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What changed in STEVEN MADDEN, LTD.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of STEVEN MADDEN, LTD.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+227 added−222 removedSource: 10-K (2024-03-04) vs 10-K (2023-03-01)

Top changes in STEVEN MADDEN, LTD.'s 2023 10-K

227 paragraphs added · 222 removed · 181 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

52 edited+15 added−10 removed36 unchanged
Biggest changeA few highlights of our diversity initiatives include: • we established a Diversity and Inclusion Council made up of key leaders in our Company to oversee the implementation of our detailed Diversity, Equity, and Inclusion Strategic Plan; • we added three new members to our Board of Directors, each of whom are people of color and bring new perspectives to the highest level of Company leadership; • our employees formed three employee resource groups – one for Black employees and allies called Black Sole, one for LGBTQ+ employees and allies called SM Pride, and one for Hispanic employees and allies called De La Sole; • we launched “Tune-In Tuesday,” a weekly email of internal job openings to encourage career development and advancement; • we signed the “Open to All” pledge with other major brands and retailers; • we joined the Black in Fashion Council; • we implemented Company-wide diversity and inclusion training; • we joined Hive Diversity as well as contributed $100,000 to Howard University and partnered with the university to establish diverse pipelines of talent and expand our recruiting; and • we launched Adaptive Kids footwear, soon to expand to adults.
Biggest changeA few highlights of our diversity initiatives include: • we established a Diversity and Inclusion Council made up of key leaders in our Company to oversee the implementation of our detailed Diversity, Equity, and Inclusion Strategic Plan; • we added three members to our Board of Directors, each of whom are people of color and bring new perspectives to the highest level of Company leadership; • our employees formed three employee resource groups – one for Black employees and allies called Black Sole, one for LGBTQ+ employees and allies called SM Pride, and one for Hispanic employees and allies called De La Sole; • we launched “Tune-In Tuesday,” a weekly email of internal job openings to encourage career development and advancement; • we signed the “Open to All” pledge with other major brands and retailers; • we joined the Black in Fashion Council; • we implemented Company-wide diversity and inclusion training; • we sponsored scholarships provided for the country’s most talented young students from diverse backgrounds through the Fashion Scholarship Fund; • we provided financial support and hands-on retail education programs for Howard University, thereby enhancing the students’ educational experience and creating a talent pipeline from the university to Steve Madden; and • we launched Adaptive Kids footwear, soon to expand to adults, and engaged partners such as Open Style Lab and Runway of Dreams to enhance and promote our adaptive styles along people with disabilities.
Most of our license agreements require the licensee to pay us a royalty based on actual revenue, a minimum royalty in the event the specified revenue targets are not achieved and a percentage of sales for advertising the brand. Corporate Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments.
Most of our license agreements require the licensee to pay us a royalty based on actual revenue, a minimum royalty in the event the specified revenue targets are not achieved and a percentage of sales for brand advertising. Corporate Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments.
These costs are primarily related to expenses associated with corporate executives, corporate finance, legal, human resources, information technology, cyber security, corporate social responsibility, and other shared services. For additional information on our segments, refer to Note S – Operating Segment Information in the Notes to our consolidated financial statements included in this Annual Report. OUR BRANDS Steve Madden.
These costs are primarily related to expenses associated with corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cyber security, and other shared services. For additional information on our segments, refer to Note S – Operating Segment Information in the Notes to our consolidated financial statements included in this Annual Report. OUR BRANDS Steve Madden.
Principal top of funnel marketing activities include digital brand marketing, social media and influencer marketing, experiential events, in-store and online promotions, and public relations focusing primarily on digital product and brand placements, celebrity seeding, as well as public and media appearances by our Founder, Creative and Design Chief, Steve Madden.
Principal top of funnel marketing activities include digital brand marketing, social media and influencer marketing, experiential events, in-store and online promotions, and public relations focusing primarily on digital product and brand placements, celebrity seeding, as well as public and media appearances by our Founder and Creative and Design Chief, Steve Madden.
Our products are distributed in our wholesale channel to over 2,000 retailers, including department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, and other international markets through our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East along with special distribution arrangements in certain 5 European countries, North Africa, South and Central America, Australia and various countries in Asia.
Our products are distributed in our wholesale channel to over 2,000 retailers, including department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, and other international markets through our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East along with special distribution arrangements in certain European countries, North Africa, South and Central America, Australia, and various countries in Asia.
PRODUCT DESIGN AND DEVELOPMENT We have established a reputation for our creative designs, marketing and trend-right products at affordable price points. Our future success will substantially depend on our ability to continue to anticipate and react quickly to changing consumer demands. To meet this objective, we have developed what we believe is an unparalleled design team and process.
PRODUCT DESIGN AND DEVELOPMENT We have established a reputation for our creative designs, marketing, and trend-right products at affordable price points. Our future success will substantially depend on our ability to continue to anticipate and react quickly to changing 4 consumer demands. To meet this objective, we have developed what we believe is an unparalleled design team and process.
In addition, we may incur liability under environmental statutes and regulations with respect to the contamination of sites that we own or operate or previously owned or operated (including contamination caused by prior owners and operators of such sites and neighboring properties, or other persons) and the off-site disposal of hazardous materials.
In addition, we may incur liability under environmental statutes and 8 regulations with respect to the contamination of sites that we own, or operate, or previously owned, or operated (including contamination caused by prior owners and operators of such sites and neighboring properties, or other persons) and the off-site disposal of hazardous materials.
We consider our Company-owned trademarks to be among our most valuable assets and have registered many of our marks in the United States and 149 other countries and in numerous International Classes. From time to time, we adopt new trademarks and new logos and/or stylized versions of our trademarks in connection with the marketing of new product lines.
We consider our company-owned trademarks to be among our most valuable assets, and have registered many of our trademarks in the United States and 149 other countries and in numerous International Classes. From time to time, we adopt new trademarks and new logos and/or stylized versions of our trademarks in connection with the marketing of new product lines.
Our Wholesale Accessories/Apparel business primarily consists of handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting, and other trend accessories. The Wholesale Accessories/Apparel segment primarily consists of the following brands: Steve Madden ® , Anne Klein ® , Betsey Johnson ® , Cejon ® , and Dolce Vita ® .
Our Wholesale Accessories/Apparel business primarily consists of handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting, and other trend accessories. The Wholesale Accessories/Apparel segment primarily consists of the following brands: Steve Madden ® , Anne Klein ® , Betsey Johnson ® , and Dolce Vita ® .
We entered into a license agreement with WHP Global for a license to use the Anne Klein ® , AK Sport ® , AK Anne Klein Sport ® , and Lion Head Design ® (collectively "Anne Klein ® ") trademarks in connection with the design, marketing, and sale of footwear and accessories in January of 2018. Blondo.
In January 2018, we entered into a license agreement with WHP Global for a license to use the Anne Klein ® , AK Sport ® , AK Anne Klein Sport ® , and Lion Head Design ® (collectively "Anne Klein ® ") trademarks in connection with the design, marketing, and sale of footwear and accessories.
The suppliers and manufacturers of our products are required to adopt our Supplier Code of Conduct 2.0 which specifies that they comply with all local laws and regulations governing human rights, working conditions, anti-corruption laws, restricted substances, and environmental compliance, including animal welfare and conflicts minerals, before we conduct business with them.
The suppliers and manufacturers of our products are required to adopt our Supplier Code of Conduct 2.0 which specifies that they comply with all local laws and regulations governing human rights, working conditions, anti-corruption laws, restricted substances, and environmental compliance, including animal welfare and conflict minerals, before we conduct business with them.
Dolce Vita is more than just shoes and handbags, it’s about creating a community, supporting underrepresented voices, and responsibly building a brand that we can be proud of with every step. The Dolce Vita brand is sold globally, including the U.S., Canada, Israel, Australia, and Indonesia.
Dolce Vita ® is more than just shoes and handbags, it’s about creating a community, supporting underrepresented voices, and responsibly building a brand that we can be proud of with every step. The Dolce Vita ® brand is sold globally, including the U.S., Canada, Mexico, Europe, Israel, Australia, and Indonesia.
We have established a reputation for design creativity and our ability to offer quality, trend-right products at accessible price points, delivered in an efficient manner and time frame. The following is a description of our business as of December 31, 2022.
We have established a reputation for design creativity and our ability to offer quality, trend-right products at accessible price points, delivered in an efficient manner and time frame. The following is a description of our business as of December 31, 2023.
We do not own or operate any foreign manufacturing facilities; rather, we use agents and our own sourcing office to source our products from independently owned manufacturers primarily in China, Cambodia, Mexico, Brazil, Vietnam, India, Italy and other European countries. We have established relationships with a number of manufacturers and agents in each of these countries.
We do not own or operate any foreign manufacturing facilities; rather, we use agents and our own sourcing offices to source our products from independently owned manufacturers in China, Cambodia, Mexico, Brazil, Italy, Vietnam, India, and other European countries. We have established relationships with a number of manufacturers and agents in each of these countries.
Our top ten wholesale customers, in no particular order, include: Nordstrom, Macy's, Dillard's, DSW, The TJX Companies, Ross Stores, Burlington Stores, Amazon, Walmart, and Target. For the year ended December 31, 2022, the Company did not have any customers who accounted for more than 10% of total revenue.
Our top ten wholesale customers, in no particular order, include: Nordstrom, Macy's, Dillard's, DSW, The TJX Companies, Ross Stores, Burlington Stores, Amazon, Walmart, and Target. 5 For the year ended December 31, 2023, the Company did not have any customers who accounted for more than 10% of total revenue.
While the brand appeals to a wide demographic, the core target consumer is 16 to 35 years old. The Steve Madden brand is sold globally, including the U.S., Canada, Mexico, Europe, Asia-Pacific, Africa, and Latin America. Dolce Vita. Dolce Vita ® is a contemporary women's brand known for its effortless style for the modern individual.
While the brand appeals to a wide demographic, the core target consumer is 18 to 40 years old. The Steve Madden ® brand is sold globally, including the U.S., Canada, Mexico, Europe, Asia-Pacific, Africa, and Latin America. Dolce Vita. Dolce Vita ® is a contemporary women's brand known for its effortless style for the modern individual.
We design, source, and market fashion-forward footwear, accessories, and apparel for women, men, and children under the Steve Madden brand. The Steve Madden brand is a leader in the fashion footwear industry with permission from the customer to sell products across most footwear categories including dress shoes, boots, booties, fashion sneakers, and casuals.
We design, source, and market fashion-forward footwear, accessories, and apparel under the Steve Madden ® brand. The Steve Madden ® brand is a leader in the fashion footwear industry with permission from the customer to sell products across most footwear categories including dress shoes, boots, booties, fashion sneakers, and casuals.
Our retail stores are located in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Israel, South Africa, Taiwan, China, and the Middle East. Our stores play an important role in our test-and-react strategy, and also serve as fulfillment and return locations for our e-commerce business.
We operate retail locations in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Europe, Israel, South Africa, Taiwan, China, and the Middle East. Our stores play an important role in our test-and-react strategy, and also serve as fulfillment and return locations for our e-commerce business.
BACKLOG We had unfilled wholesale customer orders of approximately $500,921 and $839,381, as of February 1, 2023 and February 1, 2022, respectively. Our backlog at a particular time is affected by a number of factors, including seasonality, supply chain lead time, timing of market weeks, and wholesale customer purchases of our core products through our open stock program.
BACKLOG We had unfilled wholesale customer orders of approximately $533,609 and $500,921, as of February 1, 2024 and February 1, 2023, respectively. Our backlog at a particular time is affected by a number of factors, including seasonality, supply chain lead times, timing of market weeks, and wholesale customer purchases of our core products through our open stock program.
By utilizing distribution facilities specializing in fulfillment for certain wholesale customers and Steve Madden retail stores we believe that our consumers are served more promptly and efficiently. Suppliers of products for our businesses in Canada, Mexico, Europe and our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East ship to the respective countries.
By utilizing distribution facilities specializing in fulfillment for certain wholesale customers and Steve Madden retail stores we believe that our consumers are served in a prompt and efficient manner. Suppliers of products for our businesses in Canada, Mexico, Europe, and our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East ship directly to the respective countries.
ITEM 1. BUSINESS Steven Madden, Ltd. and its subsidiaries design, source, and market fashion-forward branded and private label footwear, accessories and apparel for women, men, and children.
ITEM 1. BUSINESS Steven Madden, Ltd. and its subsidiaries design, source, and market fashion-forward branded and private label footwear, accessories, and apparel.
Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments. 9
Accordingly, a comparison of backlog from period to period may not be indicative of actual future shipments. 9
The Company’s Chief Information Security Officer has ultimate oversight of the Company’s cyber risk management policies and procedures, and chairs quarterly Information Security Steering Committee meetings, which provides cooperation, collaboration, and consensus driven information security guidance to both the Information Technology Department, and the Company as a whole. Additionally, the Board of Directors receives quarterly updates on these topics.
The Company’s Chief Information Security Officer has ultimate oversight of the Company’s cyber risk management policies and procedures, and chairs quarterly Information Security Steering Committee meetings, which provides cooperation, collaboration, and consensus driven information security guidance to both the Information Technology Department, and the Company as a whole.
Our design team strives to create designs that are true to our DNA, reflect current or anticipated trends and can be manufactured in a timely and cost-effective manner. Most new products are tested in select Steve Madden retail stores and on www.stevemadden.com.
Our design team strives to create designs that are true to our DNA, reflect current or anticipated trends, and can be manufactured in a timely and cost-effective manner. Most new products are tested in select retail stores and on directly-operated e-commerce websites.
As part of the Company’s information security program, all global employees are required to take annual training on information security awareness, including cybersecurity, global data privacy requirements and IT compliance measures.
As part of the Company's information security program, all global employees including high-risk users and executives, are required to complete annual training on information security awareness, including cybersecurity, global data privacy requirements, and information technology compliance measures.
HUMAN CAPITAL RESOURCES As of February 1, 2023, we employed approximately 4,000 employees globally, with approximately 2,200 of these employees located in the United States and 1,800 located internationally. Of these employees, approximately 2,800 work full-time and approximately 1,200 work part-time. Most of our part-time employees work in the Direct-to-Consumer segment. None of our employees are represented by a union.
HUMAN CAPITAL RESOURCES As of February 1, 2024, we employed approximately 4,200 employees globally, with approximately 2,200 of these employees located in the United States and 2,000 located internationally. Of these employees, approximately 2,900 work full-time and approximately 1,300 work part-time. Most of our part-time employees work in the Direct-to-Consumer segment.
At December 31, 2022, three customers accounted for 20.6%, 16.2%, and 11.1% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total accounts receivable. Direct-to-Consumer.
At December 31, 2023, three customers accounted for 16.1%, 12.7%, and 12.4% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total accounts receivable. Direct-to-Consumer.
Our Direct-to-Consumer channel consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, Steve Madden ® shop-in-shops and directly-operated e-commerce websites.
Our Direct-to-Consumer segment consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, Steve Madden ® concessions in international markets, and our directly-operated digital e-commerce websites.
In addition, during 2022, we opened two concessions in Taiwan and one concession in China, ending the year with 20 Company-operated concessions in international markets. 3 In addition to our stores, our Direct-to-Consumer business offers products online through our e-commerce sites in the United States, Canada, Mexico, Europe, Israel, South Africa and Asia.
In addition, we ended the year with 20 concessions in Taiwan, four concessions in China, and one concession in Portugal, ending the year with 25 Steve Madden ® concessions in international markets. 3 In addition to our brick-and-mortar stores, our Direct-to-Consumer business offers products online through our e-commerce sites in the United States, Canada, Mexico, Europe, Israel, South Africa, Asia, and the Middle East.
We believe that our retail stores and websites enhance overall sales and profitability and our ability to react quickly to changing consumer demands. In 2022, we added 28 brick-and-mortar stores and closed 10 brick-and-mortar stores.
We believe that our retail stores and websites enhance overall sales and profitability and our ability to react quickly to changing consumer demands. In 2023, we added 38 brick-and-mortar stores and closed 15 brick-and-mortar stores and one e-commerce site.
This segment also includes our private label handbag and accessories business. This segment represented 18.6% of total revenue during 2022. Direct-to-Consumer Our Direct-to-Consumer segment, which was referred to as the Retail segment in previous filings, consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, and our directly-operated digital e-commerce websites.
This segment also includes our private label handbag and accessories business. This segment represented 21.0% of total revenue during 2023. Direct-to-Consumer Our Direct-to-Consumer segment consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, Steve Madden ® concessions in international markets, and our directly-operated digital e-commerce websites.
As of December 31, 2022, we operated 232 brick-and-mortar retail stores, including 165 Steve Madden full-price stores, 66 Steve Madden outlet stores and one Dolce Vita full-price store.
As of December 31, 2023, we operated 255 brick-and-mortar retail stores, including 181 Steve Madden ® full-price stores, 71 Steve Madden ® outlet stores and three Dolce Vita ® full-price store.
DISTRIBUTION For the year ended December 31, 2022, our Wholesale segment and our Direct-to-Consumer segment generated revenue of approximately $1,589,566 and $521,729, or 74.9% and 24.6% of our total revenue, respectively. Each of these distribution channels is described below. Wholesale.
DISTRIBUTION For the year ended December 31, 2023, our Wholesale and our Direct-to-Consumer businesses generated revenue of approximately $1,464,980 and $506,494, or 73.9% and 25.6% of our total revenue, respectively. Each of these distribution channels is described below. Wholesale.
The Blondo ® brand is a 100+ year-old footwear brand recognized for its quality water-resistant leather boots, booties, casual shoes and sneakers. The Blondo brand is primarily sold in the U.S. and Canada. We acquired the intellectual property and related assets of Blondo ® in January of 2015. GREATS.
The Betsey Johnson brand is primarily sold in the U.S, and in select international markets. We acquired the Betsey Johnson ® trademark and substantially all other intellectual property of Betsey Johnson LLC in October of 2010. Blondo. The Blondo ® brand is a 100+ year-old footwear brand recognized for its quality water-resistant leather boots, booties, casual shoes, and sneakers.
The GREATS ® brand is a Brooklyn-based, digitally native footwear brand founded in 2014 which specializes in premium quality, responsibly made sneakers for men and women. The GREATS ® brand is primarily sold in the U.S. We acquired the GREATS ® brand in August of 2019. 4 Mad Love .
The Blondo ® brand is primarily sold in the U.S. and Canada. We acquired the intellectual property and related assets of Blondo ® in January of 2015. GREATS. The GREATS ® brand is a Brooklyn-based, digitally native footwear brand founded in 2014 which specializes in premium quality, responsibly made sneakers. The GREATS ® brand is primarily sold in the U.S.
Our retail stores are located in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Israel, South Africa, Taiwan, China, and the Middle East. Through our joint venture partnerships in China and Taiwan, we also have company-operated concessions.
We operate retail locations in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Europe, Israel, South Africa, Taiwan, China, and the Middle East.
Trademarks we believe to be most significant to our business include: Steve Madden ® , Madden Girl ® , Madden NYC ® , Betsey Johnson ® , LUV BETSEY by Betsey Johnson Design ® , Dolce Vita ® , DV ® , DV Dolce Vita ® , MadLove ® , Blondo ® , Blondo Waterproof plus Heart ® , Steven ® , SM Pass ® , and GREATS ® .
Trademarks we believe to be most significant to our business include: Steve Madden ® , Madden Girl ® , Madden NYC™, Betsey Johnson ® , Dolce Vita ® , and Blondo ® .
As of December 31, 2022, we operated 232 brick-and-mortar retail stores, including one Dolce Vita full-price store and 66 Steve Madden outlet stores, and six e-commerce websites. In addition, we had 20 Company-operated concessions in international markets. Out of the 232 total brick-and-mortar retail stores, 115 were located outside of the U.S. COMPETITION The fashion industry is highly competitive.
As of December 31, 2023, we operated 255 brick-and-mortar retail stores, including three Dolce Vita ® full-price stores and 71 Steve Madden ® outlet stores, and five e-commerce websites. In addition, we had 25 Steve Madden ® concessions in international markets. Out of the 255 total brick-and-mortar retail stores, 135 were located outside of the U.S.
We compete with numerous domestic and international footwear, apparel, and accessory companies. Our competitors may have greater financial and other resources than we do. We believe effective marketing and advertising, favorable brand image, fashionable styling, high quality, value, and fast manufacturing turnaround are the most important competitive factors, and we intend to continue to employ these elements in our business.
We believe effective marketing, favorable brand image, fashionable styling, high quality, value, and fast manufacturing turnaround are the most important competitive factors, and we intend to continue to employ these elements in our business.
Our management considers relations with our employees to be good. We have never experienced a material interruption of our operations due to a labor dispute. Culture Steve Madden is for the bold, expressive, and ambitious. Our core values – authenticity, initiative, tenacity, humility, and trust are key to our competitive edge and are embedded throughout all levels of our Company.
None of our employees are represented by a union, and we consider our relations with our employees to be good. We have never experienced a material interruption of our operations due to a labor dispute. Culture Steve Madden is for the bold, expressive, and ambitious.
As part of the Company's charitable giving strategy, we made a $1 million contribution for each of 2022 and 2021, and we have since launched multiple shop-to-give campaigns across our various Company-owned e-commerce websites. 8 GOVERNMENT REGULATIONS Our business is subject to various United States federal state, and local and foreign laws and regulations, including environmental, health and safety laws and regulations.
As part of the Company's charitable giving strategy, we made a one million dollar contribution for each of 2023 and 2022, and we have since launched multiple shop-to-give campaigns across our various company-operated e-commerce websites.
We acquired the Dolce Vita ® footwear trademark in August of 2014 and in December 2021, we acquired the remaining intellectual property rights of Dolce Vita including handbags and other accessories. Anne Klein. The Anne Klein ® brand has a rich heritage going back over 50 years and is recognized for its dedication to timeless American classics.
We acquired the GREATS ® brand in August of 2019. LICENSED BRAND Anne Klein. The Anne Klein ® brand has a rich heritage going back over 50 years and is recognized for its dedication to timeless American classics. Anne Klein ® footwear and accessories are sold in the U.S., Canada, Mexico, and Israel.
Our Wholesale Footwear business consists of fashion-forward footwear for women, men, and children. Our products are designed and marketed for various lifestyles and include dress shoes, boots, booties, fashion sneakers, sandals, and casual shoes.
Our products are designed and marketed for various lifestyles and include dress shoes, boots, booties, fashion sneakers, sandals, and casual shoes. The Wholesale Footwear segment primarily consists of the following brands: Steve Madden ® , Dolce Vita ® , Betsey Johnson ® , Blondo ® , GREATS ® , and Anne Klein ® .
To help manage work-life balance, we offer a paid membership to Care.com so employees can find childcare, senior care, special needs care and other related services. Charitable Giving In December 2021, the Company formed The Steve Madden Corporate Foundation, a donor-advised fund established under Fidelity Charitable and managed by Rockefeller Capital Management.
Charitable Giving In December 2021, the Company formed The Steve Madden Corporate Foundation, a donor-advised fund established under Fidelity Charitable and managed by Rockefeller Capital Management.
A point-of-sale system for our U.S. retail stores is integrated with a retail inventory management/store replenishment system. We have transitioned our e-commerce software to a major cloud-based provider. Complementing all of these systems are ancillary systems and third-party information processing services, including, among others, supply chain, business intelligence/data warehouse, Electronic Data Interchange, credit card processing, and payroll.
A point-of-sale system for our U.S. retail stores is integrated with a retail inventory management and store replenishment system. We have transitioned our e-commerce platform to a major cloud-based provider.
We undertake updates of all of these management information systems on a periodic basis in order to ensure that our functionality is continuously improved. 6 INFORMATION SYSTEMS The Company maintains its information technology and security policies, comprised of risk management policies and procedures surrounding the Company’s information systems, cybersecurity practices and protection of confidential information.
INFORMATION SYSTEMS The Company maintains its information technology and security policies, comprised of risk management policies and procedures surrounding the Company’s information systems, cybersecurity practices, and protection of confidential information.
These include mindfulness and meditation training, financial wellness seminars, health fairs, discounted gym memberships, free flu shots, paid-time-off to receive COVID-19 vaccination and boosters, on-site COVID testing and on-site discounted food. We also offer an Employee Assistance Program with a range of programs, resources and tools that can help with various issues.
Additionally, we offer financial wellness seminars, health fairs, discounted gym memberships, and on-site discounted food. We also offer an Employee Assistance Program with a range of programs, resources, and tools that can help with various wellness issues. We collaborate with featured vendors to enhance the experience and provide even more ways for our employees to prioritize their wellness.
Some examples of this focus include our ongoing professional development relationship with the University of Arizona Global Campus, our tuition reimbursement program, our internal employee learning opportunities, and external conference and workshop offerings around specific industry content as well as leadership, coaching, and management training.
Key initiatives include our long-standing professional development relationship with the University of Arizona Global Campus, a comprehensive tuition reimbursement program, leadership and management training, and access to external conferences and workshops that focus on specific industry knowledge.
We operate six branded e-commerce sites, which include: www.stevemadden.com, www.dolcevita.com, www.betseyjohnson.com, www.blondo.com, www.greats.com, and www.superga-usa.com. This segment represented 24.6% of total revenue during 2022. First Cost Our First Cost segment represents commission based activities where the Company serves as a buying agent for footwear products under private labels for select national chains, and value-priced retailers.
We operate five branded e-commerce sites, which include: www.stevemadden.com, www.dolcevita.com, www.betseyjohnson.com, www.blondo.com, and www.greats.com. This segment represented 25.6% of total revenue during 2023.
We license our Steve Madden ® trademark for use in connection with the manufacture, marketing, and sale of women’s outerwear, sleepwear and intimates, hosiery, jewelry, hair accessories, watches, eyeglasses, sunglasses, umbrellas, bedding and bath, luggage, fragrance, children’s apparel, and men’s leather accessories.
We license our Steve Madden ® and the Betsey Johnson ® trademark for use in connection with the manufacture, marketing, and sale of select apparel, accessories, and home categories as well as various other non-core products.
In addition, in 2021 we launched SM Learning Sessions, a monthly, Company-wide training and development program where we invite internal and external subject matter experts to present on various topics. Mentoring, annual performance evaluations and feedback are also key elements of our career development efforts at our Company.
In 2021, we introduced the SM Learning Sessions, a monthly, company-wide initiative that brings together internal and external experts to share knowledge on diverse topics. This program not only enhances skillsets, but also fosters a collaborative and inclusive environment, encouraging cross-departmental interaction and networking. Furthermore, annual performance evaluations and constructive feedback mechanisms are integral to our strategy.
The Wholesale Footwear segment primarily consists of the following brands: Steve Madden ® , Dolce Vita ® , Betsey Johnson ® , GREATS ® , Blondo ® , Anne Klein ® , Mad Love ® , and Superga. This segment also includes our private label footwear business. This segment represented 56.3% of total revenue during 2022.
This segment also includes our private label footwear business. This segment represented 52.9% of total revenue during 2023.
Removed
As a buying agent, we utilize our expertise and our relationships with shoe manufacturers to facilitate the production of private label product to customer specifications. We believe that operating in the private label market leverages our overall sourcing and design capabilities.
Added
We acquired the Dolce Vita ® footwear trademark in August of 2014 and in December 2021, we acquired the remaining intellectual property rights of Dolce Vita ® including handbags and other accessories. Betsey Johnson.
Removed
In addition, by leveraging the strength of our Steve Madden brands and product designs, we are able to partially recover our design and product development costs from our suppliers.
Added
The Betsey Johnson ® brand is recognized for its unique and original designs – both pretty and punk, lots of color, and movement and modernity – that embrace girl power at any age. Betsey Johnson ® footwear and accessories are designed for inclusive, punky, and fiercely independent women with a target age of 25 to 45 yrs. old.
Removed
Anne Klein footwear and accessories are sold in the U.S., Canada, Mexico, and Israel.
Added
COMPETITION The fashion industry is highly competitive. We compete with numerous domestic and international footwear, apparel, and accessory companies. Our competitors may have greater financial and other resources than we do.
Removed
The Mad Love ® brand is a beach-to-the-street lifestyle brand created to appeal to women with a young attitude and active lifestyle, and marketed exclusively to Target Corporation. In spring 2021, Mad Love ® became a sustainable brand, designed and created with the mission to make our earth a better place. Superga.
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Complementing all of these systems are ancillary systems and third-party information processing services, including, among others, supply chain, business intelligence, data warehousing, Electronic Data Interchange, credit card processing, human resources, and payroll. We undertake updates of all of these management information systems on a periodic basis in order to ensure that our functionality is continuously improved.
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On February 9, 2011, we entered into a license agreement with Basic Properties America Inc. and BasicNet S.p.A., for the use of the Superga ® trademark in connection with the marketing and sale of footwear. The Superga license was terminated as of December 31, 2022.
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Our Chief Information Security Officer oversees our cybersecurity risk management and information security programs and provides quarterly status reports to the Information Security Steering Committee and the Audit Committee.
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We also conduct periodic third-party assessments to test our cybersecurity controls, including our ecommerce sites, our mobile applications, corporate systems and network security (including Wi-Fi), and store systems, point-of-sale software and network security (including Wi-Fi).
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Certain roles require additional role-based, specialized cybersecurity training, such as tabletop exercises to ensure proactive preparation and effective coordination in the event of a security incident. An annual network and application penetration test is conducted by a reputable external vendor.
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We license the Betsey Johnson ® trademark for use in connection with the manufacture, marketing, and sale of women's and children’s apparel, hosiery, fragrance and beauty, medical scrubs, jewelry, watches, eyeglasses, sunglasses, stationary, bedding and bath, luggage, umbrellas, and self-care products.
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The 6 outcomes and findings of the penetration testing are shared with the Information Security Steering Committee and the Audit Committee, as well as any steps the Company has taken to mitigate and remediate any identified risks.
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They motivate our growth, inspire our innovation, define our culture, and set the standard for all of our actions. • Authenticity: Show up to work as your true self • Initiative: Act upon good ideas quickly and be ready to iterate • Tenacity: Look at problems from all sides and be resourceful 7 • Humility: Think from the perspective of others and always be open to learning • Trust: Build strong relationships with good will and integrity Career Development The fashion landscape is constantly shifting and evolving, which makes it especially important for us to invest in the ongoing career development of our employees.
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Our guiding principles are key to our competitive edge and are embedded throughout all levels of our Company. They motivate our growth, inspire our innovation, define our culture, and set the standard for all of our actions. • First things first. Take care of the fundamentals before anything else. • It starts with trust. Great teams are built upon trust.
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In service of this objective, we constantly seek out, promote and improve upon internal programs and processes that make it possible for our employees to reach their full potential.
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We build trust through honesty, care for the greater good, and follow-through. • Don’t coast . Celebrate success, but don’t rest on your laurels. Hustle and grind are what set us apart. • Think big and small. Have your eyes on the big picture while obsessing over the details. • The customer is our muse.
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Wellness We see personal health and fitness of our employees as key to long-term professional success, which is why we offer benefits and programs focused on physical, emotional and financial well-being.
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Study our customers, connect with them directly, and always be open to inspiration. • Place team ownership over personal ego. The company wins when the team has ownership. Don’t let your ego control you. • Everyone can be creative. Creativity is about more than making art.
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It’s about seeing around corners, working within limitations, and being original. • Progress, not perfection. Act upon good ideas quickly and always be ready to iterate. Career Development In the dynamic world of fashion, it is vital that we support the continuous learning and personal growth of our employees.
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Our talent development initiatives focus on enhancing internal programs and processes that empower our 7 employees to excel and feel a strong sense of belonging and fulfillment in their roles.
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By investing in employee development, we aim to create a workplace where employees are not only equipped to meet the challenges of the ever-evolving fashion industry but are also deeply engaged and committed to our long-term success.
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Employee Wellness At Steve Madden, we prioritize the well-being of our employees, which is why we’ve established #SMWellness as a monthly opportunity for our team to invest in themselves. During these sessions, employees can take a break from their work routines to indulge in rejuvenating activities like meditation sessions, soothing back massages, and nutritious snacks.
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GOVERNMENT REGULATIONS Our business is subject to various United States federal, state, local, and foreign laws and regulations, including environmental, health, and safety laws and regulations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur failure to maintain effective internal controls could result in a determination by our auditors that a material weakness or significant deficiency exists in our internal controls. 17 Such a determination could result in a loss of investor confidence in the reliability of our financial statements and could require us to restate our quarterly or annual financial statements.
Biggest changeSuch a determination could result in a loss of investor confidence in the reliability of our financial statements and could require us to restate our quarterly or annual financial statements. These factors could, in turn, negatively affect the price of our common stock.
In the future, retailers in the United States and in foreign markets may further consolidate, undergo restructurings or reorganizations, or realign their affiliations, any of which could decrease the number of stores that carry our or our licensees’ products or increase the ownership concentration within the retail industry.
In the future, retailers in the United States and in foreign markets may further consolidate, undergo restructurings or reorganizations, or realign their affiliations, any of which could decrease the number of stores that carry our licensees’ products, or increase the ownership concentration within the retail industry.
Our results of operations may fluctuate from quarter to quarter and are affected by a variety of factors, including: • the timing of larger shipments of products; • market acceptance of our products; • the mix, pricing and presentation of the products offered and sold; • the hiring and training of additional personnel; • inventory write downs for obsolescence; • the cost of materials; • the product mix between wholesale, retail and licensing businesses; • the incurrence of other operating costs; 11 • factors beyond our control, such as health pandemics, general economic conditions, declines in consumer confidence and actions of competitors; • the timing of holidays; and • weather conditions.
Our results of operations may fluctuate from quarter to quarter and are affected by a variety of factors, including: • the timing of larger shipments of products; • market acceptance of our products; • the mix, pricing, and presentation of the products offered and sold; • the hiring and training of additional personnel; • inventory write-downs for obsolescence; • the cost of materials; • the product mix between wholesale, retail, and licensing businesses; • the incurrence of other operating costs; • factors beyond our control, such as health pandemics, general economic conditions, declines in consumer confidence, and actions of competitors; 11 • the timing of holidays; and • weather conditions.
These risks include, among other things: • the challenge of managing broadly dispersed foreign operations; • inflationary pressures and economic changes or volatility in foreign economies; • the burdens of complying with the laws and regulations of both U.S. and foreign jurisdictions; • additional or increased customs duties, tariffs, taxes and other charges on imports or exports; • political corruption or instability; • geopolitical regional conflicts, terrorist activity, political unrest, civil strife and acts of war; • local business practices that do not conform to U.S. legal or ethical guidelines; 14 • anti-American sentiment in foreign countries in which we operate; • delays in receipts of our products at our distribution centers due to labor unrest, increasing security requirements or other factors at U.S. or foreign ports; • significant fluctuations in the value of the dollar against foreign currencies; • increased difficulty in protecting our intellectual property in foreign jurisdictions; • restrictions on the transfer of funds between the U.S. and foreign nations; and • natural disasters or health epidemics in areas in which our businesses, customers, suppliers and licensees are located.
These risks include, among other things: • the challenge of managing broadly dispersed foreign operations; • inflationary pressures and economic changes or volatility in foreign economies; • the burdens of complying with the laws and regulations of both U.S. and foreign jurisdictions; • additional or increased customs duties, tariffs, taxes, and other charges on imports or exports; • political corruption or instability; • geopolitical regional conflicts, terrorist activity, political unrest, civil strife, and acts of war; • local business practices that do not conform to U.S. legal or ethical guidelines; • anti-American sentiment in foreign countries in which we operate; • delays in receipts of our products at our distribution centers due to labor unrest, increasing security requirements, or other factors at U.S. or foreign ports; • significant fluctuations in the value of the dollar against foreign currencies; • increased difficulty in protecting our intellectual property in foreign jurisdictions; • restrictions on the transfer of funds between the U.S. and foreign nations; and • natural disasters or health epidemics in areas in which our businesses, customers, suppliers, and licensees are located.
Adjustments to the incremental provisional tax expense may be made in future periods as actual amounts may differ due to, among other factors, a change in interpretation of the U.S. tax code and related tax accounting guidance, changes in assumptions made in developing these estimates, regulatory guidance that may be issued with respect to the applicable revisions to the U.S. tax code and state tax implications.
Adjustments to the incremental provisional tax expense may be made in future periods as actual amounts may differ due to, among other factors, a change in interpretation of the U.S. tax code, and related tax accounting guidance, 17 changes in assumptions made in developing these estimates, regulatory guidance that may be issued with respect to the applicable revisions to the U.S. tax code, and state tax implications.
Our sources of supply are subject to the usual risks of doing business abroad, such as the implementation of, or potential changes in, foreign and domestic trade policies, increases in import duties, anti-dumping measures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, political instability and terrorism.
Our sources of supply are subject to the usual risks of doing business abroad, such as the implementation of, or potential changes in, foreign and 13 domestic trade policies, increases in import duties, anti-dumping measures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, political instability and terrorism.
In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United States. Our failure to establish and protect such proprietary rights from unlawful and improper use could have a material adverse effect on our business, financial condition, results of operations and liquidity.
In addition, the laws of certain foreign countries may not 16 protect proprietary rights to the same extent as do the laws of the United States. Our failure to establish and protect such proprietary rights from unlawful and improper use could have a material adverse effect on our business, financial condition, results of operations, and liquidity.
Furthermore, if we are unable to engage an adequate replacement for a terminated licensee or to engage such a replacement for an extended period, our revenues and results of operations could be adversely affected. 16 GENERAL RISK FACTORS Changes in economic conditions may adversely affect our financial condition, results of operations and liquidity.
Furthermore, if we are unable to engage an adequate replacement for a terminated licensee or to engage such a replacement for an extended period, our revenues and results of operations could be adversely affected. GENERAL RISK FACTORS Changes in economic conditions may adversely affect our financial condition, results of operations, and liquidity.
If the U.S. decides to impose additional tariffs on footwear, accessories, apparel, or any other of our goods imported from China, there can be no assurance that we will be able to offset all related increased costs. This potential increase in costs could be material to our business operations because approximately 78% of our products are currently sourced from China.
If the U.S. decides to impose additional tariffs on footwear, accessories, apparel, or any other of our goods imported from China, there can be no assurance that we will be able to offset all related increased costs. This potential increase in costs could be material to our business operations because approximately 79% of our products are currently sourced from China.
A downturn in economic conditions leading to a reduction in consumer confidence and discretionary spending could have a negative effect on our sales and results of operations during the year ending December 31, 2023 and thereafter. Litigation or other legal proceedings could divert management resources and result in costs that adversely affect our operating results from quarter to quarter.
A downturn in economic conditions leading to a reduction in consumer confidence and discretionary spending could have a negative effect on our sales and results of operations during the year ending December 31, 2024 and thereafter. Litigation or other legal proceedings could divert management resources and result in costs that adversely affect our operating results from quarter to quarter.
Any severe and prolonged disruption to ocean freight transportation could force us to rely on alternate and more expensive transportation systems. Efficient and timely inventory deliveries and proper inventory management are important factors in our operations. Inventory shortages can adversely affect the timing of shipments to customers and diminish sales and brand loyalty.
Any severe and prolonged disruption to ocean freight transportation could force us to rely on alternate and more expensive transportation methods. Efficient and timely inventory deliveries and proper inventory management are important factors in our operations. Inventory shortages can adversely affect the timing of shipments to customers and diminish sales and brand loyalty.
Even though we seek to mitigate the risks of extending credit by factoring most of our accounts receivable and obtaining letters of credit or credit insurance for others, if any of our customers were to experience a shortage of liquidity, the risk that the customer's outstanding payables to us would not be paid could cause us to curtail business with the customer or require us to assume more credit risk relating to the customer's accounts payable.
Even though we seek to mitigate the risks of extending credit by factoring most of our accounts receivable and obtaining letters of credit, or credit insurance for others, if any of our customers were to experience a shortage of liquidity, the risk that the customer's outstanding payables to us not being paid could cause us to curtail business with the customer, or require us to assume more credit risk relating to the customer's accounts payable.
GSP is a trade program that provides nonreciprocal, duty-free treatment for certain U.S. imports (including handbags) from qualifying developing countries including Cambodia, Myanmar, Thailand, Indonesia, Sri Lanka, the Philippines, and Pakistan, among others. We currently manufacture handbags in GSP countries, primarily Cambodia. The additional tariff to be paid on such products ranges from 4.6% to 20.0%.
GSP is a trade program that provides nonreciprocal, duty-free treatment for certain U.S. imports (including handbags) from qualifying developing countries including Cambodia, Myanmar, Thailand, Indonesia, Sri Lanka, the Philippines, and Pakistan, among others. We currently manufacture handbags in GSP countries, primarily Cambodia. The additional tariff to be paid on such products ranges from approximately 6% to 20%.
Global inflation has also contributed to higher freight costs, which negatively affected our gross margin and profitability in the year ended December 31, 2022 and may continue to have a negative effect on our future operating results and profitability.
Global inflation has also contributed to higher freight costs, which negatively affected our gross margin and profitability in the year ended December 31, 2023 and may continue to have a negative effect on our future operating results and profitability.
In fiscal year 2022, approximately 60% of our net royalties were derived from our top five licensed product lines. A decrease in customer demand for any of these product lines could have a material adverse effect on our results of operations and financial condition.
In fiscal year 2023, approximately 63% of our net royalties were derived from our top five licensed product lines. A decrease in customer demand for any of these product lines could have a material adverse effect on our results of operations and financial condition.
Our success will be determined, in part, on our and our customers’ ability to manage the impact of the rapidly changing retail environment and identify and capitalize on retail trends, including technology, e-commerce and other process efficiencies that will better service our customers.
Our success will be determined, in part, on our and our customers’ ability to manage the impact of the rapidly changing retail environment and identify and capitalize on retail trends, including technology, e-commerce, artificial intelligence, and other process efficiencies, or advanced technologies that will better service our customers.
We do not own or operate any foreign manufacturing facilities and, therefore, are dependent upon third parties to manufacture most of our products. During 2022, 78% of our total purchases were manufactured in China.
We do not own or operate any foreign manufacturing facilities, and, therefore, are dependent upon third parties to manufacture all of our products. During 2023, 79% of our total purchases were manufactured in China.
The receipt of inventory sourced from areas impacted by COVID-19 has in some cases been slowed or disrupted and our manufacturers may also face similar challenges in receiving raw materials and fulfilling our orders.
For example, the receipt of inventory sourced from areas impacted by COVID-19 was, in some cases, slowed or disrupted and our manufacturers faced similar challenges in receiving raw materials and fulfilling our orders.
If one or more of our significant customers were to reduce or stop purchases of our products, our sales and profits could decline. The retailers that are our customers consist principally of department stores, specialty stores, luxury retailers, value priced retailers, national chains, mass merchants, and pure-play e-commerce retailers.
If one or more of our significant customers were to reduce or stop purchases of our products, our sales and profits could decline. The retailers that are our customers consist principally of department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs.
The trend-focused nature of the fashion industry and the rapid changes in customer preferences leave us vulnerable to the risk of inventory obsolescence.
Our products are manufactured overseas and most of our products are shipped via ocean freight carriers. The trend-focused nature of the fashion industry and the rapid changes in customer preferences leave us vulnerable to the risk of inventory obsolescence.
We depend on our in-house information technology employees and third parties, including “cloud” service providers, to maintain and periodically update and upgrade our systems and websites to support the growth of our business. We also maintain off-site server data facilities that record and process information regarding our vendors and customers and their transactions with us.
We depend on our in-house information technology, employees and third parties, including “cloud” service providers, to maintain and periodically update and upgrade our systems and websites to support the growth of our business.
FOREIGN SOURCING RISKS Disruptions to our product delivery systems and failure to effectively manage inventory based on business trends across various distribution channels could have a material adverse effect on our business, financial condition, results of operations and liquidity. 12 Our products are manufactured overseas and most of our products are shipped via ocean freight carriers.
Our stock price could decline if our results are below the estimates or expectations of these outside analysts. 12 FOREIGN SOURCING RISKS Disruptions to our product delivery systems and failure to effectively manage inventory based on business trends across various distribution channels could have a material adverse effect on our business, financial condition, results of operations, and liquidity.
Our information technology systems and websites may, from time to time, be vulnerable to damage or interruption from events such as computer viruses, security breaches, power outages and difficulties in replacing or integrating the systems of acquired businesses.
We also maintain off-site server data facilities that record and process information regarding our vendors and customers and their transactions with us. 15 Our information technology systems and websites may, from time to time, be vulnerable to damage or interruption from events such as computer viruses, security breaches, power outages, and difficulties in replacing or integrating the systems of acquired businesses.
In addition to our own confidential and proprietary business information, a routine part of our business includes the gathering, processing and retention of sensitive and confidential information pertaining to our customers, employees and others. 15 We, our business partners or our service providers may not have the resources or technical sophistication to anticipate or prevent the rapidly evolving and complex cyber-attacks being unleashed by increasingly sophisticated hackers and data thieves.
We, our business partners, or our service providers may not have the resources or technical sophistication to anticipate or prevent the rapidly evolving and complex cyber-attacks being unleashed by increasingly sophisticated hackers and data thieves.
These analysts' predictions are based upon their own opinions and could be different from our own forecasts. Our stock price could decline if our results are below the estimates or expectations of these outside analysts.
These analysts' predictions are based upon their own opinions and could be different from our own forecasts.
GLOBAL BUSINESS RISKS Our global operations expose us to a variety of legal, regulatory, political and economic risks that may adversely impact our results of operations in certain regions.
The conflict between Hamas and Israel and its broader impacts could have a lasting effect on the short- and long-term operations and financial condition of our business and the global economy. 14 Our global operations expose us to a variety of legal, regulatory, political, and economic risks that may adversely impact our results of operations in certain regions.
Our compliance with Section 404 may require us to incur substantial accounting expense and expend significant management efforts.
Our compliance with Section 404 may require us to incur substantial accounting expense and expend significant management efforts. Our failure to maintain effective internal controls could result in a determination by our auditors that a material weakness or significant deficiency exists in our internal controls.
Any failure by us to comply with these regulatory standards could subject us to significant legal financial and reputational harm.
Any failure by us to comply with these regulatory standards could subject us to significant legal, financial, and reputational harm. We did not have any material cases of information security breaches in the last three years, and we have not incurred any material expenses from security breaches, penalties, or settlements during this period.
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In 2022, the entire apparel industry, including our Company, continues to faced supply chain challenges as a result of COVID-19 including reduced freight availability and increased costs, port disruption, manufacturing facility closures, and related labor shortages and other supply chain disruptions.
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GLOBAL BUSINESS RISKS Geopolitical tensions in the regions in which we operate and any related challenging macroeconomic conditions globally may materially and adversely affect our customers, vendors, and partners, and the duration and extent to which these factors may impact our future business and operations, results of operations, and financial condition remains uncertain.
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In 2018 and 2019, the 13 United States government imposed significant tariffs and created the potential for significant additional changes in trade policies, including tariffs and government regulations affecting trade between the United States and countries where we purchase, manufacture and sell our products.
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On October 7, 2023, Hamas, a U.S. designated terrorist organization, launched a series of coordinated attacks from the Gaza Strip onto Israel. On October 8, 2023, Israel formally declared war on Hamas, and the armed conflict is ongoing as of the date of this filing.
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These trends are affecting many global manufacturing and service sectors, including the footwear, accessories and apparel industries, and may cause us to face trade protectionism in many different regions of the world. These protectionist measures could result in increases in the cost of our products and adversely affect our sales and profitability.
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Hostilities between Israel and Hamas could escalate and involve surrounding countries in the Middle East, a region in which we operate.
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These factors could, in turn, negatively affect the price of our common stock.
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Although the length, impact, and outcome of the military conflict between Israel and Hamas are highly unpredictable, this conflict could lead to significant market and other disruptions, including significant disruptions to the operations of our joint ventures in Israel and the Middle East, instability in financial markets, supply chain disruptions, political and social instability and other material and adverse effects on the macroeconomic conditions.
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At this time, it is not possible to predict or determine the ultimate consequence of this regional conflict.
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In addition to our own confidential and proprietary business information, a routine part of our business includes the gathering, processing, and retention of sensitive and confidential information pertaining to our customers, employees, and others.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Use Segment Approximate Square Feet Dongguan, China Offices and sample production Wholesale Footwear 154,900 Long Island City, NY Executive offices and sample factory Corporate (1) 111,000 Montreal, Canada Offices, warehouse Wholesale Footwear 105,800 New York, NY Offices and showroom, Schwartz & Benjamin Wholesale Footwear 29,800 New York, NY Offices and showroom, Accessories Wholesale Accessories/Apparel 27,200 New York, NY Offices and showroom Wholesale Footwear 10,000 Renton, WA Topline office Wholesale Footwear 9,500 Putian City, China Offices Wholesale Footwear 8,700 Long Island City, NY Storage Corporate (1) 7,200 León, Mexico Offices Wholesale Footwear 6,400 Mexico City, Mexico Offices, SM Mexico Wholesale Footwear and Wholesale Accessories/Apparel 5,700 (1) Corporate does not constitute a reportable segment.
Biggest changeLocation Use Segment Approximate Square Feet Montreal, Canada Offices, warehouse Wholesale Footwear 173,300 Dongguan, China Offices and sample production Wholesale Footwear 154,900 Long Island City, NY Executive offices and sample factory Corporate (1) 111,000 New York, NY Offices and showroom, Schwartz & Benjamin Wholesale Footwear 29,800 New York, NY Offices and showroom, Accessories Wholesale Accessories/Apparel 27,200 Nieuwkuijk, Netherlands Offices and showroom Wholesale Footwear 23,800 New York, NY Offices and showroom Wholesale Accessories/Apparel 17,600 Renton, WA Topline office Wholesale Footwear 14,200 New York, NY Offices and showroom Wholesale Footwear 10,000 Renton, WA Topline office Wholesale Footwear 9,500 Putian City, China Offices Wholesale Footwear 8,700 Long Island City, NY Storage Corporate (1) 7,200 León, Mexico Offices Wholesale Footwear 6,400 Mexico City, Mexico Offices, SM Mexico Wholesale Footwear and Wholesale Accessories/Apparel 5,700 (1) Corporate does not constitute a reportable segment.
We believe that our existing facilities are in good operating condition and are adequate for our present level of operations. The following table sets forth the location, use, segment, and size of the Company's principal properties as of December 31, 2022.
We believe that our existing facilities are in good operating condition and are adequate for our present level of operations. The following table sets forth the location, use, segment, and size of the Company's principal properties as of December 31, 2023.
In addition to the above properties, the Company occupies 232 leased retail and outlet store locations. These leases expire at various times through fiscal 2032. All of our retail stores are leased pursuant to leases that, under their original terms, extend for an average of five years.
In addition to the above properties, the Company occupies 255 leased full price and outlet brick-and-mortar locations. These leases expire at various times through fiscal year 2034. All of our retail stores are leased pursuant to leases that, under their original terms, extend for an average of five years.
Many of the leases contain rent escalation clauses to compensate for increases in operating costs and real estate taxes over the base year. Refer to Item 1. "Business" for further information.
Many of the leases contain rent escalation clauses to compensate for increases in operating costs and real estate taxes over the base year.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIncluded in this table are shares withheld during the fourth quarter of 2022 in connection with the settlement of vested restricted stock to satisfy tax-withholding requirements with an aggregate purchase price of approximately $15,049. 19 Performance Graph The following graph compares the yearly percentage change in the cumulative total stockholder return on our common stock during the period beginning on December 31, 2017, and ending on December 31, 2022, with the cumulative total return on the Russell 2000 Index and a peer group index.
Biggest changePerformance Graph The following graph compares the yearly percentage change in the cumulative total stockholder return on our common stock during the period beginning on December 31, 2018, and ending on December 31, 2023, with the cumulative total return on the Russell 2000 Index and a peer group index.
To the extent permitted, participants may elect to satisfy all or part of such withholding obligations by tendering to us previously owned shares or by having us withhold shares having a fair market value equal to the minimum statutory tax-withholding rate that could be imposed on the transaction.
To the extent permitted, participants may elect to satisfy all or part of such withholding obligations by tendering to us previously owned shares or by having us withhold shares having a fair market value equal to the minimum 21 statutory tax-withholding rate that could be imposed on the transaction.
The following table presents the total number of shares of our common stock, $0.0001 par value, purchased by us in the three months ended December 31, 2022, the average price paid per share, the amount of shares purchased pursuant to our Share Repurchase Program and the approximate dollar value of the shares that still could have been purchased at the end of the fiscal period pursuant to our Share Repurchase Program.
The following table presents the total number of shares of our common stock, $0.0001 par value, purchased by us in the three months ended December 31, 2023, the average price paid per share, the amount of shares purchased pursuant to our Share Repurchase Program and the approximate dollar value of the shares that still could have been purchased at the end of the fiscal period pursuant to our Share Repurchase Program.
See Note J – Share Repurchase Program to the Consolidated Financial Statements for further details on our share repurchase program. During the three months ended December 31, 2022, there were no sales by us of unregistered shares of common stock.
See Note J – Share Repurchase Program to the consolidated financial statements for further details on our share repurchase program. During the three months ended December 31, 2023, there were no sales by us of unregistered shares of common stock.
The aggregate cash dividend paid for the twelve months ended December 31, 2022 was $66,005. In February 2023, our Board of Directors approved the quarterly dividend of $0.21 per share payable on March 24, 2023 to stockholders of record as of the close of business on March 10, 2023.
The aggregate cash dividend paid for the twelve months ended December 31, 2023 was $63,177. In February 2024, our Board of Directors approved the quarterly dividend of $0.21 per share payable on March 22, 2024 to stockholders of record as of the close of business on March 8, 2024.
On November 2, 2021, the Board of Directors approved an increase in the Company's share repurchase authorization of approximately $200,000, bringing the total authorization to $250,000, which included the amount remaining under the prior authorization.
On several occasions the Board of Directors has increased the amount authorized for repurchase of our common stock. On November 2, 2021, the Board of Directors approved an increase in the Company's share repurchase authorization of approximately $200,000, bringing the total authorization to $250,000, which included the amount remaining under the prior authorization.
Our common stock is traded on the NASDAQ Global Select Market since August 1, 2007 under the trading symbol SHOO and was previously traded on the NASDAQ National Market. Holders. As of February 17, 2023, there were 152 holders of record and approximately 28,500 beneficial owners of our common stock. Dividends.
Our common stock is traded on the NASDAQ Global Select Market since August 1, 2007 under the trading symbol SHOO and was previously traded on the NASDAQ National Market. Holders. As of February 22, 2024, there were 154 holders of record and 33,453 beneficial owners of our common stock. Dividends.
During the twelve months ended December 31, 2022, we repurchased an aggregate of 3,604 shares of our common stock under the Share Repurchase Program, at a weighted average price per share of $35.84, for an aggregate purchase price of approximately $129,152, which includes the amount remaining under the prior authorization.
During the twelve months ended December 31, 2023, we repurchased an aggregate of 3,127 shares of our common stock under the Share Repurchase Program, at a weighted average price per share of $34.89, for an aggregate purchase price of approximately $109,118, which includes the amount remaining under the prior authorization.
The peer group index consists of seven companies: Caleres, Inc., Crocs, Inc., Deckers Outdoor Corporation, Genesco Inc., Skechers U.S.A., Inc., Designer Brands Inc. and Wolverine World Wide, Inc.
As of December 31, 2023, our peer group index consisted of seven companies: Caleres, Inc., Crocs, Inc., Deckers Outdoor Corporation, Genesco Inc., Skechers U.S.A., Inc., Designer Brands Inc., and Wolverine World Wide, Inc.
As of December 31, 2022, approximately $94,398 remained available for future repurchases under the Share Repurchase Program.
As of December 31, 2023, approximately $175,463 remained available for future repurchases under the Share Repurchase Program.
(in thousands except for per share) Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 10/1/2022 - 10/31/2022 6 $ 28.39 — $ 116,122 11/1/2022 - 11/30/2022 374 $ 33.00 373 $ 103,820 12/1/2022 - 12/31/2022 744 $ 32.61 281 $ 94,398 Total 1,124 $ 32.71 654 (1) The Steven Madden, Ltd. 2019 Incentive Compensation Plan and its predecessor plan, the Steven Madden, Ltd.
(in thousands except for per share) Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 10/1/2023 - 10/31/2023 6 $ 31.46 — $ 193,676 11/1/2023 - 11/30/2023 261 $ 36.68 247 $ 184,569 12/1/2023 - 12/31/2023 702 $ 41.33 226 $ 175,463 Total 969 $ 40.02 473 (1) The Steven Madden, Ltd. 2019 Incentive Compensation Plan and its predecessor plan, the Steven Madden, Ltd.
The comparison assumes that $100 was invested on December 31, 2017 in our common stock and in the foregoing indices and assumes the reinvestment of dividends. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Steven Madden, Ltd. $ 100.00 $ 98.79 $ 142.67 $ 117.95 $ 157.42 $ 110.96 Russell 2000 Index $ 100.00 $ 88.99 $ 111.70 $ 134.00 $ 153.85 $ 122.41 Peer Group $ 100.00 $ 102.90 $ 134.41 $ 150.13 $ 210.40 $ 192.41
The comparison assumes that $100 was invested on December 31, 2018 in our common stock and in the foregoing indices and assumes the reinvestment of dividends. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Steven Madden, Ltd. $ 100.00 $ 144.42 $ 119.40 $ 159.35 $ 112.32 $ 151.14 Russell 2000 Index $ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85 Peer Group $ 100.00 $ 130.63 $ 145.91 $ 204.48 $ 187.00 $ 252.60
Removed
On several occasions the Board of Directors has increased the amount authorized for repurchase of our common stock. On April 24, 2019, the Board of Directors approved the expansion of the Company's Share Repurchase Program for up to $200,000 in repurchases of the Company's common stock, which included the amount remaining under the prior authorization.
Added
The aggregate cash dividend paid for the twelve months ended December 31, 2022 was $66,005. A quarterly cash dividend of $0.21 per share on our outstanding shares of common stock was paid on March 24, 2023, June 23, 2023, September 25, 2023, and December 29, 2023.
Added
On May 8, 2023, the Board of Directors approved an increase in the Company's share repurchase authorization of approximately $189,900, bringing the total authorization to $250,000.
Added
Included in this table are shares withheld during the fourth quarter of 2023 in connection with the settlement of vested restricted stock to satisfy tax-withholding requirements with an aggregate purchase price of approximately $20,589.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

78 edited+21 added−26 removed26 unchanged
Biggest changeThe receipt of inventory sourced from impacted areas has been slowed or disrupted and our manufacturers have also faced similar challenges in receiving raw materials and fulfilling our orders. 22 RESULTS OF OPERATIONS Years Ended December 31, (in thousands, except for number of stores) 2022 2021 2020 CONSOLIDATED: Net sales $ 2,111,296 99.5 % $ 1,853,902 99.3 % $ 1,188,943 98.9 % Commission and licensing fee income 10,713 0.5 % 12,240 0.7 % 12,871 1.1 % Total revenue 2,122,009 100.0 % 1,866,142 100.0 % 1,201,814 100.0 % Cost of sales (exclusive of depreciation and amortization) 1,248,173 58.8 % 1,098,645 58.9 % 737,273 61.3 % Gross profit 873,836 41.2 % 767,497 41.1 % 464,541 38.7 % Operating expenses 592,192 27.9 % 519,848 27.9 % 414,978 34.5 % Impairment of intangibles — — % 2,620 0.1 % 44,273 3.7 % Impairment of lease right-of-use asset and fixed assets — — % 1,432 0.1 % 36,895 3.1 % Income/(loss) from operations 281,644 13.3 % 243,597 13.1 % (31,605) (2.6) % Interest and other income/(expense) – net 676 — % (1,529) (0.1) % 1,620 0.1 % Income/(loss) before income taxes 282,320 13.3 % 242,068 13.0 % (29,985) (2.5) % Net income/(loss) attributable to Steven Madden, Ltd. $ 216,061 10.2 % $ 190,678 10.2 % $ (18,397) (1.5) % BY SEGMENT: WHOLESALE FOOTWEAR SEGMENT: Net sales $ 1,194,890 100.0 % $ 1,022,322 100.0 % $ 713,662 100.0 % Cost of sales (exclusive of depreciation and amortization) 763,809 63.9 % 677,155 66.2 % 487,105 68.3 % Gross profit 431,081 36.1 % 345,167 33.8 % 226,557 31.7 % Operating expenses 166,123 13.9 % 128,004 12.5 % 118,325 16.6 % Impairment of intangibles — — % — — % 16,345 2.3 % Income from operations $ 264,958 22.2 % $ 217,163 21.2 % $ 91,887 12.9 % WHOLESALE ACCESSORIES/APPAREL SEGMENT: Net sales $ 394,676 100.0 % $ 343,675 100.0 % $ 235,892 100.0 % Cost of sales (exclusive of depreciation and amortization) 294,591 74.6 % 249,000 72.5 % 164,984 69.9 % Gross profit 100,085 25.4 % 94,675 27.5 % 70,908 30.1 % Operating expenses 70,310 17.8 % 64,776 18.8 % 45,889 19.5 % Impairment of intangibles — — % 2,620 0.8 % 27,472 11.6 % Impairment of lease right-of-use asset and fixed assets — — % 651 0.2 % — — % Income/(loss) from operations $ 29,775 7.5 % $ 26,628 7.7 % $ (2,453) (1.0) % DIRECT-TO-CONSUMER SEGMENT: Net sales $ 521,729 100.0 % $ 487,906 100.0 % $ 239,389 100.0 % Cost of sales (exclusive of depreciation and amortization) 189,773 36.4 % 172,490 35.4 % 85,184 35.6 % Gross profit 331,956 63.6 % 315,416 64.6 % 154,205 64.4 % Operating expenses 264,307 50.7 % 240,093 49.2 % 175,743 73.4 % Impairment of intangibles — — % — — % 456 0.2 % Impairment of lease right-of-use asset and fixed assets — — % 781 0.2 % 36,895 15.4 % Income from operations $ 67,649 13.0 % $ 74,542 15.3 % $ (58,889) (24.6) % Number of stores 238 220 218 FIRST COST SEGMENT: Commission fee income $ 916 100.0 % $ 2,346 100.0 % $ 3,902 100.0 % Gross profit 916 100.0 % 2,346 100.0 % 3,902 100.0 % Operating expenses 150 16.4 % 375 16.0 % 1,308 33.5 % Income from operations $ 766 83.6 % $ 1,971 84.0 % $ 2,594 66.5 % LICENSING SEGMENT: Licensing fee income $ 9,798 100.0 % $ 9,893 100.0 % $ 8,969 100.0 % Gross profit 9,798 100.0 % 9,893 100.0 % 8,969 100.0 % Operating expenses 1,944 19.8 % 1,785 18.0 % 3,141 35.0 % Income from operations $ 7,854 80.2 % $ 8,108 82.0 % $ 5,828 65.0 % CORPORATE: Operating expenses $ (89,358) — % $ (84,815) — % $ (70,752) — % Loss from operations $ (89,358) — % $ (84,815) — % $ (70,572) — % 23 The following section discusses our results of operations for 2022 and 2021 and year-to-year comparisons between those periods.
Biggest changeAs we look ahead, we remain focused on delivering trend-right product, deepening connections with our consumers, growing our international business, expanding our non-footwear categories, enhancing our digital commerce business, strengthening our core U.S. wholesale business, and efficiently managing our inventory and expenses, while continuing to make meaningful progress on our corporate social responsibility initiatives. 24 RESULTS OF OPERATIONS Years Ended December 31, (in thousands, except for number of stores) 2023 2022 2021 CONSOLIDATED: Net sales $ 1,971,474 99.5 % $ 2,111,296 99.5 % $ 1,853,902 99.3 % Commission and licensing fee income 10,108 0.5 % 10,713 0.5 % 12,240 0.7 % Total revenue 1,981,582 100.0 % 2,122,009 100.0 % 1,866,142 100.0 % Cost of sales (exclusive of depreciation and amortization) 1,149,168 58.0 % 1,248,173 58.8 % 1,098,645 58.9 % Gross profit 832,414 42.0 % 873,836 41.2 % 767,497 41.1 % Operating expenses 612,672 30.9 % 592,192 27.9 % 519,848 27.9 % Impairment of intangibles 6,520 0.3 % — — % 2,620 0.1 % Impairment of lease right-of-use asset and fixed assets — — % — — % 1,432 0.1 % Income from operations 213,222 10.8 % 281,644 13.3 % 243,597 13.1 % Interest and other income/(expense) – net 7,392 0.4 % 676 — % (1,529) (0.1) % Income before income taxes 220,614 11.1 % 282,320 13.3 % 242,068 13.0 % Net income attributable to Steven Madden, Ltd. $ 171,554 8.7 % $ 216,061 10.2 % $ 190,678 10.2 % BY SEGMENT: WHOLESALE FOOTWEAR SEGMENT: Net sales $ 1,048,448 100.0 % $ 1,194,890 100.0 % $ 1,022,322 100.0 % Cost of sales (exclusive of depreciation and amortization) 677,817 64.6 % 763,809 63.9 % 677,155 66.2 % Gross profit 370,631 35.4 % 431,081 36.1 % 345,167 33.8 % Operating expenses 165,681 15.8 % 166,123 13.9 % 128,004 12.5 % Income from operations $ 204,950 19.5 % $ 264,958 22.2 % $ 217,163 21.2 % WHOLESALE ACCESSORIES/APPAREL SEGMENT: Net sales $ 416,532 100.0 % $ 394,676 100.0 % $ 343,675 100.0 % Cost of sales (exclusive of depreciation and amortization) 281,364 67.5 % 294,591 74.6 % 249,000 72.5 % Gross profit 135,168 32.5 % 100,085 25.4 % 94,675 27.5 % Operating expenses 73,740 17.7 % 70,310 17.8 % 64,776 18.8 % Impairment of intangibles — — % — — % 2,620 0.8 % Impairment of lease right-of-use asset and fixed assets — — % — — % 651 0.2 % Income from operations $ 61,428 14.7 % $ 29,775 7.5 % $ 26,628 7.7 % DIRECT-TO-CONSUMER SEGMENT: Net sales $ 506,494 100.0 % $ 521,729 100.0 % $ 487,906 100.0 % Cost of sales (exclusive of depreciation and amortization) 189,987 37.5 % 189,773 36.4 % 172,490 35.4 % Gross profit 316,507 62.5 % 331,956 63.6 % 315,416 64.6 % Operating expenses 279,827 55.2 % 264,307 50.7 % 240,093 49.2 % Impairment of intangibles 6,520 1.3 % — — % — — % Impairment of lease right-of-use asset and fixed assets — — % — — % 781 0.2 % Income from operations $ 30,160 6.0 % $ 67,649 13.0 % $ 74,542 15.3 % Number of stores 260 238 220 FIRST COST SEGMENT: Commission fee income $ — — % $ 916 100.0 % $ 2,346 100.0 % Gross profit — — % 916 100.0 % 2,346 100.0 % Operating expenses — — % 150 16.4 % 375 16.0 % Income from operations $ — — % $ 766 83.6 % $ 1,971 84.0 % LICENSING SEGMENT: Licensing fee income $ 10,108 100.0 % $ 9,798 100.0 % $ 9,893 100.0 % Gross profit 10,108 100.0 % 9,798 100.0 % 9,893 100.0 % Operating expenses 1,681 16.6 % 1,944 19.8 % 1,785 18.0 % Income from operations $ 8,427 83.4 % $ 7,854 80.2 % $ 8,108 82.0 % CORPORATE: Operating expenses $ (91,743) — % $ (89,358) — % $ (84,815) — % Loss from operations $ (91,743) — % $ (89,358) — % $ (84,815) — % 25 The following section discusses our results of operations for 2023 and 2022 and year-to-year comparisons between those periods.
These costs are primarily related to expenses associated with corporate executives, corporate finance, legal, human resources, information technology, cyber security, corporate social responsibility, and other shared services.
These costs are primarily related to expenses associated with corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cyber security, and other shared services.
These costs are primarily related to expenses associated with corporate executives, corporate finance, legal, human resources, information technology, cyber security, corporate social responsibility, and other shared services.
These costs are primarily related to expenses associated with corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cyber security, and other shared services.
We estimate a return reserve in the Direct-to-Consumer segment by establishing a return rate using historical returns data. The rate is then applied to eligible revenues recorded in the current period to calculate the reserve. We do not accept returns as a normal business practice in our wholesale segments, except for our Blondo, Dolce Vita and BB Dakota product lines.
We estimate a return reserve in the Direct-to-Consumer segment by establishing a return rate using historical returns data. The rate is then applied to eligible revenues recorded in the current period to calculate the reserve. We do not accept returns as a normal business practice in our wholesale segments, except for our Blondo ® and Dolce Vita ® product lines.
In general, our inventory obsolescence estimates have historically been within our expectations and in line with the reserves established, and although possible, significant variation is not expected in the future. A hypothetical 5% increase to inventory reserves at December 31, 2022 would have decreased our 2022 gross profit by approximately $400. Valuation of intangible assets and goodwill.
In general, our inventory obsolescence estimates have historically been within our expectations and in line with the reserves established, and although possible, significant variation is not expected in the future. A hypothetical 5% increase to inventory reserves at December 31, 2023 would have decreased our 2023 gross profit by approximately $400. Valuation of intangible assets and goodwill .
As a result of this assessment, the BB Dakota trademark was written down from the carrying value of $9,670 to its fair value of 29 $7,050, resulting in a pre-tax, non-cash impairment charge of $2,620. This charge was recorded in impairment of intangibles in the Company’s Consolidated Statements of Income/ (Loss) and recognized in the Wholesale Accessories/Apparel segment.
As a result of this assessment, the BB Dakota trademark was written down from the carrying value of $9,670 to its fair value of $7,050, resulting in a pre-tax, non-cash impairment charge of $2,620. This charge was recorded in impairment of intangibles in the Company’s Consolidated Statements of Income and recognized in the Wholesale Accessories/Apparel segment.
Discussions of 2020 and year-to-year comparisons between 2021 and 2020 are not included in this Annual Report on Form 10-K and can be found within Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report on Form 10-K filed with the SEC on March 1, 2022.
Discussions of 2021 and year-to-year comparisons between 2022 and 2021 are not included in this Annual Report on Form 10-K and can be found within Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K filed with the SEC on March 1, 2023.
Performance of the qualitative impairment assessment requires judgment in identifying and considering the significance of relevant events and circumstances including external factors, such as macroeconomic and industry conditions (including the COVID-19 pandemic) and the legal and regulatory environment, as well as entity-specific factors, such as actual and planned financial performance, that could impact the fair value of our reporting units and indefinite-lived intangible assets.
Performance of the qualitative impairment assessment requires judgment in identifying and considering the significance of relevant events and circumstances including external factors, such as macroeconomic and industry conditions, and the legal and regulatory environment, as well as entity-specific factors, such as actual and planned financial performance, that could impact the fair value of our reporting units and indefinite-lived intangible assets.
Our estimates are made based upon historical factors, current and future circumstances and market conditions, and the experience and judgment of management. Assumptions and estimates are evaluated on an ongoing basis, and we may employ outside experts to assist in the valuation process of our intangible assets, goodwill, and other long-lived assets. Allowances for doubtful accounts.
Our estimates are made based upon historical factors, current and future circumstances and market conditions, and the experience and judgment of management. Assumptions and estimates are evaluated on an ongoing basis, and we may employ outside experts to assist in the valuation process of our intangible assets and goodwill. Allowances for doubtful accounts.
Determination of the fair value of a reporting unit or indefinite-lived intangible asset is subjective in nature and involves the use of significant estimates and assumptions including consideration of external factors, such as macroeconomic and industry conditions (including the COVID-19 pandemic) and the legal and regulatory environment, as well as entity-specific factors such as actual and planned financial performance.
Determination of the fair value of a reporting unit or indefinite-lived intangible asset is subjective in nature and involves the use of significant estimates and assumptions including consideration of external factors, such as macroeconomic and industry conditions, and the legal and regulatory environment, as well as entity-specific factors such as actual and planned financial performance.
CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES Management believes the following critical accounting estimates are the most significantly affected by judgments and assumptions used in the preparation of our consolidated financial statements: allowances for doubtful accounts; markdowns and chargeback allowances, co-op advertising allowances, customer returns; inventory valuation; valuation of intangible assets and goodwill; and impairment of other long-lived assets.
CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES Management believes the following critical accounting estimates are the most significantly affected by judgments and assumptions used in the preparation of our consolidated financial statements: allowances for doubtful accounts; markdowns and chargeback allowances, co-op advertising allowances, customer returns; inventory valuation; and valuation of intangible assets and goodwill.
The balances and activity in the allowances for doubtful accounts are presented in Note T – Valuation and Qualifying Accounts to the Consolidated Financial Statements included in this Form 10-K. A hypothetical 5% increase in our allowance for doubtful accounts as of December 31, 2022 would have increased our 2022 operating expenses by approximately $400.
The balances and activity in the allowances for doubtful accounts are presented in Note T – Valuation and Qualifying Accounts to the consolidated financial statements included in this Form 10-K. A hypothetical 5% increase in our allowance for doubtful accounts as of December 31, 2023 would have increased our 2023 operating expenses by approximately $200.
In addition, some of these employment agreements provide for discretionary bonuses and some provide for incentive compensation based on various performance criteria as well as other benefits, including stock-related compensation. Transition tax of $11,721 was the result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act").
In addition, some of these employment agreements provide for discretionary bonuses and some provide for incentive compensation based on various performance criteria as well as other benefits, including stock-related compensation. Transition tax of $4,884 was the result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act").
Excluded from the contractual obligations table above are long-term taxes payable of $1,145 as of December 31, 2022 primarily related to uncertain tax positions, for which we are unable to make a reasonably reliable estimate of the timing of payments in individual years beyond one year due to uncertainties in the timing of tax audit outcomes.
Excluded from the contractual obligations table above are long-term taxes payable of $238 as of December 31, 2023 primarily related to uncertain tax positions, for which we are unable to make a reasonably reliable estimate of the timing of payments in individual years beyond one year due to uncertainties in the timing of tax audit outcomes.
On July 22, 2020, we entered into a $150,000, five-year, asset-based revolving credit facility with various lenders and Citizens Bank, N.A. On March 25, 2022, we entered into an amendment to the revolving credit facility, which replaced the London Interbank Offering Rate (“LIBOR”) with the Bloomberg Short-Term Bank Yield Index (“BSBY”) as the interest rate benchmark, among other changes.
On July 22, 2020, we entered into a $150,000, five-year, asset-based revolving credit facility with various lenders and Citizens Bank, N.A (the “Credit Agreement”). On March 25, 2022, we entered into the Credit Agreement, which replaced the London Interbank Offering Rate (“LIBOR”) with the Bloomberg Short-Term Bank Yield Index (“BSBY”) as the interest rate benchmark, among other changes.
Income from the Licensing segment was $7,854 for the year ended December 31, 2022 as compared to $8,108 in the prior year. Corporate: Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments.
Income from the Licensing segment was $8,427 for the year ended December 31, 2023 as compared to $7,854 in the prior year. Corporate: Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments.
A hypothetical 5% increase in the reserve balance for markdowns and chargeback allowances as of December 31, 2022 would have decreased our 2022 revenue by approximately $1,000. b. Co-op advertising allowances .
A hypothetical 5% increase in the reserve balance for markdowns and chargeback allowances as of December 31, 2023 would have decreased our 2023 revenue by approximately $1,500. b. Co-op advertising allowances .
We have minimized the impact of product, wage and freight cost increases by raising prices, renegotiating costs, changing suppliers and improving operating efficiencies. However, no assurance can be given that we will be able to offset any such inflationary cost increases in the future.
Historically, we have minimized the impact of product, wages, and logistic cost increases by raising prices, renegotiating costs, changing suppliers, and improving operating efficiencies. However, no assurance can be given that we will be able to offset such inflationary cost increases in the future.
We paid total cash dividends for the three months ended September 30, 2022 of $16,385. In November 2022, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on December 30, 2022, to stockholders of record as of the close of business on December 16, 2022.
The dividend was paid on September 25, 2023, to stockholders of record as of the close of business on September 15, 2023. We paid total cash dividends for the three months ended September 30, 2023 of $15,698. In November 2023, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock.
Goodwill and other intangible assets deemed to have indefinite useful lives are not amortized. These assets are tested for impairment at least annually on the first day of the third quarter, or more frequently if impairment indicators are present. Intangible assets with finite lives are amortized over their estimated useful lives and tested for impairment if indicators are present.
These assets are tested for impairment at least annually on the first day of the third quarter, or more frequently if impairment indicators are present. Intangible assets with finite lives are amortized over their estimated useful lives and tested for impairment if indicators are present.
We paid total cash dividends for the three months ended March 31, 2022 of $16,774. In April 2022, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on June 24, 2022, to stockholders of record as of the close of business on June 13, 2022.
The dividend was paid on March 24, 2023, to stockholders of record as of the close of business on March 10, 2023. We paid total cash dividends for the three months ended March 31, 2023 of $16,039. In May 2023, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock.
Dividends Our Board of Directors approved a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock which was paid on March 25, 2022, June 24, 2022, September 26, 2022 and December 30, 2022. The aggregate cash dividends paid for the twelve months ended December 31, 2022 was $66,005.
Dividends Our Board of Directors approved a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock which was paid on March 24, 2023, June 23, 2023, September 25, 2023, and December 29, 2023. The aggregate cash dividends paid for the twelve months ended December 31, 2023 was $63,177.
Licensing Segment: Royalty income generated by the Licensing segment accounted for $9,798, or 0.5% of total revenue, for the year ended December 31, 2022 compared to $9,893, or 0.5% of total revenue, for the year ended December 31, 2021. Operating expenses increased to $1,944 in the current year compared to $1,785 to last year.
Licensing Segment: Royalty income generated by the Licensing segment accounted for $10,108, or 0.5% of total revenue, for the year ended December 31, 2023 compared to $9,798, or 0.5% of total revenue, for the year ended December 31, 2022. Operating expenses decreased to $1,681 in the current year compared to $1,944 last year.
Overview ($ in thousands, except for retail sales data per square foot, earnings per share and per share data) Steven Madden, Ltd. and its subsidiaries design, source, and market fashion-forward branded and private label footwear, accessories and apparel for women, men, and children.
Overview ($ in thousands, except for retail store count, earnings per share, and per share data) Steven Madden, Ltd. and its subsidiaries design, source, and market fashion-forward branded and private label footwear, accessories, and apparel.
Our retail stores are located in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Israel, South Africa, Taiwan, China, and the Middle East.
We operate retail locations in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Europe, Israel, South Africa, Taiwan, China, and the Middle East.
Our inventory turnover (calculated on a trailing four quarter average) for the years ended December 31, 2022 and 2021 was 4.9 times and 6.4 times, respectively. Our total Company accounts receivable average collection days were 72 days in 2022 compared to 67 days in 2021.
The Company also operated 25 concessions in international markets. Our inventory turnover (calculated on a trailing four quarter average) for the years ended December 31, 2023 and 2022 was 5.6 times and 4.9 times, respectively. Our total Company accounts receivable average collection days were 71 days in 2023 compared to 72 days in 2022.
The balances of allowances for doubtful accounts are generally correlated with our revenues from wholesale customers whose receivables are not covered under our Rosenthal agreement, and actual losses have historically been within our expectations and in line with the allowances we have established.
Differences in management’s estimation of the above factors could impact our results of operations and financial position. The balances of allowances for doubtful accounts are generally correlated with our revenues from wholesale customers whose receivables are not covered under our Rosenthal agreement, and actual losses have historically been within our expectations and in line with the allowances we have established.
The review is based on an analysis of the age and styles of inventory on hand, historical sales of the same or similar products, and expected net realizable value through future sales.
We review inventory on a regular basis for excess and slow-moving inventory. The review is based on an analysis of the age and styles of inventory on hand, historical sales of the same or similar products, and expected net realizable value through future sales.
We paid total cash dividends for the three months ended June 30, 2022 of $16,615. In July 2022, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on September 26, 2022, to stockholders of record as of the close of business on September 16, 2022.
The dividend was paid on June 23, 2023, to stockholders of record as of the close of business on June 12, 2023. We paid total cash dividends for the three months ended June 30, 2023 of $15,856. In August 2023, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock.
Net income attributable to Steven Madden, Ltd. for the year ended December 31, 2022 was $216,061 compared to $190,678 for the year ended December 31, 2021.
Net income attributable to Steven Madden, Ltd. for the year ended December 31, 2023 was $171,554 compared to $216,061 for the year ended December 31, 2022.
Diluted earnings per share in 2022 was $2.77 per share on 78,069 diluted weighted average shares outstanding compared to diluted income of $2.34 per share on 81,628 diluted weighted average shares outstanding in the prior year.
Diluted earnings per share in 2023 was $2.30 per share on 74,565 diluted weighted average shares outstanding compared to diluted income of $2.77 per share on 78,069 diluted weighted average shares outstanding in the prior year.
Corporate operating expenses increased 5.4% to $89,358 during the year ended December 31, 2022 as compared to $84,815 in the prior year. 25 LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash flows from operations, cash, cash equivalents and short-term investments.
Corporate operating expenses amounted to $91,743 during the year ended December 31, 2023 as compared to $89,358 in the prior year. 27 LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash flows from operations, cash, cash equivalents, and short-term investments.
Wholesale Footwear Segment: Revenue from the Wholesale Footwear segment in the year ended December 31, 2022 accounted for $1,194,890, or 56.3% of total revenue, as compared to $1,022,322, or 54.8% of total revenue, in the year ended December 31, 2021.
Wholesale Footwear Segment: Revenue from the Wholesale Footwear segment in the year ended December 31, 2023 accounted for $1,048,448, or 52.9% of total revenue, as compared to $1,194,890, or 56.3% of total revenue, in the year ended December 31, 2022.
Our Direct-to-Consumer segment, which was referred to as the Retail segment in previous filings, consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, and our directly-operated digital e-commerce websites.
Our Direct-to-Consumer segment consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, Steve Madden ® concessions in international markets, and our directly-operated digital e-commerce websites.
Of the total cash, cash equivalents and short-term investments as of December 31, 2022, $133,729, or approximately 46%, was held in our foreign subsidiaries, and of the total cash, cash equivalents and short-term investments at December 31, 2021, $156,112, or approximately 59%, was held in our foreign subsidiaries.
Of the total cash, cash equivalents, and short-term investments as of December 31, 2023, $134,745, or approximately 61%, was held in our foreign subsidiaries, and of the total cash, cash equivalents, and short-term investments on December 31, 2022, $133,729, or approximately 46%, was held in our foreign subsidiaries.
Cash, cash equivalents and short-term investments totaled $289,798 and $263,536 at December 31, 2022 and December 31, 2021, respectively.
Cash, cash equivalents, and short-term investments totaled $219,813 and $289,798 at December 31, 2023 and December 31, 2022, respectively.
A hypothetical 5% increase in the reserve balance for co-op advertising allowances as of December 31, 2022 would have decreased our 2022 revenue by approximately $300. c. Return reserve. Our Direct-to-Consumer segment accepts returns within 30 days from the date of a sale.
A hypothetical 5% increase in the reserve balance for co-op advertising allowances as of December 31, 2023 would have an immaterial impact on our 2023 revenue. 30 c. Return reserve. Our Direct-to-Consumer segment accepts unworn returns within 30 days from the date of a sale, or 30 days from the date of delivery for online orders.
Our annual impairment tests were last performed as of July 1, 2022 using a qualitative assessment, the results of which indicated that it is more likely than not that the fair values of our reporting units and indefinite-lived intangible assets significantly exceeded their carrying values.
Our annual impairment tests were last performed as of July 1, 2023 using a quantitative impairment test as described above, the results of which indicated that the fair values of our reporting units and indefinite-lived intangible assets significantly exceeded their carrying values.
For further information, refer to Note N – Income Taxes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
(2) Refer to Note O – Commitments, Contingencies, and Other to the consolidated financial statements included in this Annual Report on Form 10-K for further information.
We have established a reputation for design creativity and our ability to offer quality, trend-right products at accessible price points, delivered in an efficient manner and time frame. Our business comprises five distinct segments: Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to-Consumer, First Cost, and Licensing.
We have established a reputation for design creativity and our ability to offer quality, trend-right products at accessible price points, delivered in an efficient manner and time frame. We manage our operations through our operating divisions, which are presented as the following reportable segments: Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to-Consumer, and Licensing.
We opened 28 brick-and-mortar stores and closed 10 brick-and-mortar stores during the year ended December 31, 2022 and ended the year with 232 brick-and-mortar stores and six e-commerce sites compared to 214 brick-and-mortar stores and six e-commerce sites as of 24 December 31, 2021.
We opened 38 brick-and-mortar stores and closed 15 brick-and-mortar stores and one e-commerce site during the year ended December 31, 2023 and ended the year with 255 brick-and-mortar stores and five e-commerce sites compared to 232 brick-and-mortar stores and six e-commerce sites as of December 31, 2022.
A vast majority of our customers’ receivable balances are protected under our factoring and collection agency agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”), described in Note Q – Factoring Agreement to the Consolidated Financial Statements included in this Form 10-K. Under this agreement, Rosenthal assumes the credit risk resulting from a customer’s financial inability to make payment of credit-approved receivables.
A vast majority of our customers’ receivable balances are protected under our factoring and collection agency agreements with Rosenthal & Rosenthal, Inc. (“Rosenthal”) and CIT Group/Commercial Services, Inc. (“CIT”), described in Note Q – Factoring Agreements to the consolidated financial statements included in this Form 10-K.
Gross profit was $100,085, or 25.4% of Wholesale Accessories/Apparel revenue, in the year ended December 31, 2022, as compared to $94,675, or 27.5% of Wholesale Accessories/Apparel revenue, in the year ended December 31, 2021. The decrease of gross profit as a percentage of revenue was primarily due to higher freight costs.
Gross profit was $135,168, or 32.5% of Wholesale Accessories/Apparel revenue, in the year ended December 31, 2023, as compared to $100,085, or 25.4% of Wholesale Accessories/Apparel revenue, in the year ended December 31, 2022. The increase in gross profit as a percentage of revenue was primarily due to lower freight costs, improved production costs, and lower markdown allowances.
Future quarterly cash dividend payments are subject to the discretion of our Board of Directors and contingent upon future earnings, our financial condition, capital requirements, general business conditions, and other factors.
The quarterly dividend of $0.21 per share is payable on March 22, 2024 to stockholders of record as of the close of business on March 8, 2024. 29 Future quarterly cash dividend payments are subject to the discretion of our Board of Directors and contingent upon future earnings, our financial condition, capital requirements, general business conditions, and other factors.
As of December 31, 2022, we had $289,798 in cash, cash equivalents and short-term investments, no debt and total stockholders’ equity of $843,863. Working capital increased to $522,649 as of December 31, 2022, compared to $509,470 on December 31, 2021.
As of December 31, 2023, we had $219,813 in cash, cash equivalents, and short-term investments, no debt, and total stockholders’ equity of $848,032. Working capital decreased to $477,208 as of December 31, 2023, compared to $522,649 on December 31, 2022.
We have not entered into any long-term manufacturing or supply contracts with any of these foreign manufacturers. We believe that a sufficient number of alternative sources exist outside of the United States for the manufacture of our products. Purchases are made primarily in United States dollars.
We believe that a sufficient number of alternative sources exist outside of the United States for the manufacture of our products. Purchases are made primarily in United States dollars.
Year Ended December 31, 2022 vs. Year Ended December 31, 2021 Consolidated: Total revenue in the year ended December 31, 2022 increased 13.7% to $2,122,009 compared to $1,866,142 for in 2021, with increases in the Wholesale Footwear, Wholesale Accessories/Apparel, and Direct-to-Consumer segments.
Year Ended December 31, 2023 vs. Year Ended December 31, 2022 Consolidated: Total revenue in the year ended December 31, 2023 decreased 6.6% to $1,981,582 compared to $2,122,009 in 2022, with decreases in the Wholesale Footwear and Direct-to-Consumer segments, partially offset by increases in the Wholesale Accessories/Apparel and Licensing segments.
Operating Activities Cash provided by operations was $267,883 in 2022 compared to $159,463 in the prior year. The improvement in cash provided by operations was primarily driven by favorable changes in receivables, inventories, and an increase in net income, partially offset by unfavorable changes in accounts payable and accrued expenses.
Operating Activities Cash provided by operations was $229,237 in 2023 compared to $267,883 in the same period of the prior year. The decrease in cash provided by operations was primarily driven by unfavorable changes in receivables and net income offset by less cash used in accounts payable and accrued expenses.
We paid total cash dividends for the three months ended December 31, 2022 of $16,231. On February 22, 2023, our Board of Directors approved a quarterly cash dividend. The quarterly dividend of $0.21 per share is payable on March 24, 2023 to stockholders of record as of the close of business on March 10, 2023.
The dividend was paid on December 29, 2023, to stockholders of record as of the close of business on December 15, 2023. We paid total cash dividends for the three months ended December 31, 2023 of $15,584. On February 27, 2024, our Board of Directors approved a quarterly cash dividend.
As of December 31, 2022, we had working capital of $522,649, cash and cash equivalents of $274,713, and short-term investments of $15,085 and no cash borrowing and $503.9 letters of credit outstanding unrelated to the Credit Agreement.
As of December 31, 2023, we had working capital of $477,208, cash and cash equivalents of $204,640, short-term investments of $15,173, no cash borrowing, and $504 in letters of credit outstanding unrelated to the Credit Agreement.
A hypothetical 10% decrease in the fair values of our reporting units and our indefinite-lived intangible assets as of December 31, 2022 would not have resulted in any impairment charges. No goodwill or intangible asset impairment charges were recorded as a result of our annual impairment tests during any of the years presented in this Form 10-K.
A hypothetical 10% decrease in the fair values of our reporting units and our indefinite-lived intangible assets as of December 31, 2023 would not have resulted in any material impairment charges.
Operating expenses in the year ended December 31, 2022 were $70,310, or 17.8%, of Wholesale Accessories/Apparel revenue, as compared to $64,776, or 18.8%, of Wholesale Accessories/Apparel revenue, in the year ended December 31, 2021.
Operating expenses in the year ended December 31, 2023 were $73,740, or 17.7%, of Wholesale Accessories/Apparel revenue, as compared to $70,310, or 17.8%, of Wholesale Accessories/Apparel revenue, in the year ended December 31, 2022. Operating expenses in 2023 included acquisition costs of $1,505 related to the acquisition of Almost Famous.
Wholesale Accessories/Apparel Segment: Revenue from the Wholesale Accessories/Apparel segment in the year ended December 31, 2022 accounted for $394,676, or 18.6% of total revenue, as compared to $343,675, or 18.4% of total revenue, in the year ended December 31, 2021. The 14.8% increase in revenue resulted from an increase in our branded handbag business as well as our apparel business.
Wholesale Accessories/Apparel Segment: Revenue from the Wholesale Accessories/Apparel segment in the year ended December 31, 2023 accounted for $416,532, or 21.0% of total revenue, as compared to $394,676, or 18.6% of total revenue, in the year ended December 31, 2022.
We have employment agreements with our Creative and Design Chief, Steven Madden, and certain executive officers, which provide for the payment of compensation aggregating to approximately $9,675 in 2023, $8,998 in 2024 and $7,851 in 2025.
As of the date of this report, we have employment agreements with our Founder and Creative and Design Chief, Steven Madden, and certain executive officers, which provide for the payment of compensation aggregating to approximately $10,686 in 2024, $10,368 in 2025 and $9,396 in 2026, $8,589 in 2027, $8,549 in 2028, $7,942 in 2029, and $7,746 in each of the years 2030 and 2031.
Operating expenses in the year ended December 31, 2022 were $166,123, or 13.9%, of Wholesale Footwear revenue, as compared to $128,004, or 12.5% of Wholesale Footwear revenue, in the year ended December 31, 2021. The increase in operating expenses as a percentage of Wholesale Footwear revenue was primarily attributable to higher warehouse expenses, payroll, and advertising expenses.
Operating expenses in the year ended December 31, 2023 were $165,681, or 15.8%, of Wholesale Footwear revenue, as compared to $166,123, or 13.9% of Wholesale Footwear revenue, in the year ended December 31, 2022. The increase in operating expenses as a percentage of Wholesale Footwear revenue was primarily due to expense deleverage on a lower revenue base.
Operating expenses for the twelve months of 2022 were $264,307, or 50.7% of Direct-to-Consumer revenue, as compared to $240,093, or 49.2% of Direct-to-Consumer revenue, for the twelve months of 2021. The increase in operating expenses as a percentage of Direct-to-Consumer revenue was primarily due to higher advertising and payroll related expenses.
The decrease in gross profit as a percentage of revenue was primarily due to higher promotional activity, partially offset by lower freight costs. Operating expenses for the twelve months of 2023 were $279,827, or 55.2% of Direct-to-Consumer revenue, as compared to $264,307, or 50.7% of Direct-to-Consumer revenue, for the twelve months of 2022.
See Note G – Goodwill and Intangible Assets and Note M – Leases in this Form 10-K to the Consolidated Financial Statements included in this Form 10-K for further detail and impairment charges.
The fair value of $7,050 was amortized over its remaining useful life of one year and was fully amortized at the end of 2022. See Note G – Goodwill and Intangible Assets to the consolidated financial statements included in this Form 10-K for further detail and impairment charges.
We also use risk insurance, letters of credit and put agreements to mitigate credit risk for a significant portion of the receivables not covered under our Rosenthal agreement. The balance of receivables not covered under our Rosenthal agreement is reduced by an allowance for amounts that may be uncollectible in the future.
Under this agreement, Rosenthal assumes the credit risk resulting from a customer’s financial inability to make payment of credit-approved receivables. We also use risk insurance, letters of credit, and put agreements to mitigate credit risk for a significant portion of the receivables not covered under our Rosenthal agreement.
The estimated allowance for doubtful accounts is based on an analysis of the aging of accounts receivable, assessments of collectability based on historical trends, the financial condition of our customers and an evaluation of economic conditions. Differences in management’s estimation of the above factors could impact our results of operations and financial position.
The balance of receivables not covered under our Rosenthal agreement is reduced by an allowance for amounts that may be uncollectible in the future. The estimated allowance for doubtful accounts is based on an analysis of the aging of accounts receivable, assessments of collectability based on historical trends, the financial condition of our customers, and an evaluation of economic conditions.
The estimated fair values of these trademarks were determined using an excess earnings method, incorporating the use of projected financial information and a discount rate, which was developed using market participant-based assumptions. See Note G – Goodwill and Intangible Assets to the Consolidated Financial Statements included in this Form 10-K for further detail and impairment charges.
The estimated fair value of this trademark was determined using an excess earnings method, incorporating the use of projected financial information, and a discount rate which are developed using market participant based assumptions.
As of December 31, 2022, we had 232 brick-and-mortar retail stores and six e-commerce websites in operation, compared to 214 brick-and-mortar retail stores and six e-commerce websites as of December 31, 2021.
As of December 31, 2023, we had 255 brick-and-mortar retail stores and five e-commerce websites in operation, compared to 232 brick-and-mortar retail stores and six e-commerce websites as of December 31, 2022. This increase resulted from the opening of 38 brick-and-mortar stores, most in international markets, offset by the closure of 15 brick-and-mortar stores and one e-commerce site.
The primary changes between the Company’s effective tax rate for the year ended December 31, 2022 and 2021 are due to a lower tax benefit from the exercising and vesting of equity-based awards and an increase in pre-tax income in jurisdictions with higher tax rates.
The effective tax rate for the year ended December 31, 2023 was 21.1% compared to 23.1% last year. The primary changes between the Company’s effective tax rate for the year ended December 31, 2023 and 2022 are due to a higher tax benefit related to equity-based awards and jurisdictional mix.
A hypothetical 5% increase in the return reserve as of December 31, 2022 would have decreased our 2022 revenue by approximately $200. The balances and activity in the markdown, chargeback and co-op advertising allowances are included in Note T – Valuation and Qualifying Accounts to the Consolidated Financial Statements included in this Form 10-K. Inventory valuation.
The balances and activity in the markdown, chargeback, and co-op advertising allowances are included in Note T – Valuation and Qualifying Accounts to the consolidated financial statements included in this Form 10-K. Inventory valuation. Inventories are stated at the lower of cost or net realizable value, on a first-in, first-out basis.
During the year ended December 31, 2022, gross profit was $331,956, or 63.6% of Direct-to-Consumer revenue, compared to $315,416, or 64.6% of Direct-to-Consumer revenue, in the twelve months of 2021. The decrease in gross profit as a percentage of revenue was primarily due to higher promotional activity, partially offset by a reduction in air freight expense.
Gross profit was $370,631, or 35.4% of Wholesale Footwear revenue, in the year ended December 31, 2023 as compared to $431,081, or 36.1% of Wholesale Footwear revenue, in the year ended December 31, 2022. The decrease of gross profit as a percentage of revenue was primarily due to higher promotional activity partially offset by lower freight expenses.
Operating expenses in 2022 include the accelerated amortization of a trademark of $7,050 and a $5,807 benefit from the change in valuation of a contingent consideration. In 2021, impairment charges of $2,620 and $1,432 were recorded associated with certain intangibles and lease right-of-use assets and fixed assets, respectively. No similar impairment charges were recorded in 2022.
Operating expenses in 2022 included the accelerated amortization of a trademark of $7,050 and a benefit from the change in valuation of a contingent consideration of $5,807.
Net income attributable to Steven Madden, Ltd. was $216,061 in 2022 compared to $190,678 in 2021. Our effective tax rate for 2022 increased to 23.1% compared to 20.5% in 2021.
Key Highlights Total revenue for 2023 decreased by 6.6% to $1,981,582 from $2,122,009 in 2022. Net income attributable to Steven Madden, Ltd. was $171,554 in 2023 compared to $216,061 in 2022. Our effective tax rate for 2023 decreased to 21.1% compared to 23.1% in 2022.
Direct-to-Consumer Segment: In the year ended December 31, 2022, revenue from the Direct-to-Consumer segment accounted for $521,729, or 24.6% of total revenue, as compared to $487,906, or 26.1% of total revenue, in the twelve months of 2021. The 6.9% increase in revenue was driven by increases in both our brick-and-mortar stores and our e-commerce business.
Income from operations for the Wholesale Accessories/Apparel segment in 2023 was $61,428, or 14.7% of Wholesale Accessories/Apparel revenue, as compared to $29,775, or 7.5% of Wholesale Accessories/Apparel revenue, in 2022. 26 Direct-to-Consumer Segment: In the year ended December 31, 2023, revenue from the Direct-to-Consumer segment accounted for $506,494, or 25.6% of total revenue, as compared to $521,729, or 24.6% of total revenue, in the twelve months of 2022.
In the year ended December 31, 2022, income from operations increased to $281,644, or 13.3% of total revenue, as compared to $243,597, or 13.1% of total revenue, in the prior year. The effective tax rate for the year ended December 31, 2022 was 23.1% compared to 20.5% last year.
The 2023 financial results also included a pre-tax charge of $6,520 for an impairment of a trademark. In the year ended December 31, 2023, income from operations decreased to $213,222, or 10.8% of total revenue, as compared to $281,644, or 13.3% of total revenue, in the prior year.
Dividends In February 2022, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on March 25, 2022, to stockholders of record as of the close of business on March 11, 2022.
For further information, refer to Note N – Income Taxes to the consolidated financial statements included in this Annual Report on Form 10-K. Dividends In February 2023, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock.
For additional information on these acquisitions, refer to Note D – Acquisitions & Sale of Minority Noncontrolling Interest in the Notes to our consolidated financial statements included in this Annual Report. Key Highlights Total revenue for 2022 increased by 13.7% to $2,122,009 from $1,866,142 in 2021.
Almost Famous markets products under its own brands, primarily Almost Famous, as well as private label brands for various retailers. For additional information on this acquisition, refer to Note D – Acquisitions & Sale of Minority Noncontrolling Interest in the notes to our consolidated financial statements included in this Annual Report.
On February 22, 2023, our Board of Directors approved a quarterly dividend of $0.21 per share is payable on March 24, 2023 to stockholders of record as of the close of business on March 10, 2023. 21 Executive Summary Recent Developments During fiscal year 2022, the Company formed a joint venture ("AG SM Holdings Limited") with Apparel FZCO through its subsidiary, Madden Asia Holding Limited.
On February 27, 2024, our Board of Directors approved a quarterly dividend of $0.21 per share is payable on March 22, 2024 to stockholders of record as of the close of business on March 8, 2024. 23 Executive Summary Recent Developments Acquisitions On October 20, 2023, we acquired substantially all of the assets and certain liabilities of Turn On Products Inc.
Gross profit was $873,836, or 41.2% of total revenue, as compared to $767,497, or 41.1% of total revenue, in the prior year. Operating expenses in 2022 were $592,192, or 27.9%, of total revenue, as compared to $519,848, or 27.9% of total revenue, in the prior year.
Gross profit in 2023 included a charge of $2,023, related to the fair value step-up of inventory in connection with the acquisition of Almost Famous. Operating expenses in 2023 were $612,672, or 30.9%, of total revenue, as compared to $592,192, or 27.9% of total revenue, in the prior year.
Investing Activities Cash provided by investing activities was $5,517 for the year ended December 31, 2022, which consisted of cash received of $73,998 from the maturities and sales of short-term investments partially offset by purchases of $45,130 in short-term investments. We also made capital expenditures of $16,351, which were mainly for systems enhancements, new store openings and leasehold improvements.
Investing Activities Cash used in investing activities was $99,892 for the year ended December 31, 2023, which consisted of $75,271 for the acquisition of Almost Famous and purchases of $25,688 in short-term investments offset by cash received of $25,872 from the maturities and sales of short-term investments.
In 2021, impairment charges of $781 were recorded associated with certain fixed assets and lease right-of-use assets. No similar impairment charges were recorded in 2022. In 2022, income from operations for the Direct-to-Consumer segment was $67,649, or 13.0% of Direct-to-Consumer revenue as compared to $74,542, or 15.3% of Direct-to-Consumer revenue, in 2021.
In 2023, income from operations for the Direct-to-Consumer segment was $30,160, or 6.0% of Direct-to-Consumer revenue as compared to $67,649, or 13.0% of Direct-to-Consumer revenue, in 2022. First Cost Segment: As of January 2023, the Company no longer serves as a buying agent for any of its customers, and as a result no longer reports under the First Cost segment.
We estimate such returns based on historical experience and current market conditions. In addition, our wholesale segments may, from time to time, accept returns for damaged products from our wholesale customers on which our 28 costs are normally charged back to the responsible third-party factory. The level of returns is generally correlated with our revenues to wholesale customers.
We estimate such returns based on historical experience and current market conditions. The level of returns is generally correlated with our revenues. A hypothetical 5% increase in the return reserve as of December 31, 2023 would have decreased our 2023 revenue by approximately $200.
Income from operations increased to $264,958, or 22.2% of Wholesale Footwear revenue in 2022 as compared to $217,163, or 21.2% of Wholesale Footwear revenue, in 2021.
Operating expenses in 2023 included severance and a certain office restructuring costs of $1,546 and acquisition costs of $929 related to newly formed international joint ventures. Income from operations decreased to $204,950, or 19.5% of Wholesale Footwear revenue in 2023 as compared to $264,958, or 22.2% of Wholesale Footwear revenue, in 2022.
We also had investments of $7,000, of which $2,000 consisted of a purchase of a trademark and $5,000 related to other investing activities.
We also made capital expenditures of $19,470, principally for leasehold improvements, new stores, and systems enhancements. We also had investments of $5,339 related to other investing activities.
As a result of the COVID-19 pandemic and decline in the macroeconomic environment, during the twelve months ended December 31, 2020, the Company’s Cejon, Report, GREATS and Jocelyn trademarks (indefinite-lived intangibles) were written down from an aggregate carrying value of $57,198 to their fair values of $12,925, resulting in a pre-tax non-cash impairment charge of $44,273.
As a result of this assessment, the GREATS ® trademark was written down from the carrying value of $12,670 to its fair value of $6,150, resulting in a pre-tax non-cash impairment charge of $6,520. This charge was recorded in impairment of intangibles in the Company’s Consolidated Statements of Income and recognized in the Direct-to-Consumer segment.
Removed
Our First Cost segment represents commission based activities where the Company serves as a buying agent for footwear products under private labels for select national chains, and value-priced retailers.
Added
As of January 2023, the Company no longer serves as a buying agent for any of its customers, and as a result no longer reports under the First Cost segment. This change is not considered to have a material or meaningful impact on the Company's operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−0 removed4 unchanged
Biggest changeAs currency exchange rates fluctuate, foreign currency exchange rate translation adjustments reflected in our financial statements with respect to our foreign operations affects the comparability of financial results between years. 31
Biggest changeAs currency exchange rates fluctuate, foreign currency exchange rate translation adjustments reflected in our financial statements with respect to our foreign operations affects the comparability of financial results between years. 32 Inflation Risk Inflationary factors generally affect us by reducing consumer spending, increasing our labor and overhead costs, and negatively impacting our direct sales to end consumers and our sales to our wholesale customers, which may adversely affect our results of operations and financial position.
We have the ability to hold these investments until maturity. 30 Foreign Currency Exchange Rate Risk We face market risk to the extent that our U.S. or foreign operations involve the transaction of business in foreign currencies.
We have the ability to hold these investments until maturity. Foreign Currency Exchange Rate Risk We face market risk to the extent that our U.S. or foreign operations involve the transaction of business in foreign currencies.
Because we had no cash borrowings under the Credit Facility as of December 31, 2022, a 10% change in interest rates, with all other variables held constant, would have an immaterial effect on our reported interest expense. As of December 31, 2022, we held short-term investments valued at $15,085, which consist of certificates of deposit.
Because we had no cash borrowings under the Credit Facility as of December 31, 2023, a 10% change in interest rates, with all other variables held constant, would have an immaterial effect on our reported interest expense. As of December 31, 2023, we held short-term investments valued at $15,173, which consist of certificates of deposit.
The terms of our $150,000 asset-based revolving credit agreement (the “Credit Facility”) and our collection agency agreement with Rosenthal & Rosenthal, Inc. can be found in the Liquidity and Capital Resources section of Item 7 and in Note P – Credit Agreement and Note Q – Factoring Agreement, respectively, to the Consolidated Financial Statements included in this Form 10-K.
The terms of our $150,000 asset-based revolving credit agreement (the “Credit Facility”) and our collection agency agreements with Rosenthal & Rosenthal, Inc. and CIT Group/Commercial Services, Inc. can be found in the Liquidity and Capital Resources section of Item 7 and in Note P – Credit Agreement and Note Q – Factoring Agreements, respectively, to the consolidated financial statements included in this Form 10-K.
We performed a sensitivity analysis based on a model that measures the impact of a hypothetical change in foreign currency exchange rates to determine the effects that market risk exposures may have on the fair values of our forward foreign exchange contracts that were outstanding as of the year-end.
We performed a sensitivity analysis based on a model that measures the impact of a hypothetical change in foreign currency exchange rates to determine the effects that market risk exposures may have on the fair values of our forward foreign exchange contracts that were outstanding as of December 31, 2023.
As of December 31, 2022, a 10% increase or decrease of the U.S. dollar against the exchange rates for foreign currencies under forward foreign exchange contracts, with all other variables held constant, would result in a net increase or decrease in the fair value of our derivatives portfolio of approximately $6,989.
As of December 31, 2023, a 10% increase or decrease of the U.S. dollar against the exchange rates for foreign currencies under forward foreign exchange contracts, with all other variables held constant, would result in a net increase or decrease in the fair value of our derivatives portfolio of approximately $120, which is immaterial to the consolidated financial statements.
A description of our accounting policies for derivative financial instruments is included in Note B and Note L to the Consolidated Financial Statements. During 2022, we entered into forward foreign exchange contracts with notional amounts totaling $74,869.
A description of our accounting policies for derivative financial instruments is included in Note B – Summary of Significant Accounting Policies and Note L – Derivative Instruments to the consolidated financial statements. As of December 31, 2023, we had entered into forward foreign exchange contracts with notional amounts totaling $105,602.
Added
We have historically been able to minimize the impacts of inflation by raising prices, renegotiating costs, changing suppliers, and improving operating efficiencies. However, no assurance can be given that we will be able to offset such inflationary impacts in the future. 33

Other SHOO 10-K year-over-year comparisons