Steven Madden Ltd, a leading designer, wholesaler and marketer of fashion footwear and accessories for women, men and children announced financial results for the third quarter ended September 30, 2007.

Third quarter net sales were $113.4 million compared to $123.2 million in the third quarter of 2006. Gross margin was 41.3% compared to 41.4% in the third quarter of the prior year, reflecting a margin decline in the wholesale division, partially offset by a margin increase in the retail division.

Operating expenses increased to $38.4 million from $33.0 million in last year's third quarter and were 33.8% of sales compared to 26.8% of sales in the same period of 2006. The increase was due primarily to a one-time charge of $1.2 million related to a provision for prior-year customs duties, expenses associated with new store openings and increased salary expense related to new hires.

Operating income was $12.8 million, or 11.3% of sales, compared to operating income of $21.9 million, or 17.7% of sales, in the third quarter of 2006. Excluding the one-time charge for prior year customs duties, operating income was $14.0 million, or 12.4% of sales. Net income for the quarter was $10.9 million, or $0.52 per diluted share, compared to $12.6 million, or $0.57 per diluted share, in the prior year's third quarter.

In addition to the one-time charge for prior-year customs duties of $0.03 per diluted share, net income in the third quarter of fiscal 2007included a one-time gain of $2.9 million, or $0.13 per diluted share, resulting from tax savings related to prior periods. Excluding both one-time items, net income in the third quarter of 2007 was $8.8 million, or $0.42 per diluted share.

Revenues from the wholesale business were $86.0 million compared to $91.8 million in the third quarter of 2006 due to a challenging selling environment with a lack of strong direction in footwear fashion trends as well as generally softer retail trends compared to the prior year.

Gross margin in the wholesale business was 36.2% compared to 37.9% in the prior year's third quarter, due primarily to higher markdown allowances relative to the year ago period.

Retail revenues were $27.4 million compared to $31.5 million in the third quarter of the prior year. Same store sales decreased 15.0% versus an increase of 10.5% in the third quarter of 2006. Retail gross margin increased to 57.4% compared to 51.7% in the same period of the prior year, due primarily to freight savings and fewer markdowns and close-outs.