STEVEN MADDEN, LTD. (SHOO)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered adjusted EPS of $0.60 versus Wall Street consensus of $0.4567*, a significant beat, while revenue of $553.5M was slightly below consensus of $556.3M* .
• Gross margin held at 40.9% (+20 bps YoY) despite early tariff headwinds (~20 bps drag), aided by stronger March sell-through and inventory discipline .
• Management withdrew FY2025 guidance due to tariff-driven uncertainty; near-term profit growth to be pressured as the company aggressively re-sources out of China and implements selective price increases .
• Closed acquisition of Kurt Geiger (EV ~£289M); KG adds a high-growth, accessory-led brand with global expansion potential and lower U.S. tariff exposure (65% of sales ex-U.S.) .
• Stock reaction catalysts: EPS beat vs expectations, guidance withdrawal, tariff/sourcing updates, and integration roadmap for Kurt Geiger .

Values with asterisk were retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• “Earnings results significantly exceeded expectations,” driven by strong March demand and on-trend assortments supported by full-funnel marketing (House of Steve) .
• Wholesale gross margin expanded to 35.7% (+60 bps YoY), with gains in both footwear and accessories/apparel; licensing income rose to $2.2M from $1.8M .
• Acquisition of Kurt Geiger closed; management targets making KG London a $1B brand, with momentum led by handbags and strong U.S. digital growth (~+60% in 2024) .

What Went Wrong

• Tariffs created immediate margin pressure (~20 bps in Q1) with a more significant impact expected in Q2; DTC gross margin fell to 60.1% (61.9% LY) on higher promotions .
• Wholesale revenue was modestly affected by shifting ~$13M mass-channel shipments from Jan’25 to Dec’24 and by cancellations among FOB customers and price-sensitive accounts .
• FY2025 outlook withdrawn; management guided investors to expect no near-term profit growth as re-sourcing, price actions, and later deliveries weigh on results .

Financial Results

Non-GAAP adjustments in Q1 included inventory fair value step-up ($0.3M pre-tax), legal settlements ($1.2M), severance ($2.4M), acquisition/JV costs ($3.2M), and a net benefit from contingent liability revaluation (~$4.5M) .

Segment/Channel Breakdown

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We were pleased with our performance in the first quarter… earnings results that significantly exceeded expectations. Looking ahead, we face meaningful near-term headwinds and heightened uncertainty due to the impact of new tariffs… we are optimistic that the current disruption will create opportunities for market share gains over time.” — Edward Rosenfeld, CEO .
• “For fall 2025, we expect the comparable figure [U.S. imports from China, ex-KG] to be in the mid-teens and by spring 2026 down to the mid-single digits… we have begun selectively raising prices by differing amounts… we will monitor the elasticity of demand carefully.” — Edward Rosenfeld .
• “As of March 31, 2025, we had $147.2 million of cash, cash equivalents and short-term investments and no debt… The company’s Board approved a quarterly cash dividend of $0.21 per share.” — Zine Mazouzi, CFO .

Q&A Highlights

• Sourcing shift: Moving components and production rapidly out of China to Mexico, Brazil, Vietnam, Cambodia; footwear/accessories fall production >95% outside China; kids most challenging but manageable .
• Pricing: Targeted price increases by style, average ~10% (0%–20%); industry response still evolving .
• Demand/cancellations: FOB customers canceled near-term orders due to tariff burden; some cancellations on price and later delivery; wholesale sell-through in April similar to March (improved vs Jan/Feb) .
• Kurt Geiger: ~80% sourcing from China currently; only 35% of sales in U.S.—less exposed; sourcing diversification is priority post-close .
• Margin/GM outlook: ~20 bps GM drag in Q1 from tariffs; more significant impact in Q2; mix shift (branded up, private label down) aided Q1 wholesale margins .

Estimates Context

Values retrieved from S&P Global.*

• Q1 2025: EPS materially beat (+$0.14), while revenue modestly missed (−$2.77M); mix (branded>private label), stronger March, and inventory discipline supported margins despite early tariff drag .
• Recent trend shows consistent EPS and revenue beats in Q3 and Q4 2024, but the Q1 revenue miss coupled with guidance withdrawal suggests estimates should move lower for FY2025 revenue and margins near-term given tariffs, later deliveries, and price elasticity risks .

Key Takeaways for Investors

• EPS outperformance versus consensus, but revenue slightly below—tariffs beginning to bite; expect sharper impact in Q2 .
• Management withdrew FY2025 guidance; near-term profit growth likely pressured as the company re-sources rapidly and manages longer lead times .
• Strategic re-sourcing is advanced: U.S. imports from China expected to drop to mid-teens for Fall ’25 and mid-single digits by Spring ’26, reducing long-run tariff exposure .
• Selective price increases (~10% average) are in market; watch consumer elasticity and wholesale acceptance, especially for off-price/private-label accounts .
• Kurt Geiger adds a scaled, high-growth accessories brand with global runway and lower U.S. tariff sensitivity; integration synergies in sourcing and international retail footprint are near-term focus .
• Inventory is elevated YoY due to Suez disruption, pre-tariff acceleration, and re-sourcing; wholesale sell-through trends in March/April solid, supporting demand resilience .
• Trading lens: Expect volatility around tariff headlines and guidance withdrawal; catalysts include updated sourcing milestones, Q2 margin progression, and KG integration updates .