Steven Madden, Ltd. (SHOO) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Consolidated Revenue $667.9 million, a 6.9% increase compared to Q3 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 14.8%. The increase was driven by the acquisition of Kurt Geiger, while the decline excluding Kurt Geiger was due to tariff-related order reductions, shipment delays, and production disruptions.
Wholesale Revenue $442.7 million, down 10.7% compared to Q3 2024. Excluding Kurt Geiger, wholesale revenue decreased 19%. The decline was attributed to tariff-related order reductions, shipment delays, and production disruptions.
Wholesale Footwear Revenue $266.5 million, a 10.9% decrease from Q3 2024 or down 16.7% excluding Kurt Geiger. The decline was due to tariff-related order reductions and production disruptions.
Wholesale Accessories and Apparel Revenue $176.2 million, down 10.3% compared to Q3 2024 or down 22.5% excluding Kurt Geiger. The decline was attributed to tariff-related order reductions and production disruptions.
Direct-to-Consumer Revenue $221.5 million, a 76.6% increase compared to Q3 2024. Excluding Kurt Geiger, direct-to-consumer revenue increased 1.5%. The increase was driven by the acquisition of Kurt Geiger and strong consumer demand.
License and Royalty Income $3.7 million compared to $3.5 million in Q3 2024, showing a slight increase.
Consolidated Gross Margin 43.4%, up from 41.6% in Q3 2024. The increase was due to the impact of Kurt Geiger, which has a higher mix of direct-to-consumer business.
Wholesale Gross Margin 33.6% compared to 35.5% in Q3 2024. The decline was due to pressure from tariffs, partially offset by mitigation efforts.
Direct-to-Consumer Gross Margin 61.9% compared to 64% in Q3 2024. The decline was due to pressure from tariffs and the addition of Kurt Geiger, which had lower direct-to-consumer margins driven by the concessions business.
Operating Expenses $243.4 million or 36.4% of revenue compared to $174.2 million or 27.9% of revenue in Q3 2024. The increase was driven by the acquisition of Kurt Geiger and higher costs.
Operating Income $46.3 million or 6.9% of revenue compared to $85.4 million or 13.7% of revenue in Q3 2024. The decline was due to higher operating expenses and tariff-related impacts.
Net Income $30.4 million or $0.43 per diluted share compared to $64.8 million or $0.91 per diluted share in Q3 2024. The decline was due to higher operating expenses and tariff-related impacts.
Inventory $476 million compared to $268.7 million in Q3 2024. Excluding Kurt Geiger, inventory was $275.6 million, a 2.6% increase compared to the same period last year. The increase was driven by the acquisition of Kurt Geiger.
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Operating Highlights
Steve Madden Fall Product Assortment: Strong consumer demand for boots, dress shoes, and casuals like loafers, Mary Janes, and Mules. Enhanced marketing efforts on platforms like YouTube, TikTok, Snapchat, and Pinterest have driven awareness and conversion among Gen Z and Millennials.
Kurt Geiger London: Mid-teens comp sales growth in Q3 2025. Integration on track with revenue synergies from international expansion and cost savings in freight and logistics.
Dolce Vita: Expansion into international markets and new categories like handbags. On track for revenue gains in 2025.
Betsey Johnson: Renewed cultural relevance through talent partnerships, community engagement, and differentiated merchandise. Expected revenue growth in 2025.
International Expansion: Kurt Geiger is expanding through the Steve Madden network, while Steve Madden is growing in the U.K. via the Kurt Geiger platform.
Tariff Mitigation: Shifted production out of China to reduce tariff impact. Strategic pricing and sourcing initiatives implemented to offset gross margin pressure.
Direct-to-Consumer Growth: Revenue increased 76.6% to $221.5 million in Q3 2025, driven by the addition of Kurt Geiger and a 1.5% organic growth.
Brand Strengthening: Focused on deepening consumer connections through compelling products and effective marketing. Enhanced storytelling and investment in digital platforms have improved brand awareness and sales.
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Risk or Challenges
Tariffs on Chinese Imports: New tariffs on Chinese imports reaching 145% caused wholesale customers to cut back on orders, leading to shipment delays and increased landed costs, which negatively impacted revenue and earnings.
Production Disruption: Shifting production out of China midstream to mitigate tariff impacts caused shipment delays and operational inefficiencies.
Gross Margin Pressure: Significant increase in landed costs due to tariffs led to gross margin pressure, partially mitigated by strategic pricing actions and sourcing initiatives.
Wholesale Revenue Decline: Wholesale revenue decreased by 10.7% compared to Q3 2024, with a 19% decline excluding the newly acquired Kurt Geiger, primarily due to tariff-related order reductions and shipment delays.
Direct-to-Consumer Margin Pressure: Direct-to-consumer gross margin decreased due to tariffs and the addition of Kurt Geiger, which had lower DTC margins driven by its concessions business.
Inventory Management: Inventory levels increased significantly, with potential risks of overstocking or inefficiencies in inventory turnover.
Operating Expense Increase: Operating expenses rose to 36.4% of revenue compared to 27.9% in Q3 2024, impacting profitability.
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Guidance & Outlook
Revenue Growth: The company expects revenue to increase by 27% to 30% in the fourth quarter of 2025 compared to the fourth quarter of 2024.
Earnings Per Share (EPS): Projected EPS for the fourth quarter of 2025 is expected to range between $0.41 and $0.46.
Tariff Impact Mitigation: The company anticipates continued negative impacts from tariffs but believes the worst is behind them. They are mitigating gross margin pressure through strategic pricing actions and sourcing initiatives.
Consumer Demand: Underlying consumer demand for the company's brands and products remains strong, with expectations of improved financial performance in the fourth quarter of 2025.
Brand and Product Expansion: The company is focusing on expanding its owned brands, including Dolce Vita into international markets and new categories like handbags, and Kurt Geiger into international markets through the Steve Madden network.
Long-Term Growth: The company is confident in its ability to drive sustainable revenue and earnings growth over the long term through its brands, business model, and strategy.
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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 December 26, 2025, to stockholders of record as of the close of business on December 15, 2025.
Share Repurchase Program: During the third quarter, the company did not repurchase any shares of its common stock in the open market.
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Key Q&A
Q:Can you talk more about how you're seeing the fashion develop this fall and how inventory levels in the wholesale channel are looking?
A:Edward Rosenfeld expressed optimism about the fall fashion trends, particularly in the core Steve Madden women's shoe business. Boots, especially casual tall shaft styles, have been a strong driver of performance. Dress shoes and casuals, including loafers, mules, and Mary Janes, have also shown improvement. This positive performance gives confidence for the spring season.
Q:Could you break down the 4Q guide in terms of expectations for the core business and KG?
A:The core business revenue guide, excluding KG, is expected to be down 2% to 4%, with increases in wholesale footwear and DTC but declines in wholesale accessories and apparel. KG's contribution to revenue is expected to range from $182 million to $187 million.
Q:What portion of KG revenue is coming from the DTC channel in the fourth quarter, and what impact will it have on gross margins?
A:Over 70% of KG's revenue is from DTC, with approximately $135 million expected in Q4. This has a meaningful mix impact on gross margins.
Q:Are you seeing stockouts in the core Madden business, and how quickly can you chase?
A:There are stockouts in certain styles, but the company has been able to chase some demand despite supply chain disruptions. Merchandise was front-loaded, and products sourced from Mexico allow for reorders within 30 days.
Q:How did e-commerce perform versus brick-and-mortar, and how does the 10% reduction in China tariffs affect sourcing?
A:E-commerce outpaced brick-and-mortar in both Steve Madden and Kurt Geiger. The 10% reduction in China tariffs is a welcome development, but the company plans to remain diversified in sourcing to avoid over-reliance on one country.
Q:What are the KG rollout plans for next year in terms of store growth versus wholesale?
A:The company plans to open a handful of Kurt Geiger stores in the U.S. next year, with initial stores performing well. There will also be some wholesale growth opportunities.
Q:How are you thinking about 4Q for the entire wholesale footwear segment and wholesale accessories, excluding Kurt Geiger?
A:Excluding Kurt Geiger, wholesale footwear is expected to grow 2% to 4.5%, while wholesale accessories and apparel are expected to decline mid- to high teens.
Q:How does Kurt Geiger retail compare to wholesale, and what is the visibility for orders?
A:Kurt Geiger's DTC revenue is expected to be around $135 million, with total revenue between $182 million and $187 million. Orders for Kurt Geiger are taken earlier than for Steve Madden, providing more visibility.
Q:How did Kurt Geiger perform by region in the quarter?
A:Kurt Geiger grew in all core regions, including the U.K., U.S., and Europe.
Q:What updates are there on revenue synergy potential for Kurt Geiger in international markets?
A:The company is working on integrating Kurt Geiger into existing international markets, with benefits expected to start in 2026, particularly in the latter half.
Q:What is happening with the handbag and apparel businesses?
A:Steve Madden handbags faced challenges due to excess inventory and supply chain disruptions but showed improved sell-throughs in fall. The apparel business, particularly Steve Madden apparel, has been a growth area with strong sell-throughs in key accounts like Nordstrom, Dillard's, and Macy's.
Q:Are there differences in sell-through between higher-end and less fashion-focused stores?
A:Sell-through has been strong across the board, with no significant price resistance for the Madden brand when the product is right. Fashion-forward products have seen better consumer reception.
Q:How is the AUR lift in the business affecting sales and comps?
A:AUR has increased due to price increases and a mix shift to higher-priced categories like boots. In Q3, AUR in DTC was up high single digits, and in Q4, it is running mid-teens.
Q:Is there a tone shift in commentary around wholesale?
A:Yes, there is improved tone due to normalized conditions after tariff disruptions and improved underlying demand and sell-through.
Q:What does the strength of the product mean for promotions?
A:The company has reduced promotional days in DTC channels compared to last year due to strong product performance. Promotions will remain competitive during the holiday season.
Q:How will the mix of business with Kurt Geiger impact gross margins in Q4?
A:Kurt Geiger is expected to impact gross margins by approximately 300 basis points in Q4, similar to Q3.
Q:What are the opportunities for brand growth internationally?
A:Steve Madden is expected to see high single-digit revenue growth across EMEA, APAC, and the Americas in 2025. Kurt Geiger is in the early stages of international growth and is expected to achieve strong double-digit growth for several years.
Q:How much of the margin erosion this year is recoverable, and how much is structural?
A:The company believes all margin erosion is recoverable over time, though it may take longer than 2026. Tariffs are expected to be absorbed into retail prices, and Kurt Geiger's margins are expected to improve through cost savings and operating expense leverage.
Q:How will tariffs and Kurt Geiger impact gross margins in Q4?
A:Tariffs impacted Q3 gross margins by about 100 basis points more than Q2, and Q4 is expected to be slightly worse. However, mitigation efforts will reduce the net impact.
Q:What is the outlook for wholesale and DTC performance?
A:Wholesale is seeing stronger performance in regular price channels, while value price channels like off-price and mass have faced pressure. In DTC, full-price channels are performing better than outlet stores, which have been impacted by supply chain disruptions and weak performance in border stores.
Q:What is the marketing strategy for Q4?
A:The company will continue its storytelling approach, which has been effective, and will keep investing in consumer engagement.
Q:What is the margin structure for Kurt Geiger, and how will it evolve?
A:Kurt Geiger's EBIT margin is expected to be around 6% for the partial year in 2025. The company aims to improve margins through cost savings and operating expense leverage, with a long-term goal of reaching or exceeding legacy Steve Madden levels.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on several topics, including the order book visibility for Kurt Geiger in Q1 and Q2, the exact margin recovery timeline for Kurt Geiger, and the detailed marketing plans for Q4. Additionally, they deferred discussions about 2026 plans and specific margin improvement targets for Kurt Geiger.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Boots standout
China midstream
Comp sale
Conference today
DTC sale
London momentum
Ltd Conference
Madden Ltd
Madden month
Order pattern
Pinterest increase
Relations Vice
Snapchat Pinterest
States period
TikTok Snapchat
YouTube TikTok
acquisition integration
action consumer
activation merchandise
amount production
assortment brand
assortment track
awareness conversion
brand London
brand category
brand design
brand mid
brand model
brand product
brand relevance
brand success
brand talent
campaign Comp
casuals loafer
community engagement
competition Boots
consumer brand
consumer competition
consumer sell
demand
pressure
progress
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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