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STEVEN MADDEN, LTD. (SHOO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 was pressured by new U.S. import tariffs, producing a revenue increase but significant margin compression; adjusted EPS missed consensus and management withdrew FY’25 guidance. Revenue was $0.559B (+6.8% YoY), Adjusted EPS $0.20 vs S&P consensus $0.24*, and GAAP EPS was -$0.56 due to acquisition-related and other items .
  • Mix shift to DTC (boosted by Kurt Geiger) helped gross margin hold near flat YoY on an adjusted basis, but tariffs (net -230 bps) and higher operating costs drove adjusted operating margin down to 4.0% (vs 10.4% LY) .
  • Wholesale was soft, with ~95% of the organic revenue shortfall concentrated in mass and off-price channels amid order cancellations and delayed shipments; DTC ex-KG declined modestly, and system migrations caused ~110 bps comp drag in the quarter .
  • Integration of Kurt Geiger is progressing; management reiterated long-term growth potential, while near-term sourcing pivots (China exposure down to ~30% of U.S. imports for fall) and surgical price increases (~10%) are key mitigants to ongoing tariff uncertainty .

What Went Well and What Went Wrong

  • What Went Well

    • DTC mix and Kurt Geiger bolstered the portfolio; adjusted consolidated gross margin was 41.9% vs 41.5% LY (despite -230 bps net tariff drag), aided by higher-margin DTC and KG mix .
    • Boots and dress categories outperformed, with strong Nordstrom Anniversary sell-through, signaling healthy consumer response to new fashion assortments .
    • Strategic actions on sourcing (rapid diversification away from China) and selective price increases (~10% average) gained initial traction with manageable elasticity so far (stronger acceptance in dress and boots) .

  • What Went Wrong

    • Wholesale softness concentrated in mass and off-price: ~95% of the organic wholesale revenue shortfall was attributed to these channels amid cancellations and shipment delays; management expects continued pressure near term .
    • Tariffs compressed profitability: net -230 bps gross margin impact in Q2; management cautioned pressure will persist into Q3, with improvement only potentially by Q4 .
    • Operational frictions: DTC ERP/POS implementations limited allocations and store-fulfillment capabilities, creating ~110 bps comp headwind; tariffs also caused inventory/delivery disruptions .

Financial Results

MetricQ4 2024Q1 2025Q2 2025Notes
Revenue ($USD Billions)$0.582 $0.554 $0.559 Q/Q +0.9%, Y/Y +6.8% in Q2
Adjusted Diluted EPS ($)$0.55 $0.60 $0.20 Q2 below both Q1 and LY
GAAP Diluted EPS ($)$0.49 N/A-$0.56 Q2 GAAP loss from acquisition/legal and other items
Gross Margin % (reported)40.4% 40.9% 40.4% (Adj GM 41.9%) Q2 adjusted GM +40 bps YoY
Adjusted Operating Margin %9.0% 10.1% 4.0% Tariff impact and higher opex

Q2 2025 vs S&P Global consensus:

  • Revenue: $0.559B vs $0.577B estimate* → Miss
  • Adjusted EPS: $0.20 vs $0.241 estimate* → Miss
  • EBITDA: $23.1M actual* vs $31.5M estimate* → Miss
    Values marked with * are from S&P Global consensus and related databases.
Q2 2025 vs EstimatesActualConsensus*Delta
Revenue ($USD Billions)$0.559 $0.577*-$0.018B
Adjusted EPS ($)$0.20 $0.241*-$0.041
EBITDA ($USD Millions)$23.1*$31.5*-$8.4

Values marked with * are from S&P Global.

Segment/Channel breakdown (Q2 2025):

  • Wholesale revenue: $360.6M (-6.4% YoY; -12.8% ex-KG); gross margin 30.0% (Adj 30.9%) .
  • DTC revenue: $195.5M (+43.3% YoY; -3.0% ex-KG); gross margin 58.7% (Adj 61.3%) .
Segment (Q2 2025)Revenue ($M)YoY %Ex-KG YoY %GM % (Reported)GM % (Adjusted)
Wholesale Total360.6 -6.4% -12.8% 30.0% 30.9%
• Footwear220.1 -7.1% -11.7% ——
• Accessories/Apparel140.4 -5.3% -14.6% ——
Direct-to-Consumer195.5 +43.3% -3.0% 58.7% 61.3%

KPI snapshot (Q2 2025):

  • Stores/e-comm/concessions: 392 stores (98 outlets), 7 e-comm sites, 130 concessions; KG contributes 73 stores (27 outlets), 2 e-comm, 72 concessions .
  • Inventory: $437.0M (ex-KG +1% YoY); net debt: $181.6M (Debt $293.5M, Cash & ST investments $111.9M) .
  • Dividend: $0.21/share declared, payable Sep 23, 2025 (record Sep 12) .
KPIQ2 2025
Company-operated stores (outlets)392 (98)
E-commerce sites7
Concessions130
Inventory ($M)$437.0
Total Debt ($M)$293.5
Cash, CE & ST inv. ($M)$111.9
Net Debt ($M)$181.6
Quarterly dividend$0.21/sh

Guidance Changes

MetricPeriodPrevious GuidanceCurrent (Q2)Change
RevenueFY 2025+17% to +19% YoY (given 2/26) No 2025 guidance (withdrawn in Q1; not providing now) Withdrawn/No guidance
Diluted EPSFY 2025$2.30–$2.40 (given 2/26) No 2025 guidance (withdrawn in Q1; not providing now) Withdrawn/No guidance
DividendQ3 2025—$0.21 per share (payable 9/23/25) Declared

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Tariffs/MacroWarned 2025 headwinds from new U.S. tariffs Executed rapid sourcing shift; negotiated supplier discounts; withdrew FY’25 guidance Net -230 bps GM impact; pressure to persist into Q3, maybe ease by Q4 Deteriorating near term
Sourcing Diversification—Targeted mid-teens China share of U.S. fall’25; mid-single digits by spring’26 For fall’25, ~30% U.S. imports from China; selective re-shoring to China where necessary post-temp tariff reduction Improving agility
Pricing/Elasticity—Introduced selective price increases (~10% avg) ~10% avg continues; better acceptance on new fashion (dress/boots), less on sandals/sneakers Mixed but manageable
Product Performance——Boots and dress strong; fashion sneakers softened; apparel up Favorable mix
Channel Dynamics——Wholesale mass/off-price drove ~95% of organic shortfall; DTC ex-KG down modestly; e-comm > stores Off-price/mass weak
Systems & Ops——DTC ERP/POS migration cost ~110 bps of comp; issue now behind One-time drag
International Trends——Ex-KG international +8% reported (~+10% cc) in Q2; HSD FY growth outlook ex-US Positive
Kurt Geiger Integration—Acquisition closed May 6; 65% business outside U.S. Integration “proceeding smoothly”; double-digit digital growth; low-60% China sourcing; EBIT 9.3% last year pre-acq On track

Management Commentary

  • “The second quarter was challenging, driven largely by the impact of new tariffs on goods imported into the United States… The integration of Kurt Geiger is proceeding smoothly… we believe our key strengths… position us well to navigate the current environment and deliver sustainable growth over time.” — Ed Rosenfeld, CEO .
  • “For fall 2025, we currently expect to source approximately 30% of our U.S. imports from China, down from 71% for the full year 2024… We are also selectively raising prices… on average about 10%.” .
  • “The impact of tariffs, net of supplier discounts, resulted in 230 basis points of pressure to gross margin,” partially offset by DTC mix .

Q&A Highlights

  • Wholesale pressure concentrated: ~95% of the organic wholesale shortfall from mass and off-price; customers paused when tariffs hit 145% on China and are cautious on price and timing; continued pressure expected in Q3 .
  • Gross margin outlook: -230 bps net tariff drag in Q2; management expects a “significant impact” in Q3, with potential moderation by Q4; no specific guidance .
  • Pricing and elasticity: ~10% average increases; low resistance in new fashion (dress/boots), less pricing power in sandals/fashion sneakers; to be reassessed in fall .
  • DTC systems impact: ERP/POS migration reduced DTC comps by ~110 bps; systems work now complete; slight comp improvement seen in July vs Q2 .
  • Kurt Geiger: strong digital momentum; U.S. store openings performing ahead of plan; current China sourcing low-60%; 2024 EBIT margin ~9.3%, expected lower in 2025 due to tariffs .

Estimates Context

  • Q2 actuals vs S&P Global consensus: Revenue $0.559B vs $0.577B*, Adjusted EPS $0.20 vs $0.241*, EBITDA $23.1M vs $31.5M* — broad-based miss tied to tariff costs, wholesale cancellations, and timing delays .
  • Forward consensus (illustrative): Q3 2025 Revenue $0.694B*, EPS $0.446*; Q4 2025 Revenue $0.754B*, EPS $0.464* — management reiterated uncertainty and declined to guide; expect models to reflect continued tariff drag into Q3 and gradual improvement thereafter* .
    Values marked with * are from S&P Global.

Key Takeaways for Investors

  • Near-term pressure, long-term opportunity: Tariffs will likely suppress margins into Q3 with some relief possible by Q4; sourcing diversification, DTC mix, and KG scale are the structural offsets .
  • Wholesale risk skewed to mass/off-price: Expect ongoing caution and order timing issues; department store and premium channels appear healthier, supported by strong Anniversary sale performance .
  • Pricing strategy is surgical: ~10% average increases are landing better on new fashion (dress/boots) than on sandals/sneakers; monitor fall elasticity and competitive pricing .
  • KG is a growth engine: Strong U.S. digital and retail performance, global whitespace, and cross-network synergies offer multi-year runway despite near-term tariff/headwind impacts .
  • Balance sheet remains sound but now levered: Net debt $181.6M post KG; dividend maintained ($0.21), buybacks paused in Q2 — prudent capital allocation while navigating tariff uncertainty .
  • Model implications: Reduce Q3 profitability assumptions to reflect continued tariff drag and wholesale mass/off-price softness; modest improvement into Q4 as mix and mitigation actions build, with 2026 as cleaner normalization year absent further policy shocks .

Values marked with * are from S&P Global.