Steve Madden’s Earnings Call: Mixed Sentiment Amid Challenges

Steven Madden ((SHOO)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Steve Madden presented a mixed sentiment, highlighting both challenges and opportunities. While the company faced significant hurdles due to tariffs impacting wholesale revenue and net income, there were notable successes in the direct-to-consumer segment and the integration of Kurt Geiger, which bodes well for the fourth quarter.

Strong Direct-to-Consumer Growth

The direct-to-consumer segment was a bright spot for Steve Madden, with revenue surging by 76.6% to $221.5 million. Even when excluding the newly acquired Kurt Geiger, the segment still saw a modest increase of 1.5%, underscoring the strength of this channel.

Successful Acquisition Integration

The integration of Kurt Geiger London is progressing well, with comparable sales rising by mid-teens in the third quarter. The brand is gaining momentum and expanding into international markets, contributing positively to Steve Madden’s overall performance.

Improved Gross Margin

Steve Madden reported an improved consolidated gross margin of 43.4%, up from 41.6% in the same quarter last year. This improvement was primarily driven by a higher mix of direct-to-consumer business, thanks to the inclusion of Kurt Geiger.

Tariff-Related Challenges

The company faced significant challenges due to new tariffs on Chinese imports, which reached 145%. This led to reductions in wholesale orders and shipment delays, exerting substantial pressure on both revenue and earnings in the third quarter.

Decrease in Wholesale Revenue

Wholesale revenue declined by 10.7% to $442.7 million compared to the previous year. Excluding Kurt Geiger, the decrease was even more pronounced at 19%, highlighting the impact of external economic factors.

Increased Operating Expenses

Operating expenses rose to $243.4 million, accounting for 36.4% of revenue, up from $174.2 million or 27.9% of revenue in the same quarter last year. This increase reflects the company’s investments in growth and integration efforts.

Decline in Net Income

Net income attributable to Steve Madden Limited fell to $30.4 million or $0.43 per diluted share, down from $64.8 million or $0.91 per diluted share in the third quarter of the previous year. This decline was largely due to the challenges faced in the wholesale segment.

Positive Fourth Quarter Outlook

Looking ahead, Steve Madden is optimistic about the fourth quarter, projecting a revenue increase of 27% to 30% compared to the same period last year. Earnings per share are expected to range between $0.41 and $0.46, supported by strategic pricing actions and sourcing initiatives aimed at mitigating gross margin pressure.

In summary, the earnings call for Steve Madden highlighted a challenging third quarter, with significant impacts from tariffs and a decline in wholesale revenue. However, the company’s strong direct-to-consumer performance and successful integration of Kurt Geiger provide a positive outlook for the future. Investors can look forward to potential improvements in the fourth quarter, driven by strategic initiatives and continued consumer demand.