SHOO — Steven Madden, Ltd.

Summary of Steve Madden Ltd. Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Consolidated Revenue: $667.9 million, a 6.9% increase year-over-year; however, excluding the newly acquired Kurt Geiger, revenue decreased by 14.8%.
• Wholesale Revenue: $442.7 million, down 10.7% year-over-year; excluding Kurt Geiger, down 19%.
• Direct-to-Consumer (DTC) Revenue: Increased 76.6% to $221.5 million; excluding Kurt Geiger, increased 1.5%.
• Gross Margin: Consolidated gross margin improved to 43.4% from 41.6% in Q3 2024, driven by Kurt Geiger's higher DTC mix. Wholesale gross margin decreased to 33.6% from 35.5%.
• Operating Income: $46.3 million (6.9% of revenue), down from $85.4 million (13.7% of revenue) in Q3 2024.
• Net Income: $30.4 million ($0.43 per diluted share), compared to $64.8 million ($0.91 per diluted share) in Q3 2024.
• Debt and Cash: $293.8 million in outstanding debt and $108.9 million in cash and equivalents, resulting in net debt of $185 million.
• Inventory: Increased to $476 million from $268.7 million in Q3 2024.

2. Strategic Updates and Business Highlights

• The company is navigating challenges from new tariffs on Chinese imports, which have led to reduced orders and shipment delays.
• Despite these challenges, underlying consumer demand remains strong, particularly for the Steve Madden brand, with notable success in boots and dress shoes.
• Marketing efforts are focused on engaging Gen Z and Millennial consumers through platforms like YouTube and TikTok, resulting in improved brand awareness and sales.
• The integration of Kurt Geiger is on track, with mid-teens comp sales growth and plans for international expansion.
• Other owned brands, such as Dolce Vita and Betsey Johnson, are also expected to deliver revenue gains despite tariff headwinds.

3. Forward Guidance and Outlook

• For Q4 2025, the company expects revenue growth of 27% to 30% compared to Q4 2024, with earnings per share projected between $0.41 and $0.46.
• The core business (excluding Kurt Geiger) is expected to decline by 2% to 4%, with wholesale footwear and DTC showing positive trends.
• Long-term, the company aims to recover margins lost due to tariffs and improve the profitability of the Kurt Geiger brand through cost synergies and operational efficiencies.

4. Bad News, Challenges, or Points of Concern

• The Q3 results were impacted by significant tariff-related challenges, leading to reduced wholesale orders and shipment delays.
• Operating expenses increased to 36.4% of revenue, up from 27.9% in Q3 2024, contributing to lower operating income.
• The company faces ongoing pressure in the wholesale accessories and apparel segments, which are expected to decline in the near term.
• There is uncertainty regarding the recovery of margins, particularly with the ongoing impacts of tariffs and the integration of a lower-margin brand like Kurt Geiger.

5. Notable Q&A Insights

• Management expressed optimism about improving trends in the wholesale channel and noted that order patterns are normalizing.
• The company is focused on maintaining a diversified sourcing strategy, especially in light of tariff reductions on Chinese imports.
• There is a notable difference in performance between full-price and outlet channels, with full-price stores performing significantly better.
• Management indicated that they are seeing a positive response to price increases driven by tariffs, particularly for fashion-forward products.
• Future growth for Kurt Geiger is expected to come from both DTC and wholesale channels, with plans for store openings in the U.S. and international expansion.

Overall, while Steve Madden faced significant challenges in Q3 2025, there are signs of recovery and strategic initiatives in place to strengthen the brand and improve financial performance moving forward.