Superga and also partnered with them on a collaboration with their designer brand, The Row.

The Row for Superga collection consists of the classic 2750 and luxurious fabrications, like Italian linen and cashmere.

The initial shipments of the collaboration sold out quickly at retailers, including Bergdorf Goodman, Neiman Marcus and Barneys.

We also opened a Superga flagship store on Crosby Street in Soho.

In connection with the opening, Ashley and Mary-Kate hosted a launch party that generated outstanding coverage in both traditional press and the blogosphere.

These efforts have served to create enormous buzz around the brand and, so far, the launch of Superga has exceeded all expectations.

The regular Superga line is currently carried in retailers like Nordstrom, Bloomingdales and J.Crew, as well as top independent boutiques across the country, and initial sell-throughs have been nothing short of outstanding.

We are very excited about our opportunity with this brand as we move ahead.

Our next brand introduction comes this quarter with the launch of Betseyville as an exclusive brand in JC Penney.

The first Betseyville product ships at the end of August and will be on the floor at the beginning September.

We will be doing footwear, handbags, fashion scarves, cold-weather accessories and sunglasses in-house, and we have licensed out jewelry, watches, intimate apparel and hosiery.

Betseyville will be carried in approximately 600 JC Penney doors.

The second big growth opportunity we have outlined is expanding our direct-to-consumer business.

After shrinking the store base by 17% from 2007 to 2011 as we focused on improving the profitability of the existing stores, we now have a rejuvenated and highly profitable retail business and we are once again in expansion mode in 2012.

We now expect to open 13 Steve Madden full-price stores and 5 Steve Madden outlets in 2012, in addition to the one Superga store I mentioned earlier.

We also acquired 7 stores in the acquisition of SM Canada.

And we are adding eCommerce stores as well.

We opened a Superga online store earlier this year and we plan to launch a Betsey Johnson Internet store in early Q4.

All told, we expect to end the year with 108 company operated stores, including 3 Internet stores, a 29% increase in the store base compared to the end of 2011.

The third growth area we identified is expanding our business outside of footwear and this is the one where we are seeing the most dramatic results right now.

Our wholesale accessories business was up 85.6% in the quarter, including 65% organic growth.

Our handbag business is absolutely on fire.

Steve Madden handbag net sales increased over 100% year over year for the second consecutive quarter, with strong gains at key customers like Macy's and Dillard's.

And as I mentioned on the last call, we will start shipping Steve Madden handbags to Nordstrom for the first time next month.

The rest of the handbag business is also extremely strong.

Betsey Johnson handbags, Big Buddha handbags and our Madden's own private label handbag business were all up over 40% in sales in the quarter compared to the prior year.

In addition, we continue to expand our licensing business.

Steve Madden loungewear launches as a 6-month Nordstrom and Hudson Bay exclusive next month.

Initial shipments of Betsey Johnson luggage hit better department stores in May, and Betsey Johnson's new fragrance, "Too Too Pretty," will be found in Sephora, starting in September.

Finally, we have signed a term sheet with a new licensee for Betsey Johnson apparel and expect to have a definitive agreement within days.

Our new licensing partner will launch Betsey Johnson dresses for Spring 2013.

And finally, our fourth major growth opportunity is growing our international business.

We had another quarter of greater than 50% year-over-year growth in our international division, including particularly robust gains with our partners in Dubai and Latin America, as well as a strong performance in Canada, where we operate the business in house after our acquisition of our Canadian licensee in February.

We've already opened 2 new retail stores in Canada since the acquisition and have 2 more planned for Q4.

So, we expect to end the year with 11 company-operated locations in Canada.

We're also entering a number of new territories this year.

Earlier this year we launched Steve Madden in the United Kingdom with The Dune Group and, for Fall, we are entering Germany, France and Scandinavia, as well as North Africa and various CIS countries.

Also for Fall we are opening our first international stores under the Betsey Johnson banner.

We expect to have 3 Betsey Johnson stores open in China by the end of the year.

So, as you can see, we are making great strides with regard to each of our key growth opportunities.

We believe these efforts position us for strong sales and earnings growth in the back half of 2012 and over the years to come.

Now, let's turn to the details of the financial results for the quarter.

Consolidated net sales in Q2 grew 38% over the prior-year period to $288.7 million.

If we exclude net sales from Topline, Cejon and SM Canada, organic net sales rose 18.5% on a consolidated basis.

Wholesale net sales in the quarter rose 41.7% to $248.1 million compared to $175.2 million in the second quarter of last year.

Including Topline, Cejon and SM Canada, organic wholesale net sales increased 19.8%.

Wholesale footwear net sales were $198.7 million, up 33.8% compared to Q2 2011.

Excluding sales from Topline and SM Canada, organic net sales gross -- net sales growth, excuse me, was 10.8%, driven by strong gains in our Adesso Madden wholesale private label business, Olsenboye and international.

Wholesale accessories net sales were $49.4 million, an 85.6% increase over the prior-year period.

Excluding Cejon, organic wholesale accessories sales growth was 65%.

As I mentioned earlier, this was driven by exceptional growth across our various handbag brands, particularly Steve Madden.

Turning to retail, we had another strong quarter there with net sales up 19.4% to $40.6 million in Q2.

Comparable store sales grew 6.8% on top of an 11.6% increase in the prior year.

We were able to drive the comp, despite a decline in traffic at our bricks-and-mortar stores through improved conversion.

Casuals and fashion sneakers were strong categories.

As I mentioned earlier, sandals, particularly flat sandals, were disappointing.

We opened 4 Steve Madden full-price stores, 1 Steve Madden outlet, 1 Superga store and 1 Superga Internet store in the quarter.

Doors opened for the 12 months ended June 30, 2012 generated a record $849 in sales per square foot.

We also saw continued strength in our e-commerce business, which increased 26.1% in the quarter.

Turning to other income, our commission and licensing income, net of expenses, was $4.3 million in Q2 versus $4.4 million in last year's second quarter.

First cost commission income, net of expenses, was $2.4 million in the quarter, down from $2.6 million in last year's second quarter due to declines with the first cost customers Bakers, Kmart and Sears.

Licensing royalty income, net of expenses, was essentially flat, a $1.8 million.

Excluding Betsey Johnson apparel, where we are transitioning to a new licensee, royalty income net of expenses was up 8% compared to the prior-year period.

Consolidated gross margin for the quarter was 36.1% as compared to 40.2% in last year's second quarter.

Wholesale gross margin declined to 31.6% versus 35.4% compared to last year.

The wholesale decline was due primarily to shifts in sales mix as a result of, one, the impact of Topline and Cejon; and two, the significant increase in Adesso Madden private label wholesale business in the quarter.

Combined, these factors diluted wholesale gross margin by approximately 400 basis points.

Excluding these mix shifts, wholesale gross margin was up approximately 20 basis points compared to the prior year.

Gross margin in the retail division was 63.7%, down from 64.8% in the second quarter of 2011, driven primarily by increased promotional activity in the sandal category.

Operating expenses were $66.7 million in the second quarter, or 23.1% of net sales, compared to $51.3 million or 24.5% of net sales a year ago.

The improvement was driven by leverage on increasing sales, as well as an increased mix of wholesale, which carries lower operating expenses as a percentage of sales in retail.

Operating income for the second quarter of 2012 was $37.5 million or 13% of net sales.

Operating income included a $2.5 million charge for a class action lawsuit related to unauthorized text messaging and a $1.8 million charge for impairment of a note receivable from our former licensee for Betsey Johnson retail and apparel.

Excluding these charges, operating income was $41.8 million or 14.5% of net sales, compared to $37.2 million or 17.8% of net sales in last year's second quarter.

The effective tax rate in the quarter was 31.3% compared to 39% in the second quarter of last year, due primarily to a tax benefit of $2.8 million or $0.06 per diluted share related to the year-to-date impact of a portion of our earnings from our foreign operations that have been reinvested indefinitely.

We expect to recognize an additional tax benefit of $0.08 per diluted share in the back half of 2012 related to foreign operations, bringing our effective tax rate in the back half to approximately 35.5%.

In 2013 the effective tax rate is expected to return to historical levels.

Net income for Q2 was $26.9 million or $0.61 per diluted share, compared to $23.8 million or $.55 per diluted share in the prior year's second quarter.

The charge for the text messaging litigation and the charge for impairment of the note receivable from our former licensee for Betsey Johnson retail and apparel resulted in a combined $0.06 loss in the quarter and the tax benefit related to foreign operations resulted in a $0.06 gain.

So, there was no niche net impact to EPS from these three items altogether.

Turning to our balance sheet, as of June 30, 2012 we had $189.8 million in cash and marketable securities and no debt.

We ended the second quarter with inventory of $91 million, versus $67.7 million in the second quarter of last year.

Our consolidated inventory turn for the last 12 months was 10.5 times, up from 9 times for the prior year.

CapEx for the quarter was $4.8 million.

Now, turning to guidance.

For fiscal 2012 we continue to expect net sales to increase 24% to 26% compared to fiscal 2011.

Diluted EPS on a GAAP basis is now expected to be in the range of $2.67 to $2.77, compared to previous guidance of diluted EPS in the range of $2.62 to $2.72.

The updated EPS guidance includes an expected tax benefit related to foreign operations in the back half of approximately $0.08 that was not included in the previous guidance.

In summary, despite a challenging environment in Q2, we delivered solid financial results.

We believe our brands and our business model are stronger than ever.

And as we look ahead, our increasingly diversified platform provides us with a number of meaningful growth opportunities that should enable us to continue to drive strong sales and earnings gains in the back half of 2012 and beyond.

Thanks for listening.

And now, I'd like to turn it over to the operator for questions.

Thank you, sir.

(Operator Instructions).

And we will go first to Jeff Van Sinderen with B. Riley.

Please standby for that question.

Hello?

Your line is open, sir.

Okay.

Ed, can you hear me?

Yes.

Good morning, Jeff.

Okay.

Good morning.

Okay.

So, maybe you can just talk a little bit more about the sandal business, what you think was trigging the weakness there.

And then, if you could just get -- kind of give us a sense of how much of your business in total was sandals in Q2 and then if there's any carry-over effect going into Q3 from sandals.

Maybe we can start with that.

Sure.

So, sandals as a whole, in both wholesale and retail, makes up somewhere between -- or made up somewhere between 35% and 40% of our women's shoe business in the second quarter.

That was down from last year when it was between 40% and 45% of the women's shoe business.

And it was a challenging category this year.

Particularly, the flat sandals did not perform the way that we had hoped.

And one of the tricky things about it this year was that we got, I guess what you could call sort of a false-positive read early in the season, because sandals did sell very well early.

We had nice selling of sandals in the first quarter.

In retrospect, I think what happened there was that there was unseasonably warm weather.

The weather turned very nice early this year and there were not a lot -- there's was not a lot of supply of sandals on the floor at that time, so there was a demand created by the warm weather and not a lot of supply.

And so, the sandals that were on the floor sold quite well.

But, as we got into the season, it turned out that that was not really the trend.

The closed-up casuals performed much, much better, things like ballerinas and Oxfords and smoking slippers, et cetera.

And so, we were forced to be more promotional in the sandal category.

We and everybody else.

I don't think this was a Steve Madden specific problem.

This was an industry-wide issue for people in the fashion footwear area.

But, we were -- we did have to be more promotional in that category.

In terms of Q3 and beyond, in wholesale we're really done with sandals.

We still have -- there's still going to be -- the wholesale -- within wholesale the sandal categories is virtually non-existent in Q3.

In retail, it's still going to be about, let's say, 20% - 22% of our sales in, again, women's shoes in the retail stores.

But, we feel pretty good that we've moved through that inventory.

We're on schedule to be out of it when we want to be out of it and we don't -- we're not looking for any meaningful impact in Q3.

Okay.

And then, maybe you can just update us on your latest thoughts on the outlook for the boot business as we think about second half.

Yes.

That's the good news, is that we've got very good early indications on boots and booties.

As you know, the Nordstrom anniversary sale is in progress right now and we've gotten very good reads from that.

We think our business is actually going to be up, year over year in that sale.

We feel -- got very good reads on tall shaft riding boots.

We also feel very good about the real short booties, what we call "shooties." So, so far, boots and booties are looking good.

Okay, great.

And then, can you just remind us -- I know you mentioned going into some areas of Western Europe as the year progresses.

And I know that's not a big exposure of you, but can you just give us kind of a sense of how much of your business is Europe at this point?

Oh, it's tiny.

We're talking about 1% of the total.

Okay.

That's great to hear, that you don't have exposure there at this point.

Okay, thanks very much.

Good luck this quarter.

Thanks, Jeff.

And we'll hear next from Kate McShane with Citi Research.

Hi, thanks.

Good morning, Ed.

Good morning.

I wonder if you could go into a little bit more detail about what you're seeing in the mid-tier channel.

I know that on the last question you had talked about sandal inventories, but I wondered if you could talk about just inventories in general, how the reorder or just orders have been from the mid-tier channel and any additional detail on that.

Sure.

Well, I think that this sandal issue that I talked about and, to a lesser extent, a fairly tough dress category did result in fewer reorders for the Spring season.

And there were some people that maybe felt a little backed up with inventory.

But, at this point, I feel that people are moving -- all the retailers are moving through that inventory and we don't see any major impact on Fall from what we saw in the sandal category.

Okay.

Okay, great.

And in terms of other category trends, you indicated that there are early indications that boots and booties doing well.

Can you just highlight other possible strong categories for the Fall?

Yes.

Well, I think that the stud trend that I know you've seen, Kate, is something that we feel very good about.

And that works on -- pretty much anything we puts studs on is selling right now.

So, that's something that's going to be important.

And then fashion sneakers, I think, is also something that's new this year that we're -- that we think is going to be very important.

We're getting great reads on that.

Okay, great.

Thank you.

And we will go next to Scott Krasik with BB&T Capital Markets.

Hey, Ed.

Good morning.

Good morning.

A couple of questions.

How do you feel about -- I think you had said before you thought gross margins could grow by about 100 basis points now that we've anniversaried the acquisitions in Q3 or the back half of the year.

How do you feel about that?

Yes.

We still continue to feel that we can return to year-over-year gross margin improvement in the back half.

You don't want to put a number around it?

There's no change from our previous guidance.

I mean, I don't recall putting a number of 100 but, yes, we always said modest gross margin improvement.

Okay.

And then, most of the things you called out in the organic footwear growth seems to carry lower margins.

How did Steve Madden Women's do, Steve Madden Men's?

I know you don't give specifics on brand growth, but maybe talk about the businesses.

The big ones.

Yes.

Well, Steve Madden Women's was essentially flat in the quarter, actually down a touch, and it was for all the reasons that we just talked about.

Flat sandals and, to a lesser extent, dress were tough.

We didn't get the reorders that we've been accustomed to getting.

But, the good news is that, because of the positive reads that we're getting on boots and looking at our order file, we do expect to return to year-over-year growth in Steve Madden Women's in Q3.

Okay.

And then, in terms of your retail stores, we've been getting reads that maybe some of the New York stores had been hit by a lack of European tourism that tourism is down in Las Vegas and some of the other locations.

Did that affect you guys in Q2 and what's your outlook for that in Q3 and Q4?

Yes.

That's absolutely something we did see.

If you look at our sales by geography in the retail stores, we certainly did see a little bit of a down-tick in the stores where we have a lot of tourist business.

So, we were flattish in markets like New York City, Las Vegas and L.A. We were up in the mid-teens, for instance, in South Florida.

Now, obviously, they are tourists in Miami, but fewer European tourists, more South American tourists.

And so, that's a little bit of a headwind.

But, interestingly, over the last few weeks that's gotten a little bit better.

And the traffic trends, which were negative in Q2, have turned to a modest positive comp traffic so far this quarter.

Oh, good.

So comp assumptions for the back half sort of mid-single digits, or --?

Yes, I think we still think mid-single digits is a reasonable target.

Okay.

Thank you.

And I'm still waiting for that invitation to the Olsen Superga launch party.

We'll have you at the next one, Scott.

Thanks.

And moving on, we have a question from Camilo Lyon with Canaccord Genuity.

Hey, Ed.

How are you?

Good morning, Camilo.

So, I just wanted to get a little clarification on the guidance and how that relates to your view on the back half relative to what it was one quarter ago.

Is there any change there?

Yes.

There was no change to the back half so, essentially, our internal forecast for Q2 was to do roughly $0.64 and we came in -- we met our sales target there, but came in just shy on the gross margin.

It was about 70 basis points of gross margin that we lost versus our internal forecast due, again, primarily to the sandal issue.

And so, we were about $0.03 short and we've assumed that we leave the back half flat to where it was.

And so, we've reduced the core guidance for the year by $0.03.

And then, when you add in the tax benefit of $0.08 in the back half, that's how you get to our new guidance, which is the $0.05 increase versus the prior guidance.

Got it.

So, stripping out everything, it was just really the impact from the second quarter margin sandal hit.

That's right.

Okay.

And then, secondarily, on -- the good reads that you've been seeing from the boot business at the Nordstrom anniversary sale, how does that reflect in your outlook for the back half boot business?

In other words, were these positive reads better than you had anticipated?

Yes.

I would say we certainly feel better than we did a couple weeks ago.

It's a little early to be making dramatic changes to our back half outlook but, on the margin, we feel much better.

Got it.

Understood.

And then, lastly, you talked about the studding and how that should play out for booties and then boots and the embellishments.

How do you think about ASP trends going into the back half with this kind of fashion trend now seemingly becoming more favorable on the pricing front?

Yes.

I still think -- so far this year, we've been basically flattish in AUR.

And I still think that that's -- it's reasonable to look at it that way for the back half.

Keep in mind that we got a fair amount of price last year.

Our prices were up 4% to 5% last year.

And so, I think we're going to anniversary that, but I don't see further increases over what we did last year.

Okay.

And then, just maybe you could just update us on where Betsey footwear stands and what are the opportunities from a growth perspective; whether it's SKU growth or channel penetration or door growth.

I mean, Betsey footwear, we're just really getting started.

We've got tons of opportunity for door growth and tons of opportunity to expand the assortment within the existing doors.

We've brought in a new design director there that we're very excited about and feel that the shoes look great and we're really looking to start to explode that business, really, in the back half here.

Great.

Good luck with everything.

Sounds like you've got lot of good things going.

So, best of luck with everything.

Thanks, Camilo.

And we will hear next from Jane Thorn Leeson from Keybanc.

Hi.

One of my questions has been answered, but I just had one question on a purpose for you cash usage.

How do you feel about potential buy-backs and, also, what you're seeing in the acquisition landscape as it is today?

Sure.

I'll take them in reverse order.

We do continue to look for additional acquisitions.

Obviously, M&A is something that we've been -- an area where we've been pretty active in over the couple of years.

And we still have an appetite to do additional things, with the caveat that we want to be very disciplined about making sure that we do deals that make sense and at prices that make sense.

There are still a number of opportunities out there and so we continue to work on things and look at things every day, although nothing is imminent.

We won't be announcing any acquisitions in the next week or so.

In terms of share or purchase, I think that it's safe to assume that, given the our recent pull-back in our stock and the fact that we remain confident in the future prospects of business, that that has moved up on the priority list and that that's something that we're looking much harder at.

Okay, great.

And then, just lastly, can you remind us what your expectations for the organic sales growth for the remainder of this year would be?

Yes.

I believe we've said 9% to 11% organic and that number is still -- we're still comfortable with that number.

Okay, great.

Thanks very much.

And we'll move on to our next question from Corinna Freedman with Wedbush Securities.

Hi, good morning.

Just wondering if you could tell us what your expectations are for the tax rate for the second half given the revised guidance.

And I know that you, I think, had mentioned prior that you were doing or experimenting with a mailer.

I'm just wondering if there's anything you can share with us about that initiative.

Thanks.

Yes.

The tax rate for the back half is -- should be around 35.5%, somewhere in there.

And then, keep in mind that in 2013 it's going to -- we expect it will go back to historical levels, which is closer to 39%.

Okay.

We did do a test mailer earlier this year and results were okay; not great.

I mean, I think we had some good learnings from it and it's something that we'll continue to look at and figure out if we want to try again.

And I think that we figured out some things that we liked about it and some things we didn't like about it.

So, we'll probably most likely be trying something again over the next few months.

Okay, great.

Thank you.

And we'll go next to Steve Marotta with CL King and Associates.

Good morning, Ed.

Speaking of the share repurchase, what's left on your authorization currently?

It's about $45 million.

And you didn't utilize any in the second quarter, correct?

We did not.

Okay.

From a costing standpoint, can you talk a little bit about average unit cost coming out of the Far East right now?

I know that you were trying to maintain pricing this year ahead of what you had already mentioned as price increases at 4% to 5% last year.

But, from a costing standpoint, how is that shaking out?

Well, fortunately, as you know, we were all dealing with pretty significant price increases year over year, last year.

This year, that has moderated quite a bit.

So, there are very modest price increases coming out of China right now, I would say low single-digits, but it's much more manageable than what we saw last year.

And we don't really -- we're not forecasting any impact to gross margin from those price increases.

Okay.

Can you offer any additional third-quarter-to-date commentary, either in markets where back-to-school has -- or potentially started in the last week or two and either from your retail doors or a read-through from a wholesale standpoint?

It's basically what we've said before.

We've got good early -- I think the most important thing is good early reads on boots and booties.

And so -- and also the fact that, so far in July in our retail stores, the traffic trends have actually improved a little bit over where they were in June.

So, we feel -- but, I think overall we're feeling better than we did a month ago about the business.

Great.

Lastly, your inventory is up about 34% year over year.

I know that sales are up in a similar fashion.

Can you parse out a little bit the pieces of that inventory?

Yes.

I mean, there's a couple things I would point out there.

Number one, we do have the Steve Madden Canada acquisition which was not there last year, as well as a number of new businesses, like Betseyville, Superga, ShoeMint, et cetera.

So, that's almost $9 million of inventory right there that I would classify as sort of non-comp.

When you exclude that, I think we're up more like 21.5%, which is a number, given our sales growth, that I think people should be pretty comfortable with.

The other thing, within the 21.5%, keep in mind that we've got a number of store openings in the back half.

We're looking at 11 bricks-and-mortar stores and then 1 one Internet store for Betsey Johnson.

So, we've got some inventory to support those door openings as well.

And as I said, I think most importantly we do expect that we can be up year over year in gross margin in Q3.

So, obviously, that's an indication that we're comfortable with the inventory level at the end of Q2.

Terrific.

That's helpful.

Thank you much.

And we'll go to our next question from Sam Poser with Sterne, Agee.

Good morning, Ed.

Just to clarify.

So, the organic inventory growth is around 21.5%.

Yes.

Okay.

Can you also talk about what percent of your business was e-commerce in the quarter?

Just some housekeeping stuff here.

With e-commerce and international.

How much was e-commerce and how much was international?

Correct.

Okay.

On a year-over-year basis, if you want.

Oh, okay.

E-commerce was up 26%, international was up 51%.

And the percent of total?

I don't have it off the top of my head.

Alright.

And then, you're about to roll in Betseyville into JC Penney.

Are you working on any other exclusive deals?

You have a couple other lines like Wild Pair that you've recently gotten a hold of and so on.

Are you looking to work with other retailers to do exclusives and, if so, where are you with that?

Yes.

Wild Pair we are close to striking a deal for an exclusive with one big retailer, but we're not there yet, so we can't announce anything there.

Does that retailer have three letters?

I'll be happy to tell you as soon as we make a deal.

Okay.

And then, I mean, when you're -- what are your store strategies, like with -- you've had outlets now that -- I think the outlets are probably working pretty well.

The comp there was, I would assume, pretty good.

Now, I think you've -- we've lapped a couple of them by now, correct?

Yes, we have.

And I'd love to know how those are doing relative to the total comp.

And how do you foresee the outlet growth over the next few -- going forward from here?

Yes.

Well, interestingly, the outlet comp was actually a little below the full-price comp in second quarter.

And the reason for that is this tourist impact that we talked about earlier, because Las Vegas and Orlando make up about 80% of the comp base in outlet, or did in Q2, and those are markets that were challenged by the tourist issue.

Overall, however, we still feel very good about the outlet business and how those stores are performing and the four-wall contribution that we're going to get out of these stores.

And so, we've got 3 more openings in the back half here, 1 in Florida, 1 in Texas and 1 in California.

And we're working on a package of about 3 more for early 2013.

So, I think, provided that we continue to perform the way we are, you're going to see us roll out 5, 6, 7 of these a year, if not more, over the next few years.

Okay, thanks.

And then, lastly, where do you think you are in sort of -- again, looking forward over time, in growth with the core Steve Madden line and let's say the -- and the Madden Girl line here?

Or is that something that's just going to slow down and just be like a steadier growth and more growth is going to come from the newer brands?

Well, I mean, when you talk about Steve Madden, if we're only talking about Steve Madden wholesale in the US --.

Steve Madden Women's wholesale.

Yes, let's talk about US Women's wholesale.

Yes.

Then the challenge is it is a more mature business than our others.

It's -- we're already in basically all the doors that we want to be in.

There's not a ton of door growth opportunity.

And we have the number one market share in our department in many of those doors.

That being said, we've been in that situation for a few years now and have been able to ring up very nice organic sales growth in the Steve Madden Women's brand.

But, certainly, it is more mature and I think that's one that we should look at as more of a low to mid-single-digit grower over the long term.

However, that leaves -- that ignores the fact that we're going into handbags where our business is doubling every quarter right now or that we're growing internationally in Steve Madden, where our business is up over 50% each quarter.

So, there's still a lot of growth within that -- within the brand.

But, admittedly, within the wholesale business in the US, it's more -- it's a relatively more mature business.

Well, thank you very much and continued success.

Thanks.

And there are no further questions in the queue at this time.

Mr. Rosenfeld, I'd like to turn the conference back to you for any additional or closing remarks.

Okay, great.

Well, thanks very much for joining us on the call and we look forward to speaking with you on the next call.

And again, that does conclude this call.

We thank everyone for participating today.