Steven Madden, Ltd. (SHOO) Q3 2023 Earnings Call Transcript

Steven Madden, Ltd. (NASDAQ:SHOO) Q3 2023 Earnings Conference Call November 8, 2023 6:00 AM ET

Company Participants

Danielle McCoy – Vice President of Corporate Development and Investor Relations

Edward Rosenfeld – Chairman and Chief Executive Officer

Zine Mazouzi – Chief Financial Officer

Conference Call Participants

Aubrey Tianello – BNP Paribas

Tom Nikic – Wedbush

Laura Champine – Loop

Janine Stichter – BTIG

Corey Tarlowe – Jefferies

Samuel Poser – Williams Trading

Jay Sole – UBS

Operator

Good day and welcome to the Steven Madden, Ltd. Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Danielle McCoy

Thanks, Abigail, and good morning, everyone. Thank you for joining our third quarter 2023 earnings call and webcast.

Before we begin, I’d like to remind you that our remarks that follow including answers to your questions contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC.

We disclaim any obligation to update these forward-looking statements which may not be updated into our next quarterly earnings conference call, if at all. The financial results discussed on today’s call are on an adjusted basis unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release.

Joining me today on the call is Ed Rosenfeld, Chairman and Chief Executive Officer; and Zine Mazouzi, Chief Financial Officer.

With that, I’ll turn the call over to Ed. Ed?

Edward Rosenfeld

Thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steven Madden’s third quarter 2023 results.

We were pleased to return to year-over-year earnings growth in the third quarter demonstrating the strength and durability of our business models in challenging operating environments. After a tough first half, where we saw significant year-over-year declines in revenue and earnings, we drove strong improvement in our financial performance in Q3.

On a consolidated basis, revenue for the quarter declined 1% versus the prior year period, operating margin expanded 90 basis points to 15.1% and diluted EPS rebounded sharply to increase 11% over the comparable period in 2022.

In a challenging and uncertain environment our team remains focussed on controlling what we can control and executing our strategy for long-term growth. That strategy starts with utilizing our proven model, which combines talented design teams, a test-and-react strategy and an industry leading speed to market capability to create trend-right product assortments and get them to market ahead of the competition. We then support that great product with an always on full from a marketing and consumer engagement strategy by consistently combining our standing product and effective marketing we create deeper connections with our consumers, which inturn enables our success with our forward key business drivers.

The first of those drivers is growing our business in international markets. In the third quarter, our international revenue increased 5% compared to the prior year period and accounted for just under 20% of consolidated revenue, anew quarterly high.

Our EMEA region was a standout. We continue to see strong momentum in Europe, where third quarter revenue rose 18% compared to the same period in 2022. Our success in the region was recently recognized by the leading U.K. industry trade publication Draper’s, which named Steve Madden the Women’s Footwear Brand of the Year for 2023. And in September, we opened a flagship store on Oxford Street in London with our local partner, allowing us to showcase the brand to customers from around the globe in one of the world’s most important shopping destinations. We also continued to develop our business in the Middle East through our new joint venture in the region. The JV opened five new stores in the quarter, drove strong performance in e-commerce, and made significant investments in marketing, both offline and online, to build brand awareness.

And while it’s a smaller market, I also want to call out our South Africa joint venture, where we experienced explosive growth, with revenue increasing 87% versus the prior year period, driven in large part by outstanding performance in sneakers, where we’ve seen multiple products go viral in the market.

Closer to home, in our Americas region, our directly owned subsidiary in Mexico continued its strong momentum, growing revenue 31% compared to the prior year period, including a 23% gain in wholesale and a 46% increase in DTC. This was offset by a decline in Canada, where trends continue to be softer overall, and some large wholesale orders moved out of Q3 and into the beginning of Q4.

Our second key business driver is expanding in categories outside of footwear, like accessories and apparel. In the third quarter, our overall accessories and apparel revenue increased 27% versus the prior year period. Our Steve Madden handbag business was the primary growth driver. It had another outstanding quarter, increasing revenue 52% compared to the third quarter of 2022, including a 46% gain in wholesale and a 90% increase in DTC.

We also continue to make meaningful progress in apparel. Our Steve Madden apparel business is having a strong fall season, with robust sell-through rates in our key accounts. And based on this performance, we see meaningful opportunity for both door growth and expanded assortments within existing doors in our most important accounts in 2024.

And last month, we further enhanced our apparel platform with the acquisition of privately held Almost Famous, a designer and marketer of women’s apparel. Almost Famous markets products in the wholesale channel under its own brands, primarily Almost Famous, as well as private label brands for various retailers. It has also been the exclusive licensee for Madden NYC Apparel since its launch in 2022, and has had outstanding success with that brand so far. Almost Famous’ core expertise is in the junior apparel category and in value price distribution channels, making it a strong complement to our existing Steve Madden apparel business, which is focused on contemporary styling and is primarily distributed in department stores and e-commerce retailers.

Our top priorities will be to use the Almost Famous platform to introduce Madden Girl apparel and to grow Madden NYC apparel. This will enable us to implement in apparel the strategy that has been so successful for us in footwear and accessories, which is to utilize the Steve Madden brand portfolio, including Steve Madden, Madden Girl, and Madden NYC, to reach customers in all tiers of distribution from premium channels down through mass.

Almost Famous had revenue in the 12 months ended September 30th, 2023 of approximately $163 million, and acquisition was completed for $52 million in cash, subject to a working capital adjustment, plus an earn out provision based on future financial performance. We’re extremely excited about the addition of Almost Famous, the capabilities it brings, and the opportunities it creates to continue the expansion of our business outside of footwear.

Our third key business driver is driving our direct-to-consumer business led by Digital. In the third quarter, DTC revenue declined 2% versus the prior year period, a sequential improvement from the 5% decline we experienced in the second quarter. We also delivered a 250 basis point improvement in gross margin in DTC, enabling us to expand operating margins and drive higher EBIT than in the prior year period despite the revenue decline. And despite the pullback we’ve seen this year, it’s important to note that our DTC business continues to be over 50% bigger than it was pre-COVID.

On a trailing 12-month basis, DTC accounted for 26% of consolidated revenue, up from 18% in pre-COVID 2019. And our fourth and final key driver is strengthening our core U.S. wholesale footwear business. As we have discussed on prior earnings calls, this business has been under significant pressure this year as our wholesale customers pulled back on orders across the board as they prioritized inventory control. But while we are still not all the way back to where we’d like to be, we saw significant improvement in the third quarter.

U.S. wholesale footwear revenue decreased 6% in the quarter, a 1,500 basis point improvement compared to the first half trend. And we expect to see sequential improvement again in the fourth quarter. So putting that all together, we are pleased with the progress we are making on our key strategic initiatives. And as we execute against our plan and focus on the long-term, we are also cognizant of the challenging operating environment and disciplined in how we manage the business in the near term.

In the third quarter, we, one, expanded gross margin for the fourth consecutive quarter with gross margin increases in both wholesale and DTC channels, despite an increasingly promotional retail landscape. Two, managed our inventory with discipline, reducing inventory by 16% at the end of Q3 compared to the prior year. And three, controlled expenses and drove cost efficiencies with operating expense dollars declining year-over-year for the second consecutive quarter, even as we continue to invest in product innovation, consumer engagement, and our long-term growth initiatives.

As we look ahead, this operating discipline will remain important because we continue to face a challenging macro environment. Trends across our industry softened beginning in September, which combined with the impact of the crisis in the Middle East on our Israel and Middle East joint ventures leaves us incrementally more cautious on the near term outlook.

Looking out further, we remain confident that our core strengths, our people, brands, and business model will enable us to deliver sustainable revenue and earnings growth over the long-term. And finally, as we navigate these challenges and execute our strategic initiatives, we also continue to embrace the opportunity and the responsibility we have to create positive change for our people, planet, and communities. And we seek to embed corporate social responsibility and sustainability in everything we do.

In the third quarter, we published our 2022 Sustainability Report, which outlines the progress we have made on our Let’s Get Real sustainability strategy and our goals going forward. You can find the report on the sustainability section of stevemadden.com, and I encourage you all to check it out.

And now I will turn it over to Zine to review our third quarter financial results in more detail and provide our updated outlook for the year.

Zine Mazouzi

Thanks, Ed, and good morning, everyone. Our consolidated revenue in the third quarter was $552.7 million, a 0.7% decrease compared to the third quarter of 2022. Our wholesale revenue was $433.5 million, down 0.3% compared to the same period in the prior year, a strong improvement compared to the 20% year-over-year decline we experienced in the first half.

Wholesale footwear revenue was $306.1 million, a 7.5% decrease from the third quarter of 2022. While wholesale customers remain cautious in their approach to orders, we are encouraged by the sequential improvement we are seeing in this business and expect to return to year-over-year revenue growth in the fourth quarter. Wholesale accessories and apparel revenue was $127.4 million, an increase of 22.7% compared to the same period last year, driven by the outstanding growth of Steve Madden handbags in both domestic and international markets.

In our direct-to-consumer segment, revenue was $116.4 million, a decrease in 1.8% compared to the same period last year. Our brick-and-mortar business outperformed our e-commerce business, and international outperformed the United States. We opened 13 new stores and closed four stores during the third quarter, all in international markets, ending the quarter with 251 brick-and-mortar retail stores, including 71 outlets, as well as five e-commerce websites and 22 company-operated concessions in international markets. In our licensing segment, royalty income was $2.9 million in the quarter, compared to $3.5 million in Q3 last year.

Turning to gross margin, consolidated gross margin was 42.1% in the quarter, expanding 90 basis points from the third quarter of 2022, with margin improvement in both wholesale and DTC. Wholesale gross margin rose 60 basis points year-over-year to 35.9%, driven by improvement in the wholesale accessories and apparel business.

Direct-to-consumer gross margin was 63.7%, a 250 basis point improvement compared to the same period last year, driven by lower freight expense, driven by lower freight expense and reduction in promotional activity. Operating expenses in the third quarter were $149.3 million, a 0.8% decrease compared to the third quarter of 2022, reflecting our ability to control costs while continuing to invest in marketing and our long-term growth initiatives.

Operating income for the quarter totaled $83.4 million, or 15.1% of revenue, up from $79 million, or 14.2% of revenue in the same period last year. We drove operating margin improvement in both wholesale and DTC channels. Our effective tax rate for the quarter was 22.8%, compared to 22.9% in Q3 2022. Finally, net income attributable to Steve Madden Limited for the quarter was $65.1 million, or $0.88 per diluted share, up from $61.5 million, or $0.79 per diluted share, in the third quarter of 2022.

Moving to the balance sheet, our financial foundation remains very strong, and as of September 30, 2023, we had $206.4 million of cash, cash equivalents, and short-term investments, and no debt. Inventory at the end of the quarter was $205.7 million, compared to $244.3 million at the end of the third quarter in 2022, a reduction of 15.8%. Our CapEx in the quarter was $6.1 million.

During the quarter, we spent $40 million on repurchases of the company’s common stock, which includes shares acquired through the net settlement of employee stock awards, bringing the 2023 year-to-date spend to $104.2 million. Our board of directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on December 29, 2023 to stockholders of record as of the close of business on December 15, 2023.

Turning to our full-year outlook, we are updating our revenue and earnings per share guidance. We now expect revenue for 2023 will decrease approximately 7% compared to 2022, and now we expect diluted EPS will be approximately $2.40. This updated guidance includes a contribution from the almost famous acquisition of approximately $30 million to $35 million in revenue and $0.01 to $0.02 in EPS. It also includes a negative impact related to the effect of the crisis in the Middle East on our Israel and Middle East joint ventures of approximately $8 million to $9 million in revenue and $0.03 in EPS.

Now I would like to turn the call over to the operator for questions. Abigail?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Paul Lejuez with Citi. Your line is open.

Unidentified Analyst

Hi, everyone. This is Kelly [Ph] on for Paul. Thanks for taking your question. I guess, can we just dig into 4Q guidance a little further now? It looks like you’re more in the core business. Some of that is due to the Middle East and Israel JVs, but outside of that, can you just talk about where you’re kind of lowering the core business outlook? Seems like wholesale is going to sequentially improve versus the fourth quarter. So just trying to figure out where we’re seeing that. We’ll start there and I have another follow-up. Thanks.

Edward Rosenfeld

Yes, good morning, Kelly. So essentially we’re taking, if you back out the impact of Almost Famous as well as the impact from the crisis in the Middle East, we’re basically going to the low end of both the revenue and the earnings guidance, the previous revenue and earnings guidance. So revenue would be down about eight if you exclude those two impacts. And what’s moving us towards that low end is a reduction in our forecast for DTC. Wholesale is pretty down close to where it was before, but we have taken the DTC down based on this softening trend that you’ve probably heard about from others that’s really happened across the industry since September.

Unidentified Analyst

And I know you’ve talked a lot about the customer kind of showing up when there’s reasons to shop. So I guess, taking all that into account, the health of the consumer, some of maybe the fashion trends you’re seeing out there, are you feeling optimistic that those trends could improve or is there just, not enough happening on the newness fashion side to make you more optimistic?

Edward Rosenfeld

Well, I think that the point you raise is a good one that we have continued to see customers, the shopping pattern is becoming more and more event driven and customers showing up on those holiday weekends, those promotional times, but then in between, the valleys have been a little deeper. So, certainly we’re hopeful that as we move into this holiday period and Black Friday, Cyber Monday, etcetera, which is clearly the biggest event of the year that the customers will really show up. And so, is it possible that we could do a little bit better than this? Yes, but essentially what we’ve done to build this forecast is rule the recent trend forward through the end of the year.

Unidentified Analyst

Just one more for me on the wholesale side. Wholesale came in a little bit better than expected. Did you see retailers to place orders? How are they kind of feeling about, taking any need back? Is there fashion out there that they’re excited about and how does that outlook look when we look to spring 2024? Just how the wholesale partners are behaving.

Edward Rosenfeld

Yes, I think, there is some new fashion. I do feel good about our product assortments. We’re getting very good feedback from our wholesale customers about, yes, about spring. We’ve been getting very good feedback about our spring assortments. But overall, the sentiment amongst the big wholesale customers remains quite cautious. And we still see a pretty conservative approach to order patterns.

Unidentified Analyst

Got it. Thank you.

Edward Rosenfeld

Thanks, Kelly.

Operator

One moment for our next question. Our next question comes from Aubrey Tianello with BNP Paribas. Your line is open.

Aubrey Tianello

Hey, good morning. Thanks for taking the questions. I wanted to touch on the Almost Famous acquisition and why now was kind of the right time to do the deal. And then going forward, how did you see the landscape for M&A opportunities from here? Do we see kind of a pickup in activity? Are you more focused on these type of platform acquisitions? Or could brands be in the cards too?

Edward Rosenfeld

Okay. Well, good morning, Aubrey. Thanks for the questions. So in terms of Why Now, look, we just feel pretty excited about the path that we’re on in apparel. And we were excited about expanding our business in that category, expanding our platform and our capability in that category. We bought BB Dakota in 2019, which was our entree into apparel. We have since converted that to Steve Madden apparel as of fall of 2022. We feel very good about the path we’re on there. And we felt it was time to expand the platform to add this, this capability that Almost Famous brings, which, as a reminder, their expertise is in the trend-driven junior part of the market and in value-price distribution channels, which, again, a very strong complement to what we do in Steve Madden apparel, which is contemporary styling and is primarily distributed in the premium channels like department stores, better department stores and pure-play e-commerce retailers.

So with this transaction, we now have a capability similar to what we have in shoes and accessories where we will be able to sell into all tiers of distribution from premium down through mass. So we feel quite good about that strategy and are very excited about what we can do with this new capability.

In terms of the overall landscape for M&A, I don’t think there’s any big update there. We’re going to — we obviously have the wherewithal to continue to do more. If we find the right transaction, we’ll continue to keep our eyes and ears open. There’s nothing else imminent, but, we’ll continue to look for the right transactions. And then as far as what they would be, yes, additional brands to add to the portfolio would be interesting. So, on occasion, we like to buy capabilities and platforms the way we did with Almost Famous, but if we found the right brand that we thought was complementary, we would continue to look at that we could grow under our umbrella, then we would be interested in that as well.

In the meantime, while we integrate Almost Famous, we’ll continue, as always, to look at our international opportunities and international joint ventures in addition to what we normally do.

Aubrey Tianello

Got it, thank you. And just as a follow up, I think earlier this year, you called out some strength in your outlet business. Wondering if you’re starting to see any trade down effect happening as the consumer environment softens a bit, and just how we should think about how you’re positioned if the customer does start migrating down toward lower price points.

Edward Rosenfeld

Yes, well, with respect to our own brick and mortar retail business in the United States, we are seeing outlets significantly outperform full price stores. Q3 and so far in Q4, we’re looking at like more than 1,000 basis points better comp in outlet than in full price stores. So I think that’s definitely reflective of a customer that is focused on value. And look, we obviously operate, one of the things we like about our business is we’re very well diversified by channel and we operate in regular price channels. We also operate in the more value price channels. And so we should be able to go where the customer goes.

Operator

One moment for our next question. Our next question comes from Tom Nikic with Wedbush. Your line is open.

Tom Nikic

Hey everyone, thanks for taking my question. Following up on Kelly’s question earlier about DTC, and I believe you said you’re more cautious on DTC now than you were three months ago. Can you give us any sort of, I guess, quantification or I guess previously you thought DTC would be up most of the digits for the year. How should we think about it for before or for the full year?

Edward Rosenfeld

Yes, thank you Tom, that’s a good question. So that’s right, our previous forecast we had built in about a 1% increase in DTC for the year, and we’ve now lowered that to down close to 4.5% for the year. So the bridge from that one to the close to down 4.5, you got about 150 basis point negative impact from the crisis in the Middle East and the impact that’s had on our bricks and mortar stores, on our DTC business rather in Israel, in our Israel JV and our Middle East JV. We’ve also got about a 50 basis point impact from non-comp stores, stores that we were planning to open that we have delayed the openings on. And then the balance, close to 350 basis points is due to a lower comp assumption because of this slowdown that we talked about, starting really in September.

Tom Nikic

Understood, and I’m not sure if you mentioned this earlier, but has there been any improvement in the DTC trend, quarter to date or with the cooler weather or anything like that?

Edward Rosenfeld

No, unfortunately, we talked about it being slow in September. October was even weaker than September, and November has really been in line with October.

Tom Nikic

Understood, all right, thanks Ed, and best of luck with all of these.

Edward Rosenfeld

Thanks, Tom.

Operator

One moment for our next question. Our next question comes from Laura Champine with Loop. Your line is open.

Laura Champine

Thanks for taking my question. I wanted to ask about the private label slowdown that happened in Q2. Did you get catch up sales from that in Q3, or was it just a return to normal wholesale volumes from private label customers in Q3?

Edward Rosenfeld

Good morning, Laura, thank you. So I wouldn’t say we had catch up sales from Q2, but private label did get much better in Q3. And that’s really a function of the comparisons from the prior year. So it was really Q3 of last year when we began to see that steep slowdown in private label as the big customers there cut orders to try to get their inventories back in line. So we were anniversarying much easier numbers beginning in Q3 and that’s why you saw that number get much, that business get much better on a year-over-year basis. We also did have between Q3 and Q4 a little bit of a shift from Q4 into Q3. So private label was up nicely in Q3, it will be down again in Q4, but for the back half it will be up in total.

Laura Champine

Understood. And then on the EPS guide towards the low end of your prior range, how much pricing are you giving? Because otherwise I think your gross margins be really strong in Q4.

Edward Rosenfeld

We built in a little bit more, we’ve assumed it particularly in DTC that it is a very promotional fourth quarter here. I think from here on out you’re going to see a lot of promotions across the industry. So we built a little bit of that into our guidance. But in wholesale I don’t really see us giving any price back. Any other colors, Zine?

Zine Mazouzi

Yes, no, as far as Q4, I think we were very clear with the guide that $2,040 for EPS, I might as well tell you that the gross margin will also be somewhere around 42%. And if you look at the 42%, it’s about 40 basis points or so lower than last year. And that’s primarily driven, we have a benefit from freight as we know, and we discussed it earlier for 100 basis points. And we have the offset of the mix of the business. And mix means the penetration of DTC, penetration of private label, and the addition of Almost Famous into the mix is 140 basis points the other way.

Laura Champine

Got it, that’s very helpful, thank you.

Zine Mazouzi

Thanks, Laura.

Operator

One moment for our next question. Our next question comes from Janine Stichter with BTIG. Your line is open.

Janine Stichter

Hey, good morning. Wanted to dig a little bit more into the slowdown that you’ve seen in September and beyond. It’s been pretty well documented across the industry, but just love your thoughts on what you think is driving that. And then it sounds like you’ve definitely seen it in your retail business. Curious if you have any sense of what’s happened in terms of sell throughs at wholesale and just your views on the inventory industry-wide, if any of the department stores have kind of been caught off guard by the slowdown and what inventories look like in the channel. Thank you.

Edward Rosenfeld

Sure. Yes, I think the first question, thank you, Janine. I think the first question was what’s driving the slowdown? Look, I think there’s a lot of macro data that we can point to about pressure on the consumer, whether it’s credit card debt or continued inflation or resumption of student loan payments, etcetera. I can’t tell you exactly what’s driving what we’re seeing, but I’m not sure that it matters. I think that what matters is it’s happening and we need to make sure that we manage our business accordingly.

You asked about sell-throughs at wholesale. We have seen a similar impact in wholesale. When we speak to our wholesale customers, I think on a relative basis, we’re still doing well and better than our direct competitive set in terms of wholesale sell-throughs, even over the last couple months, but we have seen the rate slow down a bit.

And then in terms of inventory in the channel, I think that generally speaking, I still don’t think inventories are very out of whack in the channel, although there are certainly categories where there’s probably too much inventory. I mean, if you think about booths, for instance, I think the booty category has been weaker than expected and there’s probably some excess inventory building in the channel there.

Janine Stichter

Thanks a lot.

Edward Rosenfeld

Thank you.

Operator

One moment for our next question. Our next question comes from Corey Tarlowe with Jefferies. Your line is open.

Corey Tarlowe

Hi, good morning. Just to follow up on the Almost Famous acquisition, could you talk a little bit about what you think the longer term sales and margin opportunity for the acquisition could be as we think about the growth or the potential growth for that business ahead and if it’s perhaps ratable what that could look like. And then also you mentioned that you’ve controlled expenses and you’re driving cost efficiencies. Where are some other areas where you think you could fine tune the business to further optimize cost ahead?

Edward Rosenfeld

Sure. Thanks, Corey. I’ll take the first one, then I’ll turn it over to Zine to talk about expenses. So in terms of Almost Famous, as we disclosed, it’s a little over $160 million business in revenue currently. In its most recent fiscal year, it had about a 7% operating margin. But we believe we see a pretty clear path to increasing that over time as we get the benefits of combination of our two companies. And so we can get that into the high singles and over time, most likely into the low doubles in terms of operating margin.

In terms of revenue growth, we do think that there are some pretty significant revenue synergies from combining with our company. We mentioned the introduction of Madden Girl Apparel, for instance, as something we want to do. So not willing to quantify exactly how big I this business can be at this very moment, but we certainly see significant revenue growth and operating margin opportunity in this business. Zine, do you want to address the operating expenses?

Zine Mazouzi

Sure. So for Q3, we came in at negative $0.8 against dollar from the quarter last year. Obviously, as we said before, we continue to try and control the controllables in this choppy environment. And we put a lot of controls around specifically our supply chain, mainly our warehouses to make sure that we control those expenses. So that drove a big portion of the drop versus last year. And we also have variable expenses related specifically to retail and e-com where we didn’t do so well from a sales perspective. And those variable expenses came in favorable and that was partially offset by our continued investment in marketing and innovation and IT.

So for Q4, just to give you a little bit of guidance there, we expect operating expenses to be up around 4%. And that is primarily due to the inclusion of Almost Famous into the base. Without Almost Famous, we expect to be below a 1% increase in Q4. And as far as going forward, any initiatives that we may have, I just want to obviously remind you that we run very lean as a company and we did some big cuts back in the COVID days. And we always try and not run with fat in the company.

But going forward, we’re looking at many areas. We’re continuing to invest in our automation in some of our warehouses to reduce costs. And we look basically as we always do, under every rock for any savings. But using technology and automation is a good thing that we’re doing in our supply chain.

Corey Tarlowe

Very helpful. Thanks so much.

Operator

One moment for our next question. Our next question comes from Samuel Poser with Williams Trading. Your line is open.

Samuel Poser

Good morning. Thanks for taking my questions. A lot of them have been answered. But I’d like to know, are you seeing a variance in your, let’s say, sell-through rates or consumer appetite within, with the Steve Madden brand, within your wholesale accounts? How does that compare to what you’re seeing with DTC?

Edward Rosenfeld

Thanks, Sam. No, I really don’t think there’s a big, I don’t think there’s any big distinction to call out at this very moment in terms of consumer demand across channel.

Samuel Poser

And but you did say that you felt like you were sort of out, maybe outperforming, let’s say, your peers or outperforming maybe how people are doing, other brands are doing within, let’s say, on the Macy’s floor. But there’s still a reticence from those wholesale accounts to write fill-ins for the bestselling stuff. Is that a fair statement?

Edward Rosenfeld

That is accurate. Yes, we do feel that for the fall season, if you look at the folks that we compete with most directly, we feel that we’re, that our sell-throughs are better than theirs. That’s the feedback that we’re getting. It’s not resulting in a ton of reorders, given the overall environment. But I do think it bodes well for spring. We’re getting pretty good feedback from our wholesale customers about how they’re thinking about us for spring. I think they’ve got a conservative approach overall. But we’re hearing from all the big folks that they’re going to plan us better than they plan their overall department. And I think that’s a function of, number one, the sell-through we’re seeing right now, relative to the competition. And number two, the strength of the spring product assortments.

Samuel Poser

Two other things. One, do you think they’re actually buying to the trend? Or are they still buying sort of cautiously below it? And secondly, one of your larger accounts is a vendor-managed program. Can you sort of talk to maybe the difference between the vendor-managed program and the non-vendor managed program? And if you’re making any headway in convincing the non-vendor managed programs to become vendor-managed programs.

Edward Rosenfeld

So in terms of the overall approach to orders, it is still cautious. I would say it’s still below what we view as underlying consumer demand. And so we’re working with our wholesale customers to try to get that back in line. You mentioned vendor-managed program with a big wholesale customer. Over the last, if you even zoom out a little bit and look over the last few years, that’s been one of our most successful businesses. And we do think that’s in part because of the influence that we’ve been able to have on what the assortments look like at that account. And so we’re continually on a process of trying to work more closely with our key wholesale customers to make sure that we have the right goods in the right stores at the right time.

Samuel Poser

Well, actually, can you tell me the variance between, let’s say, that vendor-managed programs business from an increase or the variance between that and the non-vendor managed program?

Edward Rosenfeld

No, I cannot.

Samuel Poser

Well, you could, but you won’t. But I appreciate it. Thank you.

Edward Rosenfeld

There you go. I won’t. Good try, as always. Thanks.

Samuel Poser

Thank you.

Operator

One moment for our next question. [Operator Instructions] Our next question comes from Jay Sole with UBS. Your line is open.

Jay Sole

Great. Thank you so much. Can I just ask for an update on the handbag and apparel parts of the business, like the BB Dakota business? How have you seen those trends in the quarter? Are they different from what you’re seeing in footwear? Thanks so much.

Edward Rosenfeld

Yes, thank you, Jay. So I’ll start with handbags, because that’s just a fantastic story. You heard about it in the prepared remarks. But Seabed and Handbags has just been on this incredible growth journey. This is something that goes back years now that we’ve been really investing in this area. And we’ve been seeing strong growth in this business, double-digit growth year after year now for several years. And the business continues to have incredible momentum. I think we called it out, but Seabag [Ph] and Handbags is up over 50% overall in Q3, 46% in wholesale, and 90% in our own direct-to-consumer channels.

And so we’re just really excited about the momentum that we have there. For us, it all starts with product. And just very proud of all the work the team has done. I think the bags are better than they’ve ever been. They’re on trend. The detailing, the materials, everything has just been right. And they’ve done a great job. And that’s driven the growth in wholesale and DTC, as I mentioned, but also in domestic and international markets. And that Seabag [Ph] and Handbags business has become a significant business for us now. I think it’ll be close to $225 million in 2023. So meaningful business and very strong growth over the last several years. That’s just Steve Madden. If you add in our other handbag businesses, the Incline, Betsy, Private Label, that’s another $100 million or so.

And then in terms of apparel, again, we talked about that. Fall of last year was the first season of Steve Madden apparel. And we continue to refine the product assortment there. And we really feel that this fall is the best assortment that we’ve had. And we’re really pleased with the sell-throughs we’re seeing there. We’re outperforming our key competitors in our top accounts. And I’m talking about our better department stores, whether it’s Bloomingdale’s, Dillard’s, etcetera. We’re very pleased with what we’re seeing. And as I mentioned, based on the success that we’re having, we are expecting door growth. And we’re also expecting to get significantly expanded assortments at a lot of those better department stores and some of the pure play e-commerce retailers, Revolve, etcetera. So really positive story there.

Jay Sole

Sounds great. Thanks so much.

Edward Rosenfeld

Thanks, Jay.

Operator

Thank you. That concludes the question-and-answer session. At this time, I would like to turn the call back to Ed Rosenfeld for closing remarks.

Edward Rosenfeld

Great. Well, thank you so much for joining us this morning. Have a great holiday season. And we look forward to speaking with you on the next call. Have a great day.

Operator

Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.