Steven Madden, Ltd. (SHOO) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents mixed signals: strong basic financial performance and a positive shareholder return plan with a dividend. However, concerns arise from the withdrawal of revenue guidance due to tariff uncertainties and the impact of tariffs on operations. Product development and market strategy show promise with international growth and the Kurt Geiger acquisition, yet challenges remain with sourcing shifts and wholesale disruptions. The Q&A section highlights analysts' concerns about tariffs and unclear management responses, leading to a balanced sentiment. Given the market cap, a neutral stock price movement is expected over the next two weeks.
Key Financial Performance
Consolidated Revenue $559 million, a 6.8% increase compared to Q2 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 10%. The increase was driven by the acquisition of Kurt Geiger, while the decline excluding Kurt Geiger was due to order cancellations, lost orders from delivery delays, and other tariff-related disruptions.
Wholesale Revenue $360.6 million, down 6.4% compared to Q2 2024. Excluding Kurt Geiger, wholesale revenue decreased 12.8%. The decline was attributed to order cancellations, lost orders due to delivery delays or pricing, and shipments moved to the following quarter.
Wholesale Footwear Revenue $220.1 million, a 7.1% decrease from Q2 2024 or down 11.7% excluding Kurt Geiger. The decline was due to order cancellations and delivery delays caused by tariffs.
Wholesale Accessories and Apparel Revenue $140.4 million, down 5.3% compared to Q2 2024 or down 14.6% excluding Kurt Geiger. The decline was attributed to order cancellations, delivery delays, and other tariff-related disruptions.
Direct-to-Consumer (DTC) Revenue $195.5 million, a 43.3% increase compared to Q2 2024. Excluding Kurt Geiger, DTC revenue decreased 3%. The increase was driven by the acquisition of Kurt Geiger, while the decline excluding Kurt Geiger was due to canceled and delayed deliveries and a systems migration.
Licensing Royalty Income $2.9 million, compared to $1.8 million in Q2 2024. The increase was not attributed to specific reasons in the transcript.
Consolidated Gross Margin 41.9% in Q2 2025 compared to 41.5% in Q2 2024. The impact of tariffs, net of supplier discounts, resulted in 230 basis points of pressure, offset by a greater mix of higher-margin DTC business due to the acquisition of Kurt Geiger.
Wholesale Gross Margin 31% compared to 33.1% in Q2 2024. The decline was primarily due to pressure from tariffs.
Direct-to-Consumer Gross Margin 61.3% compared to 64.3% in Q2 2024. The decline was due to the addition of Kurt Geiger, which had lower DTC margins, and pressure from tariffs.
Operating Expenses $211.6 million or 37.9% of revenue in Q2 2025 compared to $162.8 million or 31.1% of revenue in Q2 2024. The increase was not attributed to specific reasons in the transcript.
Operating Income $22.6 million or 4% of revenue in Q2 2025 compared to $54.5 million or 10.4% of revenue in Q2 2024. The decline was due to the impact of tariffs and increased operating expenses.
Net Income $13.9 million or $0.20 per diluted share in Q2 2025 compared to $41.2 million or $0.57 per diluted share in Q2 2024. The decline was due to the impact of tariffs and increased operating expenses.
Inventory $437 million compared to $241.6 million in Q2 2024. Excluding Kurt Geiger, inventory increased 1%. The increase was not attributed to specific reasons in the transcript.
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Operating Highlights
New fashion offerings: Positive consumer response to new fashion offerings, particularly in the dress shoe and boot categories across both DTC and wholesale channels.
Kurt Geiger acquisition: Integration of Kurt Geiger is progressing smoothly, with strong momentum in the Kurt Geiger London brand.
International market expansion: Expanding Kurt Geiger in international markets through the Steve Madden network and growing Steve Madden in the U.K. through the Kurt Geiger platform.
Sourcing diversification: Reduced reliance on China for U.S. imports from 71% in 2024 to an expected 30% for fall 2025.
Tariff impact mitigation: Implemented supplier discounts, price increases, and shifted production to manage tariff-related disruptions.
Marketing strategy: Rebalancing marketing spend across the funnel, increasing investment in YouTube, Pinterest, and Snapchat to target Gen Z and millennials.
Revenue synergies: Focus on revenue synergies from Kurt Geiger acquisition, including cost savings in freight and logistics.
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Risk or Challenges
Tariffs on goods imported into the United States: The company faced significant challenges due to new tariffs, leading to increased landed costs, reduced gross margins, order cancellations, shipment delays, and lost sales. This has caused substantial pressure on both revenue and earnings.
Sourcing and supply chain disruptions: Efforts to diversify sourcing out of China were impacted by the need to temporarily revert some production back to China to ensure on-time delivery, product quality, and reasonable pricing. This has created operational challenges and risks.
Wholesale customer behavior: Wholesale customers canceled orders and reduced open-to-buys, further impacting revenue and operational stability.
Direct-to-consumer (DTC) segment challenges: The DTC segment faced revenue declines due to canceled and delayed deliveries caused by tariff-related disruptions and a systems migration completed during the quarter.
Integration of Kurt Geiger acquisition: While the integration of Kurt Geiger is progressing, there are inherent risks in achieving revenue synergies, cost savings, and operational alignment, which could impact financial performance if not managed effectively.
Economic uncertainties and demand elasticity: The company is monitoring consumer acceptance of price increases and demand elasticity, which could impact sales if consumers react negatively to higher prices.
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Guidance & Outlook
Sourcing Diversification: For fall 2025, the company expects to source approximately 30% of U.S. imports from China, down from 71% for the full year 2024, due to tariff impacts and efforts to diversify sourcing.
Pricing Strategy: The company is selectively raising prices for wholesale customers and consumers, monitoring demand elasticity, and has observed positive consumer acceptance, particularly for new fashion items.
Marketing and Brand Strategy: The company is increasing investment in top and mid-funnel marketing tactics, diversifying spend across channels like YouTube, Pinterest, and Snapchat, and focusing on Gen Z and millennial consumers to drive brand awareness and consideration.
Kurt Geiger Acquisition: The integration of Kurt Geiger is expected to drive long-term growth through international market expansion, cost savings in logistics, and leveraging the Steve Madden network for revenue synergies.
Direct-to-Consumer Segment: The company anticipates continued growth in the direct-to-consumer segment, supported by the integration of Kurt Geiger and a shift towards higher-margin business.
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Shareholder Return Plan
Quarterly Cash Dividend: The company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on September 23, 2025, to stockholders of record as of the close of business on September 12, 2025.
Share Repurchase: During the second quarter, the company did not repurchase any shares of its common stock in the open market.
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Key Q&A
Q:Which channels of wholesale experienced significant order cancellations impacting Q2, and how has ordering behavior changed with tariff clarity?
A:The value price channels, specifically the mass channel and the off-price channel, experienced significant order cancellations. Approximately 95% of the wholesale revenue shortfall in the organic business came from these channels. Ordering behavior has improved slightly, with both channels resuming goods intake and forward orders, but Q3 will still see an impact.
Q:What was the gross margin pressure in the core business in Q2 due to higher tariffs, and what is expected for Q3 and Q4?
A:The gross margin pressure from tariffs was about 230 basis points net of supplier discounts in Q2. Management did not provide specific guidance for Q3 and Q4 but indicated that Q3 will still see significant impact, with potential improvement by Q4.
Q:Does Q3 mark the weakest point in terms of the tax impact on gross margin?
A:Management did not provide a specific answer but indicated that the situation is unlikely to improve in Q3.
Q:What is the consumer response to price increases, and are the 10% average price increases still valid?
A:The average price increase of 10% is still valid, applied on a style level. Consumer acceptance has been positive, with little resistance for new fashion items, particularly trending categories like dress shoes and summer boots. However, there is less ability to take price increases in the sandal and fashion sneaker categories. Full consumer response will be clearer in the fall season.
Q:What is the path to making Kurt Geiger a $1 billion brand?
A:Management is optimistic about Kurt Geiger's potential, citing strong U.S. growth, low brand awareness, and opportunities in retail stores, marketing, full-price and outlet stores, wholesale partnerships, and digital business. Internationally, there is significant potential in Europe, Central and South America, and Asia.
Q:How is the Steve Madden apparel business performing, and what are the trends in the boot and sneaker categories?
A:Steve Madden apparel showed revenue growth in Q2, with consistent product flow and premium distribution. Boots performed strongly in spring and summer, becoming less seasonal, while fashion sneakers softened. Boots are more successful in DTC channels than wholesale.
Q:Were the order cancellations concentrated in specific channels, and what caused them?
A:Order cancellations were across channels but most significant in the mass and off-price channels. In the mass channel, cancellations were driven by customers being responsible for tariffs, particularly when tariffs reached 145% out of China.
Q:Were there any wholesale channels or brands that performed well in Q2?
A:Betsey Johnson outperformed in Q2, while other key brands and channels were down.
Q:What is the status of sourcing shifts to Brazil and Mexico, and how is management addressing tariff uncertainties?
A:Sourcing shifts to Brazil are uncertain due to potential 50% tariffs. Management is diversifying the sourcing footprint and waiting to see how tariff rates evolve before making further decisions.
Q:How is the wholesale business expected to perform in the back half of the year?
A:Management expects continued impact from tariff-related disruptions in the back half of the year but did not provide specific guidance.
Q:Is the consumer being directly impacted by tariffs, or is it more about wholesale partners' caution?
A:The consumer is holding up, though the spending environment for fashion is not robust. Wholesale partners' caution is more significant than direct consumer impact.
Q:How did the DTC business perform in Q2, and what were the differences between e-commerce and store performance?
A:E-commerce outperformed stores in the DTC business. The DTC business faced disruptions from an ERP implementation and tariffs, impacting comps by about 270 basis points combined.
Q:What is the breakdown of inventory growth, and how is it impacted by tariffs and transit times?
A:Excluding Kurt Geiger, inventory was up 1% year-over-year. Tariffs and longer transit times from sourcing diversification and overall disruption contributed to the increase.
Q:What drove the increase in OpEx, and how much did it rise excluding Kurt Geiger?
A:Excluding Kurt Geiger, OpEx increased by less than 3%.
Q:How has Kurt Geiger performed since the acquisition, and what is its current margin profile?
A:Kurt Geiger has shown strong growth, particularly in digital and U.S. retail stores. Its EBIT margin was 9.3% last year but is expected to decline this year due to tariff pressures. Over time, management expects double-digit profitability.
Q:What is the current level of China sourcing for Kurt Geiger?
A:China sourcing for Kurt Geiger is currently in the low 60% range.
Q:What was the impact of the DTC systems implementation on Q2 performance, and how is the DTC business performing quarter-to-date?
A:The DTC systems implementation impacted Q2 comps by about 110 basis points. Quarter-to-date, there has been slight improvement in comps compared to Q2.
Q:What is the timeline for returning to double-digit EBIT margins?
A:Management cannot provide a timeline due to tariff uncertainties but will outline a path once the tariff regime is clear.
Q:How does the international business perform excluding Kurt Geiger, and are there regional differences?
A:Excluding Kurt Geiger, the international business grew 8% in revenue (10% constant currency) in Q2, with high single-digit growth expected for the year across EMEA, APAC, and Americas ex-U.S.
Q:How did the Nordstrom anniversary sale perform, and what does it indicate for holiday trends?
A:The Nordstrom anniversary sale performed very well, with the best sell-through in years, indicating optimism for fall and holiday trends.
Q:What is the pricing strategy for Kurt Geiger in the U.S., and how will its distribution expand?
A:Kurt Geiger's U.S. prices are increasing similarly to other brands, with potential for slightly higher increases. Distribution will expand through more retail stores in the coming years.
Q:How much inventory is on hand from non-China sources, and when will higher rates impact the P&L?
A:Most Q3 deliveries will not be impacted by higher rates from non-China sources, but the company’s quick inventory turnover means tariff impacts are felt earlier than others.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clarity on several questions, including: 1) Whether Q3 marks the weakest point for gross margin impact from tariffs. 2) Specific guidance for Q3 and Q4 gross margin expectations. 3) A timeline for returning to double-digit EBIT margins. 4) Detailed breakdown of OpEx increases. 5) Specific impacts of tariff-related disruptions on wholesale performance in the back half of the year.
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Earnings Word Cloud
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Andreeva Piper
Anna Andreeva
Aubrey Leland
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CEO CFO
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Co Research
Corey Tarlowe
Cutting Room
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Division Conference
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design
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SHOO Transcript
Steven Madden, Ltd. (SHOO) Q1 2026 Earnings Call Transcript
Unknown5-6
The earnings call revealed a mixed financial performance with revenue growth but declining margins and net income. The lack of strategic updates and the mention of forward-looking risks add to the uncertainty. The market cap suggests a moderate reaction, leading to a prediction of a negative stock price movement of -2% to -8% over the next two weeks.
Steven Madden, Ltd. (SHOO) Q4 2025 Earnings Call Transcript
Unknown2-25
The earnings call summary indicates mixed signals: a slight revenue increase and strong e-commerce performance, but declining gross margins. Shareholder return plans, such as dividends and buybacks, are positive, but risk disclaimers hint at uncertainties. The lack of strategic insights or new partnerships tempers enthusiasm. Given the market cap, the stock is likely to remain stable, with a neutral sentiment expected over the next two weeks.
Steven Madden, Ltd. (SHOO) Q3 2025 Earnings Call Transcript
Positive11-5
The earnings call indicates strong financial performance with positive growth in the direct-to-consumer segment and international expansion. Kurt Geiger's integration is expected to drive growth, and the strategic plan shows promising diversification and pricing strategies. Despite some margin pressures, the company is optimistic about recovery and long-term growth. The market's positive reception of price increases and reduced promotional days suggests strong demand. Overall, these factors combined with the company's market cap suggest a positive stock price movement, likely in the 2% to 8% range.
Steven Madden, Ltd. (SHOO) Q2 2025 Earnings Call Transcript
Unknown7-30
The earnings call summary presents mixed signals: strong basic financial performance and a positive shareholder return plan with a dividend. However, concerns arise from the withdrawal of revenue guidance due to tariff uncertainties and the impact of tariffs on operations. Product development and market strategy show promise with international growth and the Kurt Geiger acquisition, yet challenges remain with sourcing shifts and wholesale disruptions. The Q&A section highlights analysts' concerns about tariffs and unclear management responses, leading to a balanced sentiment. Given the market cap, a neutral stock price movement is expected over the next two weeks.
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