Good day, everyone and welcome to the Steve Madden, Ltd. 2010 second quarter earnings conference call. Today’s call is being recorded. For opening remarks and introductions, I would like to turn the call over to Ms. Jean Fontana of ICR. Please go ahead, Ms. Fontana.

Thank you. Good morning, everyone. Thank you for joining us for the discussion of Steve Madden’s second quarter 2010 earnings results. Before we begin, I would like to remind you that statements in this conference call that are not statements of historical or current facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties and other unknown facts that could cause actual results to be materially different from historical results or any future results expressed or implied by such forward-looking statements. Statements contained herein are also subject to generally other risks and uncertainties that are described from time to time in the company’s reports and registration statements filed with the SEC. Also, please refer to today’s earnings release for more information on risk factors; this could cause actual results to differ. Finally, please note that any forward-looking statements in this or used in this conference call cannot be relied upon as current after this date. I would now like to turn the call over to Ed Rosenfeld, Chairman and CEO of Steve Madden.

Thanks, Jean. Good morning and thank you for joining us today. We are very pleased to report that we delivered the highest sales and earnings results in the company's history in the second quarter. During the quarter, consolidated net sales increased 36% to $158.7 million and net income grew to $19.8 million, a 63% increase compared to the second quarter of last year. Our performance reflects strong momentum in our core business, as well as significant contributions from our newer business ventures. On the wholesale side, we achieved strong gains in our core Steve Madden Women's, Steven by Steve Madden, and Madden Girl wholesale footwear divisions. We also continued to see outstanding growth from our Men's business with a substantial increase in our Steve Madden Men's division, supplemented by a strong contribution from our new men's brand, Madden. International also accelerated, recording top line growth in excess of 50%, driven by big year-over-year increases with our existing partners in Asia and Canada, as well as incremental business with new partners in Israel and Australia. Whole accessories was another bright spot with a 79% net sales increase, resulting from 18% organic growth in addition to the sales contributions from our two recent acquisitions, Madden Zone and Big Buddha. I am very pleased with these acquisitions, both of which are exceeding expectations for sales and earnings. Meanwhile, our retail business delivered increased profitability for the sixth straight quarter, driven by a 7.4% comp store sales growth and 350 basis points of gross margin expansion. Overall, we believe that our ability to deliver outstanding growth in a still challenging retail environment demonstrates the unique capabilities of Steve and his design team; strength of our brand portfolio; benefits of our diversification by channel, product, and category; and the resiliency of our business model. Turning…

Thank you. (Operator instructions) We will take our first question from Claire Gallagher with CapStone Investments. Claire Gallagher – CapStone Investments: Hi.

Hi, Claire. Claire Gallagher – CapStone Investments: Congratulations on a great quarter.

Thank you. Claire Gallagher – CapStone Investments: So I just wanted to get an update, if you don't mind. A little bit more detail on what you are doing here with Macy's. I – could you –it was a Material Girl that you called it?

Yes. Material Girl is a new brand. It's a brand created as a joint venture with Madonna and Iconix and it's an exclusive juniors' brand for Macy's. And we are the vendor for shoes, handbags, and belts and first shipments went to (inaudible) about a week ago and it's going to be about 200 doors and real – again, real junior product, much younger than Steve Madden. And they are really going after that Forever 21 customer. The retails on the shoes will be $20 to $40; boots will be up to maybe $60. And it's something we are really excited about. Claire Gallagher – CapStone Investments: Okay. That sounds great. And then just so I heard you correctly, did you say that the Big Buddha shoes – did they already start shipping?

Yes. We just started shipping Big Buddha shoes again within the last week or two. Claire Gallagher – CapStone Investments: Okay, great. So you don't have any feel for how the consumer responds to that product yet?

No, it's a little too early for that. But the reaction from the buyers was great. Claire Gallagher – CapStone Investments: Okay, great. And then just very quickly, could you touch again on just the international business? I know you mentioned that you are seeing some traction in Asia and whatnot. And can you just kind of update us there on what you are seeing, what the tone is, just kind of from a consumer perspective overseas?

Yes. I mean, this is really exciting, because we talked – I believe it was on the last call, a little bit about how we kind of had a year of – where we took a pause from growth in this business. Due to the global recession, we had some distributors that we had to change, et cetera, but we really feel now that we are poised to grow again and we had a – our best quarter ever in second quarter. As I said, we are up over 50% in that business. A big driver, as you mentioned, was Asia. That business was about double this year versus last year in the second quarter; and it's going to have another big quarter in Q3, again with north of 50% growth. And we are just seeing a lot of traction there and see this as a big opportunity for us moving forward. Claire Gallagher – CapStone Investments: Great. Well, thank you so much and good luck.

Thanks, Claire.

(Operator instructions) Next, we will hear from Scott Krasik with BB&T Capital Markets. Kelly Hauser – BB&T Capital Markets: Hi, Ed. This is Kelly calling in for Scott.

Hi, Kelly. Kelly Hauser – BB&T Capital Markets: Hi. Congratulations on a great quarter.

Thank you. Kelly Hauser – BB&T Capital Markets: My first question is about gross margins. What does your guidance assume for gross margins in the back half of the year, specifically your wholesale gross margin? If boots are good this year, but maybe not as good as they were last year, can you still maintain or get close to the gross margin from last year through other measures?

Yes. I think that we may see wholesale margins down very modestly from a year ago. Keep in mind that we do have that mass-merchant business, which has moved from the other income line into the top line sales number, which does dilute the gross margin by about 100 basis points. And then we have also got modest pressure, maybe 50 basis points from the rising costs in China. We don't believe that we are going to be down 150 basis points, by the way. We are going to offset some of that through other gains, particularly through mix shifts – positive mix shifts, as we grow some of our higher-margin businesses. But I think we could be down very modestly in wholesale. And then we think that there is an opportunity to be up in retail. And so when you put it all together, I think that we are going to continue to say what we have been saying, which is that sort of 43 and change each quarter is a good target for us for the rest of the year. Kelly Hauser – BB&T Capital Markets: Okay, that's helpful. And I just wanted to talk about Madden Men's for a second. Has the timing or the magnitude of Madden Men's ramp-up changed with its solid early performance?

Yes. I mean, I guess it's accelerated a little bit. We have been really pleased with the launch there. And we now think we can do about $15 million this year, right out of the gate. I mean, our initial estimate was $10 million, then we raised that to $10 million to $15 million, and I think now we feel pretty good about hitting that $15 million target. Kelly Hauser – BB&T Capital Markets: Okay. Great. And my last question is – how confident are you that you can continue to grow within existing doors, given how strong it's been for you guys in the last 18 months or so? Like specifically, do you think you can still grow your product assortment within the Steve Madden brand or will you continue to grow through new brand extensions, et cetera, kind of – like the Big Buddha footwear?

Yes. Well, we have opportunity to grow Steve Madden. But you are right, that is a more mature business; we already have the number one market share in our department with virtually all of our biggest customers there. Great product, we have – I think we have shown in the past that if we have great products, we can turn good and still see growth there. But you are right, there are other brands, be it Madden Girl, Big Buddha, et cetera, where we have significantly more opportunity to expand assortment and grow within the existing doors. Kelly Hauser – BB&T Capital Markets: Okay, great. Well, congrats again. Thank you.

Thanks a lot.

Next, we will take Jeff Van Sinderen with B. Riley. Jeff Van Sinderen – B. Riley: Good morning. I wonder, Ed, if you can comment on the outlet business, and I know it's still early in where you are with that, but in terms of what – how you are thinking about that business and how you are approaching it.

Yes. Well, that's something that, as you know, we have been looking at for some time. We really felt that it was important to bring in someone with a lot of experience at running an outlet chain, because it is a different business from the full-price retail business that we are in. And as you recall, we were close a while ago and didn't get our person at that time. And so that sort of slowed us down a bit. But we have – we now have found the person that we think is the right executive to run this, someone that has been very successful running a chain for one of our competitors. And so he is going to start with us in a couple of weeks here and we are currently working on negotiating leases. And the idea would be to try to start with a test of, let's say, three to five outlets, and we will see where that goes. Jeff Van Sinderen – B. Riley: Okay. And then how do you feel about the boot business for second half versus more challenging comparisons to last year? And do you think there is anything to replace the strong boot trend that we have been seeing? I guess just anything you can say there about continuing momentum in boots?

Yes. I mean, we feel very good about the boots season. We have gotten some very good early reads here. We had very good reads from the Nordstrom anniversary sale, as well as the Macy's pre-season event. And we are also running a pre-fall event in our stores called Sneak-Peak, where we have gotten some good reads on boots. So, all indications are pretty positive about the boots season. In terms of other categories, the dress category is much, much stronger this year than it was a year ago. We are selling a lot of pumps right now. And so that's been good to see as well. Jeff Van Sinderen – B. Riley: Okay, good. And then I know you are shifting sourcing a little bit in terms of the regions that are going to be actually manufacturing the product. How are you thinking about quality? And I know you said you are shifting some to Mexico. Has the quality so far that you have been seeing held up or been flat or better or – maybe any comments on that would be helpful.

Yes, I mean, we are – obviously that's something that we are very focused on. The quality from Mexico is very good. There are certain types of products that they do much better in Mexico than in China, certain boots and other sort of more rugged, distressed looks. So we have been focusing on Mexico for those types of looks. And in terms of moving production to the north of China, the key there is that you have to have bigger quantities, and when you do, you can get the right quality out of northern China. Jeff Van Sinderen – B. Riley: Okay, great to hear. Congratulations and good luck this quarter.

Thank you.

Next, we will hear from Sam Poser with Sterne Agee. Sam Poser – Sterne Agee: Good morning, Ed. How are you?

Hi, Sam. Sam Poser – Sterne Agee: Hi. Can you give us a breakdown of the men's, of what the overall men's revenue was for the – the revenue by segment for us, please? Number one. By men's, Madden and so on.

Well, we don't usually do that, as you know. Sam Poser – Sterne Agee: You do the men's – you do give the men's, you do give the men's on the Q.

The overall men's is $17.8 million. About $3.5 million of that was Madden. Sam Poser – Sterne Agee: Okay, cool. And in your guidance assumptions – in your guidance, as far as the revenue assumptions, what is your assumption for wholesale? How do you break out the growth wholesale, retail, and then accessories? I mean, you said you expected accessories to be up 50% again next quarter, but how do you look at – how do you look at your – the assumptions for the balance of the year there?

Yes, so wholesale – we put an overall number of 22% to 24%. Wholesale should be, say, 29% to 31%, somewhere in there for the full year. And retail, 2% to 4%. Sam Poser – Sterne Agee: And that wholesale number is inclusive of that accessory growth, correct?

Yes, it is. So the accessory growth is going to be faster than that, particularly because of the acquisitions. If you are just looking at wholesale footwear, you are talking about more or like 26% to 28% growth year-over-year. Sam Poser – Sterne Agee: Okay. And then you started speaking about what your learnings were from the Nordstrom sale. And you mentioned Macy's as well. On a relative basis to last year, when you are looking at the boots and what you had, I mean, what – is the performance – or – is the performance better this year than it was last year, units or rate or – and so on, between this? I heard one of those Steven boots almost disappeared quickly.

Yes, yes. We had a great event with Steven or we are having a great event with Steven. Yes, I would say we are a little bit ahead of where we were a year ago. Sam Poser – Sterne Agee: And those – what have you taken away? I mean, as I think there was a little concern in the past about the boot business. But I mean, we are hearing boots are going to be very strong again. What are you – what are you assuming for your boot business? Are you assuming growth in the guidance? I mean, it's – it looks like you must be with the numbers.

Yes. And I think it's going to be – in the guidance has it basically flat to last year. Sam Poser – Sterne Agee: Okay. And then last – and then lastly, could you give us what you – you did – you leveraged your – just your expenses quite well. How do you look at that for the back half of the year as well? I mean, you said about 43-plus on the margin line. What do we – what should – how should we think about SG&A?

Well, SG&A should be a little bit higher in the back half than it was in the first half for two reasons. One, we think we are going to do more sales in the back half than we did in the first half. So there are some variable expenses. And then two, we are looking at doing a little bit more advertising and marketing than – in the back half than we did in the first half. But for the full year, we previously outlined a SG&A dollar growth of about 10%. I think now, as we have taken the sales up significantly, (inaudible) more or like 7% to 12% growth in the SG&A line. Sam Poser – Sterne Agee: Okay, great. Well, continued success. Thanks.

Thank you.

And we will take a question from Heather Boksen with Sidoti & Company. Heather Boksen – Sidoti & Company: Good morning, Ed. Just a couple questions on the new Big Buddha shoes line. What are the price points going to be for that? Maybe if you can tell us what accounts are signed or buying it so far and how many doors it's going to be in.

Sure. The retails will be 50, 60 bucks for shoes with boots going up to about 80 bucks. Similar to the bags, this is a non-leather product, it's made out of synthetics; it's a pretty casual line. And in terms of customers, we have got some of the better department stores signed up, Dillard's, Belk, et cetera. We have also got some specialty guys like Bakers; we will sell to DSW of course; and then it will be independent boutiques. Heather Boksen – Sidoti & Company: All right. Thanks. And one more question. On the international business, about what percent of the business is it currently, and what's the goal for that?

Well, it's under 5% right now, at 25 – at about $25 million. But we really think that business should be $100 million over the next four or five years. Heather Boksen – Sidoti & Company: All right. Thanks, guys.

At this time, we will take a follow-up from Sam Poser with Sterne Agee. Sam Poser – Sterne Agee: Thanks. Can you give a – two things. Can you give us some indication of if there is any information on your backlog, especially, I guess, more on the Madden Girl and Men's as well? Also, can you talk about the timing of those store openings of the outlets?

Sure. Well, in terms of backlog, as you know, we don't ever talk about that on these calls, but – primarily because we just don't think it's a terribly reliable indicator in our business where everything moves so quickly. But I can certainly tell you that we took the backlog into account in coming up with our guidance, and certainly the backlog supports the sales guidance that we provided. In terms of the outlet openings, I would love to get a couple opened in this year, but it really depends on whether we can find the – cut the right deals with the landlords. So – vis-à-vis fourth quarter this year or it will be in the next (inaudible). Sam Poser – Sterne Agee: Thanks very much. And again, continued success.

Thanks, Sam.

And that is all the time we have for questions today. At this time, I will turn things back over to – for our – to our presenters for any additional or closing remarks.

Okay. Well, thanks so much for joining us on the call. And we look forward to speaking to you on the next call.

And that does conclude today's teleconference. Thank you all for joining.