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Acquisitions & Sale of Minority Noncontrolling Interest | 12 Months Ended
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Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions & Sale of Minority Noncontrolling Interest | Note 4 – Acquisitions, Purchases and Sales of Joint Ventures, and Divestitures Acquisitions Almost Famous In October 2023, Daniel M. Friedman & Associates, Inc. (“Buyer”), a New York corporation and a wholly-owned subsidiary of the Company, acquired substantially all of the assets and certain liabilities (the “Business”) of Turn On Products Inc. d/b/a Almost Famous (“Seller” or “Almost Famous”), pursuant to an Asset Purchase Agreement, by and among Buyer, the Company, Seller, and the holders of capital stock of Seller. Almost Famous is a designer and marketer of women’s junior apparel. Almost Famous distributes its products to wholesale customers, including mass merchants, department stores, off-price retailers, and chain stores within the United States. Almost Famous markets products under its own brands, primarily Almost Famous, as well as private label brands for various retailers. This Business was acquired for cash consideration of $73,228 and a future payment contingent on the Almost Famous business achieving certain earnings before interest and tax ("EBIT") targets. In connection therewith, the Company recorded an initial short-term liability of $3,325 and a long-term liability of $9,975 as of the date of acquisition to reflect the estimated fair value of the contingent purchase price. The fair value of the contingent payments liability was estimated on the date of acquisition using the Monte Carlo simulation model, which included significant unobservable Level 3 inputs, such as projected EBIT over the earn-out period and a discount rate of 20.3%. Changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The maximum consideration which can be paid over the consideration period of four years is $68,000 and there are no minimum payments required. The liability will be remeasured at each reporting period with changes in fair value recorded in earnings. After the effect of closing adjustments, the total purchase price of the acquisition was $86,528. The results of the Business have been included in the consolidated financial statements since the date of acquisition within the Wholesale Accessories/Apparel segment. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the October 20, 2023 acquisition date:
(in thousands) |
Accounts receivable | $ | 1,394 |
Inventories | 22,718 |
Factor accounts receivable | 51,940 |
Operating lease right-of-use asset | 2,902 |
Prepaid expenses and other current assets | 172 |
Property and equipment, net | 248 |
Intangibles, net(1) | 32,950 |
Accounts payable | (31,857) |
Accrued expenses | (1,699) |
Operating leases - current portion | (474) |
Operating leases - long-term portion | (2,703) |
Total fair value excluding goodwill | 75,591 |
Goodwill | 10,937 |
Net assets acquired | $ | 86,528 |
(1) Consists of a trademark of $9,050 and customer relationships of $23,900, both of which are amortized over 20 years. During 2024, the Company determined that the trademark was impaired and recognized an impairment charge of $8,635 for the remaining carrying value of the trademark. Refer to Note 7 – Goodwill and Other Intangible Assets for further information. The acquisition was accounted for in accordance with ASC Topic 805, "Business Combinations," ("ASC 805"), which requires that the total cost of an acquisition be allocated to tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the date of acquisition. The Company recorded goodwill for the acquisition based on the amount by which the purchase price exceeded the fair value of the net assets acquired, which consists largely of the synergies expected from the acquisitions. For tax purposes, goodwill will be amortized over a 15-year period. The fair value of the trademark was estimated using the relief-from-royalty method, which presumes the owner of the asset avoids hypothetical royalty payments that would need to be made for the use of the asset if the asset was not owned. Key assumptions and estimates used are forecasted revenue, a royalty rate of 3.0%, and a discount rate of 21.8%. Such assumptions included significant unobservable inputs and changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The useful life of the trademark was estimated to be 20 years and amortization for the trademark has been recorded in operating expenses in our Consolidated Statements of Income. During the third quarter of 2024, the Company determined that the trademark was impaired and recognized an impairment charge of $8,635 for the remaining carrying value of the trademark. Refer to Note 7 – Goodwill and Other Intangible Assets for further information. The fair value of the customer relationships was estimated using the multi-period excess earnings method. The excess earnings methodology is an income approach methodology that estimates the projected cash flows of the business attributable to the customer relationships, net of charges for the use of other identifiable assets of the business including working capital, fixed assets, and other intangible assets. Key assumptions and estimates used in deriving the projected cash flows are forecasted revenue, earnings before interest, taxes, depreciation, and amortization ("EBITDA") margin of 8.8%, customer attrition rate of 5.0%, and discount rates in the range of 21.0% to 23.5%. Such assumptions include significant unobservable inputs and such changes in these significant unobservable inputs might result in a significantly higher or lower fair value measurement. The useful life of the customer relationships was estimated to be 20 years and amortization for these intangible assets has been recorded in operating expenses in our Consolidated Statements of Income. Transaction costs of $1,505 for the year ended December 31, 2023 have been recorded within operating expenses in the Consolidated Statements of Income. ATM In November 2024, the Company acquired the ATM Collection (“ATM”), an elevated basics apparel brand, for a total preliminary purchase price of $9,783, inclusive of customary closing price adjustments. The preliminary fair value of the assets acquired and liabilities assumed included a trade name of $6,300, customer relationships of $1,500, accounts payable of $1,870, and inventories of $1,658. The Company recorded goodwill of $2,195 based on the amount by which the purchase price exceeded the fair value of the net assets acquired. Goodwill recognized in the acquisition primarily reflects anticipated growth opportunities in both the wholesale and direct-to-consumer channels. For tax purposes, this goodwill will be amortized over 15 years. Since acquisition, the results of ATM have been included within the Wholesale Accessories/Apparel and Direct-to-Consumer segments. Hosiery Business In March 2024 Daniel M. Friedman & Associates, Inc. acquired the Steve Madden and Betsey Johnson hosiery division ("hosiery business") of Gina Group LLC (“Gina”). Gina has been the exclusive licensee of the hosiery category for Steve Madden and Betsey Johnson brands and such license agreements were terminated in conjunction with the acquisition. The assets of the hosiery business were acquired for a cash consideration of $4,259 and the assets acquired included inventories of $2,168, reacquired rights of $1,450, and goodwill of $641. The results of the hosiery business have been included in the consolidated financial statements since the date of acquisition within the Wholesale Accessories/Apparel segment. The Company determined that ATM and the hosiery business meets the definition of a business under ASC 805. Accordingly, the Company followed the acquisition method of accounting, which requires that the total cost of an acquisition be allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. Joint Ventures SM Fashion d.o.o. Beograd In May 2024, the Company, through its subsidiary, Madden Europe Holding BV, formed a joint venture ("SM Fashion d.o.o. Beograd") with Milija Babovic, the exclusive distributor of the Company's products in various countries throughout Southeastern Europe. In connection with the transaction, the Company acquired 50.01% controlling financial interest in SM Fashion d.o.o. Beograd and paid a nominal contribution. Since the date of acquisition, the Company has consolidated SM Fashion d.o.o. Beograd into its financial results in accordance with ASC Topic 810 “Consolidation” ("ASC 810"). The other member's interest is reflected in net income attributable to noncontrolling interests in the Consolidated Statements of Income and noncontrolling interests in the Consolidated Balance Sheets. SM Distribution Latin America S. de R.L In June 2024, the Company, through its subsidiary, Madden Asia Holding Limited, formed a joint venture ("SM Distribution Latin America S. de R.L.") with Steve International Inc. SM Distribution Latin America S. de R.L. is the exclusive distributor of the Company's products in various countries throughout Latin America. In connection with the transaction, the Company acquired a 51.0% controlling financial interest in SM Distribution Latin America S. de R.L. and paid a contribution of $4,131. Since the date of acquisition, the Company has consolidated SM Distribution Latin America S. de R.L. into its financial results in accordance with ASC 810. The other member's interest is reflected in net income attributable to noncontrolling interests in the Consolidated Statements of Income and noncontrolling interests in the Consolidated Balance Sheets. SM Distribution Singapore Pte. Ltd. In October 2024, the Company, through its subsidiary, Madden Asia Holding Limited, formed a joint venture (“SM Distribution Singapore Pte. Ltd.”) with Luxury Ventures Pte. Ltd., a well-known distributor of luxury and retail goods throughout Southeast Asia. The JV was established with the purpose of distributing Steve Madden’s products primarily via retail and e-commerce channels throughout Singapore. In connection with the transaction, the Company acquired a 51.0% controlling financial interest in SM Distribution Singapore Pte. Ltd. and paid a contribution of $1,020. Since the date of acquisition, the Company has consolidated SM Distribution Singapore Pte. Ltd. into its financial results in accordance with ASC 810. The other member's interest is reflected in net income attributable to noncontrolling interests in the Consolidated Statements of Income and noncontrolling interests in the Consolidated Balance Sheets. SM Distribution China Co., Ltd. In August 2024, the Company acquired the remaining 49.0% interest in SM Distribution China Co., Ltd. from non-controlling shareholder, Shanghai Shenlian Brand Management Partnership Enterprise Limited Partnership, for $1,500. This transaction increased our total investment in SM Distribution China Co., Ltd. from 51.0% to 100.0%. SM Distribution China Co., Ltd. was initially formed in 2019. SM Distribution China Co. Ltd is consolidated in net income attributable to Steven Madden, Ltd. in the Consolidated Statements of Income and total Steven Madden, Ltd. stockholders’ equity in the Consolidated Balance Sheets. AG SM Holdings Ltd. In December 2022, the Company, through its subsidiary, Madden Asia Holding Limited, formed a joint venture ("AG SM Holdings Ltd.") with Apparel FZCO, the exclusive distributor of the Company's products in the Middle East. In connection with the transaction, the Company acquired a 50.1% controlling financial interest in AG SM Holdings Ltd. and paid a contribution of $7,014. Since the date of acquisition, the Company has consolidated AG SM Holdings Ltd. into its financial results in accordance with ASC 810. The other member's interest is reflected in net income attributable to noncontrolling interests in the Consolidated Statements of Income and noncontrolling interests in the Consolidated Balance Sheets. Steve Madden South Africa Proprietary Limited In April 2022, the Company sold a 49.9% minority non-controlling interest in Steve Madden South Africa Proprietary Limited to a third party for $1,017. In connection with the transaction, the Company retained a 50.1% controlling financial interest in Steve Madden South Africa Proprietary Limited. Accordingly, the Company has continued to consolidate Steve Madden South Africa Proprietary Limited into its financial results in accordance with ASC 810. The other member's interest is reflected in net income attributable to noncontrolling interests in the Consolidated Statements of Income and noncontrolling interests in the Consolidated Balance Sheets. Divestitures GREATS Business In August 2024, the Company completed the sale of substantially all of the assets and liabilities related to one of its subsidiaries, Greats Brand Inc. ("GREATS"), to an unrelated third party, Unified Commerce Group Ltd. ("UCG"), in exchange for a minority interest in UCG with an estimated fair value of approximately $4,020. This non-cash item is excluded from our Statement of Cash Flows. The Company determined that GREATS met the definition of a business under ASC 805. The transaction resulted in the deconsolidation of GREATS from the Company’s consolidated financial statements and the recognition of a loss on sale in the amount of $3,199, which was included within operating expenses in the Consolidated Statements of Income for the year ended December 31, 2024. The loss on sale included the carrying amounts of the net intangible assets of GREATS, which consisted of a trademark of $4,287 and customer relationships of $861. Additionally, goodwill decreased $700 related to the divestiture. Prior to the divestiture, GREATS was part of our Direct-to-Consumer segment. The Company retained a minority interest in UCG which does not give the Company significant influence over UCG. Consequently, the Company accounted for the investment under ASC 321, Investments – Equity Securities, and elected to apply the measurement alternative, which allows the Company to initially record the investment at cost and subsequently remeasure the investment at fair value upon observable price changes in orderly transactions for the identical or a similar investment of the same issuer or impairment, if any. The investment was included within deposits and other on our Consolidated Balance Sheet as of December 31, 2024.

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