Jean Fontana - ICR, Inc. Edward Rosenfeld - Chairman and Chief Executive Officer Danielle McCoy - Director and Corporate Development and Investor Relations.

Erinn Murphy - Piper Jaffray & Co. Camilo Lyon - Canaccord Genuity, Inc. Edward Yruma - KeyBanc Capital Markets, Inc. Tom Nikic - Wells Fargo Securities LLC Jeff Van Sinderen - B. Riley FBR, Inc. Janine Stichter - Jefferies LLC Dana Telsey - Telsey Advisory Group Christopher Svezia - Wedbush Securities, Inc.

Samuel Poser - Susquehanna Financial Group LLLP Steven Marotta - C.L. King & Associates, Inc..

Thank you for standing by. Good day, and welcome to the Steve Madden First Quarter 2018 Earnings Conference Call. Today's conference is being recorded. And at this time, I'd like to turn the call over to Jean Fontana of ICR. Please go ahead..

Thank you. Good morning, everyone. Thank you for joining us today for the discussion of Steve Madden's first quarter 2018 earnings results.

Before we begin, I'd like to remind you that statements made on this call that are not statements of historical facts constitute forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995.

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

These statements contained herein are also subject to the risks and uncertainties as described from time-to-time in the Company's reports and registration statements filed with the SEC. Please refer to the Company's earnings release for information on the factors that could cause actual results to differ.

Finally, please note that any forward-looking statements used on today's call cannot be relied upon as current after today's date. Hosting the call today are Ed Rosenfeld, the Chairman and CEO of Steve Madden; and Danielle McCoy, Director and Corporate Development and Investor Relations. With that, I will turn it over to Danielle..

Thanks, Jean, and good morning, everyone. Before I turn the call over to Ed, I'd like to note that the financial results presented below are on an adjusted basis, unless otherwise noted. Please refer to our press release for a reconciliation of GAAP to non-GAAP financial measures.

Ed?.

Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's first quarter 2018 results. We got off to a good start in 2018 with net sales growth of 6% and diluted EPS growth of 14% compared to the first quarter of 2017.

In light of the retail backdrop, which while improved remains challenging as well as tough comparisons from the prior year period, we were very pleased with these results. Our Wholesale Footwear business recorded strong performance in the quarter with net sales growing 5%, including increases in both our Branded and Private Label businesses.

We remain pleased with the performance in our flagship Steve Madden brand where Steve and his design team continue to create outstanding product assortments that are resonating with consumers and enabling us to outperform the competition. In the first quarter, we saw strength across a range of categories, most notably sneakers and sandals.

We also saw outstanding performance in the international markets where we had strong growth across the Board. We saw increases in our directly owned subsidiaries in Canada and Mexico, in our SM Europe JV, and in our distributor business.

Our Private Label Footwear business also accelerated, increasing over 10% in the quarter compared to the prior year. In Wholesale Accessories, net sales increased 8% compared to the year ago period. Steve Madden handbags and our Madden's owned private label division were the standouts, each recording strong double-digit growth in the quarter.

Retail continues to be our most challenging segment. Overall retail sales were up 9%, but comparable store sales decreased 1.2%. Much like last quarter, the boot category drove the decline. Boots were down high-teens on a same-store basis, resulting in a roughly 400 basis point drag on the overall economy.

Overall, we were pleased with our first quarter performance, and as we look out to the balance of the year, we feel good about how we are positioned.

First, our core Steve Madden Wholesale Footwear business continues to outperform, and despite the tough comparisons from last year it's on track to grow across the board in 2018, in Steve Madden Women's, Men's, and Kids as well as in Madden Girl, Steven, and Madden NYC.

Second, the balance of our Wholesale Footwear brand portfolio is on an upward trajectory. Most notably, Blondo's momentum has continued into 2018. The order file in that division is significantly ahead of where it was a year-ago. And Dolce Vita is also on the upswing.

Sell-through for Dolce Vita has been very strong so far in 2018, and our wholesale partners are beginning to react to the improved performance at retail. We now expect the Dolce Vita brand to return to growth this quarter.

Third, our Wholesale Accessories business is poised for solid growth this year due to the strong momentum we have in our Steve Madden handbag division and in private label. Fourth, our International business is really taking off.

International was the highlight of Q1 and we expect the strong trend to continue through the balance of 2018 as we see the benefits of our increased focus on and investment in this part of the business over the last couple years. And finally, we are excited about the newest addition to our brand portfolio Anne Klein.

As a reminder, in late January, we signed an agreement to become the licensee for Anne Klein footwear and handbags beginning with fall of 2018 shipments. Anne Klein is a strong brand with a clearly defined point of view that is different from all the other brands in our stable, making it a great complement to our existing business.

We continue to believe we can do $80 million to $90 million in net sales under the Anne Klein brand in the first 12 months of shipping, which encompasses the back half of 2018 and the first half of 2019. While we have assumed this business is breakeven in profit contribution for 2018, it should contribute to profitability in 2019.

Putting that all together, we are encouraged about what we are seeing in our business and the opportunities ahead of us. And we remain confident that based on the power of our brands and the strength of our business model, we are well positioned to drive sales and earnings growth not only this year, but for years to come.

With that, I'll turn it over to Danielle to review our financial results in more detail..

Thanks, Ed. We are pleased with a good start to the new fiscal year. Our consolidated net sales increased 6.2% to $389 million compared to prior year net sales of $366.4 million. Our Wholesale segment saw strong growth despite tough comparisons in the prior year.

Wholesale Footwear net sales increased 5.3% to $275.1 million led by strong growth of our core Steve Madden brands in international markets as well as double-digit increase in our private label footwear business. In Wholesale Accessories net sales increased 8% to $56.1 million.

Steve Madden handbags and private label handbags are the growth drivers in the quarter. In our Retail segment, net sales increased 8.6% to $57.9 million. Our same-store sales decreased 1.2%. Excluding boots, which as Ed mentioned declined significantly, same-store sales were up.

During the first quarter, we opened one full price store and one outlet store while closing three full price stores and two outlet stores in the U.S. In addition, we opened one-store in Mexico and three locations in China, including one full price store and two concession.

Ended the quarter with 207 company operated retail stores, including 59 outlets and six e-commerce sites, as well as 40 company operated concession.

Turning to other income, our licensing royalty income net of expenses was $2.8 million in the quarter compared to $2.4 million in last year's first quarter, while first cost commission was $0.9 million compared to $1.6 million last year. Consolidated gross margin decreased 40 basis points to 36.2% compared to 36.6% in the prior year.

Wholesale gross margin decreased to 32.6% for the quarter compared to 32.8% in the prior year quarter. The modest decline in wholesale gross margin compared to last year was the result of strong growth in the private label business, which carries a lower gross margin.

Excluding the mix shift to private label, wholesale gross margin was up, driven by strong margin performance in the Steve Madden brand. Retail gross margin was 56.7% compared to 58.7% last year. Majority of the decline was caused by deep discounting and slow moving products in the boot category.

Operating expenses for the quarter increased to $104.7 million or 26.9% of net sales, compared to operating expenses of $98.4 million or 26.8% of net sales in the same period last year.

Operating income for the quarter totaled $39.6 million or 10.2% of net sales, compared to last year's first quarter operating income of $39.5 million or 10.8% of net sales. Our effective tax rate for the quarter was 21.7%, compared to 30.7% in the prior year, as a result of the impact of the Tax Cuts and Jobs Act.

Finally, net income for the quarter was $31 million or $0.54 per diluted share, compared to $27.5 million or $0.47 per diluted share in the first quarter of 2017. Moving to the balance sheet, our financial foundation remains strong. As of March 31, 2018, we had $200.6 million of cash and marketable securities, and no debt.

Inventory totaled $94.4 million, compared to $97 million in the prior year, a decline of 2.7% driven by a sharp reduction in inventory at Schwartz & Benjamin as we have implemented our stricter inventory controlled disciplines at that acquired business.

Our consolidated inventory turns for the last 12 months ended March 31, was 8.7 times, and our CapEx in the quarter was $2.9 million. During the quarter, we repurchased approximately 567,000 shares for $25.7 million, which includes shares acquired through the net settlement of employee stock awards.

At the end of the first quarter, there was $156.9 million remaining on the share repurchase authorization. Last, the Company's Board of Directors declared a quarterly cash dividend of $0.20 per share. The dividend will be payable on June 29, 2018 to stockholders of record as of the close of business on June 12, 2018.

Now turning to our guidance, for the full-year 2018, we continue to expect that net sales growth will be 5% to 7%. Expect diluted EPS on a GAAP basis for fiscal year 2018 will range between $2.55 and $2.62 and adjusted diluted EPS will be in a range of $2.60 to $2.67. Now I'd like to turn it over to the operator for questions.

Operator?.

Thank you. [Operator Instructions] And we'll go first to Erinn Murphy with Piper Jaffray..

Great, thanks. Good morning and really nice work on the quarter..

Thanks Erinn..

I guess my first question is just around the gross margin. Can you just help us think about on the wholesale side of the business, if you're starting to see some improvement in private label that change the trajectory of how you're planning gross margin in that segment? And then I guess retail was more impacted just by the boot headwind.

Q1 clearly still a little bit of a cold quarter, but just curious if that is fully behind us and that margin should start to inflect?.

Yes, sure on the wholesale side I think that for the full-year, we're still thinking about it pretty similarly to what we've talked about in the last call, which is that it should be basically flat for the year..

Okay..

And we were actually quite pleased with the gross margin performance in Q1 because this - we had a strong increase particularly in the Payless business on the private label side and that had a negative impact to wholesale gross margin without 120 basis points.

So we actually absent that impact had a very nice improvement in the balance of the business driven particularly by very strong gross margins in the Steve Madden brand. So we feel awfully good about the gross margin performance on the wholesale side.

And to your point, retail, we took a little bit of a hit as we went pretty deep in discounting some of the boots in Q1, but that really should be behind us now..

Okay. And then maybe just on the retail business a little bit broader, it's a really small contributor to your EBIT today, but it used to be a low double-digit margin.

Is there any way you guys can get back there just with the international brand or anything else that's just structurally different, just help us think about the next two to three years of that margin potential?.

Yes. Certainly the operating margin is well off the peak now. There are a lot of things that make that a structurally more challenging model. So I think we have to be cognizant of that fact. If you look at - well we have pretty slim operating margins.

If you look at our competitors in the United States, most of them have now shut all their stores and were losing lots of money. So it is a difficult model and so we have to be clear eyed about that. I think there are some opportunities to improve the operating margin over time.

We think that we can improve our operating margin on the e-commerce side and we've got a lot of initiatives in place to try to drive improved profitability there. I think over time, international can help us increase the operating margin as we grow the international store footprint and e-commerce business.

I think that can be higher margin than what we see in the U.S., but I think that 10% is pretty aspirational at this point..

Okay. And then just my last question now that we have the Bon-Ton news out there and kind of store liquidation I guess that coming at some point.

Is there any I guess first additional impact to your numbers? And then secondly, are you concerned at all some of the other wholesale partners you fell into where there could be some disruption as these stores start to shutter?.

So with respect to Bon-Ton specifically, we've built that into the guidance. So there is no additional impact from the Bon-Ton closures. As a reminder, we think that's about a $0.05 impact - a negative impact to us on an annual basis in terms of profitability.

And then we don't see a major impact to the other retailers that we sell to based on the Bon-Ton closures. And specifically if you look at our own stores, we don't have any Steve Madden stores in Bon-Ton malls. So we don't think that there's going to be a lot of collateral damage there..

Okay. Thanks for taking my questions. All the best..

Thanks, Erinn..

We'll go next to Camilo Lyon with Canaccord Genuity..

Thanks. Good morning..

Good morning..

Ed, so you talked about being pretty pleased with your sneakers business and sandals, if you could just take both of those separately. Sneakers have been very good for quite some time now. It's clear that that trend is becoming your own trends.

What's been kind of the incremental bump in the category that you're now calling out again? That makes you separate about how that product is performing in market?.

Yes. I mean we just - we continue to see sneakers just reach new highs in terms of percentage of sales for us and we've got a lot of different things working in that category. Slip-ons are good. Oxfords are good. We've got wedge sneakers that are working.

The dad sneakers is a new trend we talked about in the last call, but we continue to see nice hits on, so just a lot of different things and a lot of excitement in that category. We hit 30% in the Steve Madden Women's wholesale business in Q1. It's a first time we've ever gotten that high and we expect to be even higher than that in Q2.

So that's just a category that shows no signs of slowing down..

Is there a price component that's helping that too as well as the unit velocity because it seems like there's been a shift in terms of who's driving the fashion, sneaker trend where it had gone from athletic to now more of the luxury fashion houses taking a lead role on that.

And that from our perspective seems to add an incremental pricing opportunity for you.

Are you seeing the same thing?.

I mean one of the things I think that we're seeing is like other categories when you have sort of newness and you have very fashion-forward looks that are in their first season, those command a higher AUR.

And so for instance, we've got some of these dad sneakers as we call them that are north of $100 and really getting no price resistance from the fashion-forward customer who just wants the latest and greatest fashion..

Great.

And then I guess the second part of that question was the sandals piece and maybe if you can tie that into just kind of the general view of the inventory in the channel given certainly much colder weather that we've had here in the northeast for a lot longer than I think anybody has wanted or expected?.

Sure. Yes, I mean we feel very good about what we're seeing in the sandal category, like sneakers there's a few different things that are working there. Flat sandals are performing for us. Platforms are good. We've got some stacked heels that are very strong.

And to your point, there has been some quite a bit of cool weather particularly in the northeast and while that's not beneficial for early sandal sales, we have been able to get when there was good weather, some very good reads on sandals, and we do feel good about that category going forward.

With respect to inventory levels in the channel, generally speaking, I think inventory is in a pretty good place in most of our key retailers. March was a little bit of a choppy month and so that might have - inventory may have backed up a little bit, but overall we feel like the channel is pretty healthy..

And then just my final question, just on competition it seems like there's been more on the branded side, more competitors, weakening, filing for bankruptcy.

Does that provide greater opportunity for you, either via share gains or perhaps even acquisitions? What's your review on that?.

Yes. Certainly we're doing quite a bit better than many of the competitors in that space right now, and as others struggle, we will obviously look to capitalize on that and continue to take share. From an acquisition perspective, can't really comment on anything there. Obviously, you know that we're active in looking at things all the time.

And if we see something that makes sense, we're prepared to act on it, but we're also pretty disciplined about that, and want to make sure that we get assets that we think we can really grow and grow profitably..

It sounds great. Good luck. Thanks Ed..

Thanks Camilo..

We'll go next to Ed Yruma with KeyBanc Capital Markets..

Hey, good morning. Thanks for taking my questions.

I guess first in private label, how should we think about the upside opportunity in private label for the balance of the year? Can you bring on other retailers and other platform, and are you participating in Amazon's private label program?.

Yes. The growth that we're seeing in private label right now is really with our existing private label customers. We're always looking for new partners on the private label side. But if you think about what's driving the growth for the balance of the year, it's really not new customers, it's growing with our existing partners.

And we are not participating in Amazon private label right now..

Got it. And then second if I may. The boot business obviously was very weak this past winter season. I guess, are you starting to see signs that either there's innovation or trends that are changing that should allow you to comp that favorably? Thanks so much..

Yes. I mean I think that we've seen some positive signs that give us hope for fall in the boot category. Some newness in the category, boots were a little bit better in Europe this past fall than they were in the U.S., and sometimes Europe can be a leading indicator.

So I think we feel better about it than we did let's say a year-ago, but nevertheless we're certainly not ready to put a stake in the ground and say that the boot category is going to inflect this year. So I think we're - if you look at our forecast, we're really thinking about it as sort of flattish to a year ago..

Great, thanks so much..

Thanks Ed..

And we'll go next to Tom Nikic with Wells Fargo..

Hey. Good morning, Ed. Good morning, Danielle. Thanks for taking my question. I was just kind of wondering on the gross margins. I think three months ago you were calling for I guess flattish gross margin for the full-year and you were down in Q1.

I would assume that with I guess less noise around the Payless business, private label penetration would still be higher year-over-year - for the balance of the year. So I mean should be kind of think about gross margins maybe being down on a full-year basis or just I mean kind of how should we think about gross margins going forward? Thanks..

Hi. Yes, actually Tom, we continue to believe the gross margin should be flat for the full-year and well you're right, they were down modestly in Q1 driven by this increase in Payless that was - we had planned for gross margins to be down in Q1 and in fact they were down less than we anticipated.

So we're actually running a little bit ahead of where we thought we'd be in terms of gross margin so far this year..

Got it. And you also spoke about really strong, I think, you said outstanding international growth. I'm sorry if I missed it.

Did you actually quantify how much your international business was up?.

It was up about 36% in the quarter..

All right. It sounds good. Thanks and best of luck the rest of the year..

Thanks Tom..

We'll go next to Jeff Van Sinderen with B. Riley FBR..

Hi, good morning, everyone. Just a follow-up on international, Ed.

Anything you can give us in terms of what you see driving there - what's driving the acceleration there and I guess what you expect to see for the remainder of the year in international?.

Yes, I mean it's a pretty positive story all the way around on international. The owned markets are doing very well. So both Canada and Mexico are performing for us and that's both top and bottom line. Our SM Europe JV is growing very rapidly and is also very profitable already. So we feel very good about what we're seeing there.

And then our distributor business is also growing. We're growing with in the Middle East. We're growing with Italy, which is not - which we do still as a distributor, not as part of our SM Europe JV. India is growing. So we've got a lot of good things happening on that front.

And then of course the SM Asia business was a very small contributor this quarter, but we expect that to be a larger contributor going forward..

Okay, good. And then just if we can circle back to categories, obviously, sneakers has been amazing for you. And I know you mentioned sandals.

Do you see the other trends are emerging that you think might be able to fuel more growth in other categories of your business outside of sneakers this year?.

Look those are the big two right now. There are some things - I would say the dress category if you look at that, it's kind of mixed. I would say it sort of hits and misses there. And then we talked about what we're looking at for boots. So that pretty much covers the main categories.

I would say casuals, there's also some casual that's the category that we think can pick up a little bit in Q2 as well..

Okay, good. Thanks very much and best of luck for the rest of Q2..

Thanks, Jeff..

We'll go next to Janine Stichter with Jefferies..

Okay, thanks. Good morning. I was hoping to see if you can dig a little bit more into the Wholesale Accessories category, I think you saw really nice resurgence there and you're losing some easier comparisons ahead.

Can you just talk about anything you're doing differently there? And then how we should think about the cadence of that growth for the rest of the year?.

Yes, and I think the two things that we would really highlight are one the Steve Madden handbag business and then two that private label business. So on the Steve Madden handbag front, that's a business where we've had some nice momentum. It was up double digits in 2017, and had a nice strong double-digit growth number in Q1.

Just feel really good about the product assortment there. We've got a nice balance of the real fashion-forward products, but also some core product that can really drive volume for us. And also seeing very nice expansion in both the regular price channels as well as the off price channels. We've seen very nice growth at Macy's for instance.

So we feel very good about Steve Madden handbags, and then I should also say that Madden Girl handbags are diffusion line is also growing. So it's a very positive story on that side of the business.

And then our private label business on the handbag side is also really seeing strong growth and particularly just driving big numbers at the Wal-Mart right now..

Okay. And then also just anything you can share on the Men's business.

What you are seeing there and kind of what inning you feel like you're in, in terms of the long-term growth path?.

Yes. So as you know Men's has been a strong grower for us. Recently, we expect to have another year of very solid growth in that business in 2018. We are actually down a little bit in Q1 just based on timing. We think we will make that up in Q2. But overall feel very good about that business.

And as you point out relative to the Women's business, it's not as mature. So we still feel we have quite a bit of runway there both in the U.S. and of course in the international markets. As to what inning, I don't know maybe the fourth and - but really we feel good about what we're doing there.

As I said, we've strengthened the product assortment and we've also been investing more in marketing there and we're going to continue to do that..

Great. Thank you..

And we'll go next to Dana Telsey with Telsey Advisory Group..

Hi, good morning. Nice progress on the results. Can you talk a little bit about the shift of Payless and how that's transitioning and anything you're seeing there? And also progress on the Anne Klein business, and how that's developing? Thank you..

Sure.

So after Payless emerged from bankruptcy, they have - it looks like they've attempted to sort of shrink their vendor base and really focus on a few key vendors and we're one of them, and so that business has come back very strong and is in fact running ahead of where it was prior to and going bankrupt, and so we had a very nice increase in that business in Q1.

We expect to be up significantly in Q2 as well. And then I think what you're asking about is in the back half based on a new buying agency agreement with them. We will be changing how we account for that business, so it will be moving.

We will no longer recognize the topline sales and that will move into that commission and licensing fee income line net of expenses. And that's really just an accounting change, doesn't change anything about the profitability for us.

And so that business again on apples-for-apples basis will be up in the back half as well, but the accounting for it will be different. And then Anne Klein, I think we're making progress there. We've got the team in place working hard and getting prepared for our fall of 2018 launch. And we've been speaking to all the retailers.

I think they're pretty excited about our involvement and particularly our speed to market capability and how we can bring that to the Anne Klein business. So very excited about getting started with that brand..

Thank you..

Thanks Dana..

We'll go next to Chris Svezia with Wedbush..

Good morning. Thanks for taking my questions. Did nice job on the quarter, I guess just curious you did a little over 6% revenue growth in the first quarter. Your guidance is 5% to 7% for the year. I think initially when you gave the guidance you felt growth would be stronger in the back half. Obviously, you had a strong Q1.

Anything else we should be thinking about in terms of total revenues in cadence as we go through the balance of the year or should we still see incremental acceleration or is it a little bit more balanced now that you've had such a strong Q1..

Well, I guess it should be fairly balanced. Keep in mind that part of what drove the Q1 growth was that growth in the Private Label business with Payless. So that is obviously lower margin. So I think when we were talking about the seasonality before, we were mostly talking about earnings.

And so really the respective sales, yes, I guess it should be relatively consistent throughout the year..

Okay. On your Company-owned retail, I know that you don't give comp, but I'm different curious if you took out the boot business, it would be up roughly 3%, comparisons that easier.

Is there any reason I think is that the Retail segment could in comp or anything in terms of puts and takes we should think about with regard to the Retail business, as we think about comp in general for the year?.

Well, I mean I guess the one thing I will point out is that in fairness, we also did have about 250 basis point favorable impact in Q1 from an earlier Easter. So that as we look at Q2, that's a headwind. On the other hand, we also had about a negative about 150 basis point negative impact from the nor'easters in Q1.

So we can probably play this game for a long time going back, probably puts and takes. But certainly at least with Q2, we do start with about a 250 basis point headwind from the eastern..

Okay.

And then just finally just curious Madden and what's your Kohl's, any update on that? How it's performing, numbers of stores are in, just any color around that?.

Yes, that continues to be going quite well. We took selected - we launched in 450 doors year-ago. We took selected styles to 800 doors this spring. We are beating plan this spring. Kohl's seems very happy with the performance.

We're going to be testing Madden NYC Kids in about 20 doors for fall and if that goes well, we think that could be a significant opportunity. So we're very pleased with what we're seeing there..

Great, it sounds good. All the best, thank you..

Thanks, Chris..

We'll go next to Sam Poser with Susquehanna..

Good morning. Thanks for taking my question. Historically, we've seen some of the reemerging system with this chunky, clunky kind of looks and you have some old sort of heritage styles, I believe you starting to perform well.

Do you see that as an emerging trend or a reemerging trend for lack of a better with it?.

Yes, I think it's certainly one of the things that we're seeing and obviously to your point that that plays to our strength..

And I guess when you look at the fall of the Madden order that are giving - you're thinking flat on the Boot business and don't see that emerging. I mean when we're thinking about orders, let's say August onward, right now.

I mean how - in Steve Madden, how much of that is actually placed as a percent at this time?.

Well as you know we worked very close to season. So we don't know nearly as much about that timeframe as - probably most of our peers. I don't know what the percentage is, but there's a lot of that - a lot of work to chop..

Right, I mean so when you look at the order - the places where you do have orders, which would be in your private label, you're - in Madden Girl, in Men's and so on.

I guess how much of this guidance is sort of because you can react, I mean are you - you're telling us what you see now, but there's a lot of orders still to be written and I would assume a lot of orders still to be written?.

Yes. Yes, we know a lot about Q2. We know something about Q3. But there is still a heck of lot of work to do for Q3..

Okay. And then you have been acquisitive, I guess the question is - to what size company would you look for? I mean you've done generally smaller acquisitions over the years at a good value.

How much - I mean how big would you be willing to go, assuming that it's a good value?.

Look, I mean it really all depends on the transaction and the individual company and the valuation et cetera. So we certainly have the wherewithal to do deals that are much larger than anything we've done to-date. We are open to looking at them.

Would we do a $1 billion deal that's truly transformational? I think that's probably unlikely, but I'll never say never, but if you found the exactly the right transaction, we'd look at it..

And when you think about your overall business, you talk about how Anne Klein was a good fit within your stable brands and so on.

What type of thing without giving anything - I mean what type of thing sort of - do you think about as far as a niche addition not necessarily brand name, but category or so on? I mean where do you feel like you have another opportunity to round it out for?.

There are plenty of parts of the business where brands or certain categories that could be complimentary. I still think that we can do more and what I would call that traditional Women's business, meaning less the young trendy part of the market that we focus on in Steve Madden and maybe more product for a more sophisticated or mature customer.

There's also categories of footwear. We don't have a lot in comfort for instance. We've had tremendous success with Blondo in the Waterproof boot category, which - that has some sort of comfort functionality, but we don't have a true comfort brand. So look there is a lot of different things we'd look at, but it's very hard to me to speculate..

Thanks very much..

Thanks Sam..

We will go next to Steve Marotta with C.L. King & Associates..

Good morning, Ed and Danielle. I just have one follow-up question to - a question that was asked earlier regarding essentially the colder weather that we've seen within the first quarter and how much that could fill in the second quarter.

Ed, you commented that inventories within the channel currently appear to be relatively stable or relatively in line.

Remember, I think it was a couple of years ago where similar weather patterns negatively affected or increased promotions materially from a competitive standpoint you had to match then and the second quarter gross margin came in, it was a little bit under pressure due to that.

Have you seen anything from a promotional cadence competitively that may lead you to believe that warmer weather fashion is backing up at all within the channel?.

Now at this point we're not seeing anything unusual from a promotional standpoint..

And the other question I had as it relates to EPS. I think it was on your last call, you mentioned, and I'm working from memory, so forgive me, but I think the split from an EPS standpoint for the year was about 40%, 60%.

Is that still operable given what was an EPS beat in the first quarter?.

It's still close. I mean you're right, we beat by a little bit in Q1 and we've maintained the year, so maybe it's 42%, 58%. To be honest, you haven't done that calculation, but it's in that range..

That's terrific. Thank you very much..

No questions remaining. I'd like to turn the call back to Mr. Rosenfeld for any additional comments or closing remarks..

Great. Well thanks very much for joining us on the call this morning and we look forward to speaking with you all on the second quarter earnings call. Have a great day..

Thank you, sir. Again, that does conclude today's conference. Thank you for your participation. You may disconnect at this time..