Core Viewpoint - Steven Madden, Ltd. is set to release its third quarter 2025 earnings results on November 5, 2025, with a management conference call scheduled for 8:30 a.m. Eastern Time [1]. Company Overview - Steven Madden, Ltd. designs, sources, and markets fashion-forward footwear, accessories, and apparel under various brands including Steve Madden, Kurt Geiger London, and Dolce Vita [4]. - The company also licenses products for the Anne Klein brand and operates under private label brand names for various retailers [4]. - Its distribution network includes department stores, mass merchants, online retailers, and specialty retailers, alongside direct operations of retail stores and e-commerce websites [4].

Group 1 - The core viewpoint is that Steven Madden (SHOO.US) is expected to benefit from the shift in fashion trends towards more formal styles, leading Piper Sandler to upgrade its rating from "neutral" to "overweight" and raise the target price to $40 [1] - Piper Sandler's optimism is largely based on the potential of the Kurt Geiger brand, which is seen as unique with significant future growth potential despite its low market penetration in the U.S. [1] - The expectation is that Kurt Geiger could become a $1 billion annual sales brand, as consumer awareness is expected to increase significantly once they experience the brand [1] Group 2 - Crocs (CROX.US) has had its rating downgraded from "overweight" to "neutral" with a 21% reduction in target price due to changing consumer preferences towards more formal footwear and declining interest in the HEYDUDE line [1] - Crocs' sales of slippers are expected to stagnate in 2024, with a projected 12% decline in North America this year, while Birkenstock is gaining market share [2] - Interest in Crocs has decreased by 23% according to Google search trends, indicating a weakening growth momentum for the brand [2]

Group 1 - Piper Sandler upgraded Steven Madden from Neutral to Overweight and raised its price target from $25 to $40, resulting in a 3% increase in shares [1] - The firm noted that Steven Madden's fast inventory turnover had amplified tariff impacts more than its peers, but the company is now positioned for a stronger recovery [1] - Piper Sandler forecasts EBIT margins of 6% for this year, with potential to return to 11-12% over time [1] Group 2 - The firm highlighted the Kurt Geiger brand, expecting it to become a mid-teens margin business, which would provide further upside [2] - Piper Sandler estimated earnings power of more than $4 per share for Steven Madden, arguing that 2026 Street forecasts are too low [2]

Core Insights - Steven Madden, Ltd. (SHOO) reported second-quarter fiscal 2025 results, indicating ongoing tariff impacts on profitability despite solid consumer demand for the brand [1][10] - Order cancellations and shipment delays, particularly in mass and off-price channels, negatively affected performance, pushing deliveries into later periods and creating pressure on earnings [1][5] Financial Performance - Gross margin remained at 41.9%, an increase of 40 basis points year over year, but tariffs reduced profitability by approximately 230 basis points after supplier discounts [2][10] - Wholesale gross margin decreased to 31% from 33.1%, while direct-to-consumer margin fell to 61.3% from 64.3%, influenced by higher landed costs and the lower-margin Kurt Geiger concessions business [2][10] - Operating income dropped to 4% of revenues compared to over 10% a year ago, leading to adjusted quarterly earnings declining 64.9% from $0.57 to $0.20 per share [2][10] Supply Chain Management - To address supply-chain pressures, the company diversified production to countries like Vietnam and Cambodia while shifting some orders back to China to ensure timely delivery and maintain quality [3][10] - Global trade uncertainty continues to inflate inventory costs and lengthen transit times, making sourcing diversification an ongoing process [3] Pricing Strategy - The company implemented average price increases of about 10% to counter rising costs, with early consumer acceptance being encouraging in categories like boots and dress shoes [4] - Price-sensitive items, such as sandals and sneakers, remain under pressure, and the full impact of pricing strategies is expected to be clearer in the fall season [4] Future Outlook - Management anticipates margin pressure to persist through the fiscal third quarter, with potential easing later in the year if trade conditions stabilize [5] - Until the tariff environment becomes clearer, EBIT margins are unlikely to return to historical double-digit levels, but the company remains confident in brand strength and consumer demand for new assortments [5] Stock Performance and Valuation - Shares of the company have gained 13.6% in the past six months, outperforming the industry's 5.5% growth [8] - From a valuation perspective, Steven Madden is trading at a forward 12-month price-to-sales ratio of 0.87X, significantly lower than the industry average of 1.96X [9]

PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Steven Madden reported a Q2 2025 net loss of $39.5 million despite 6.8% revenue growth to $559.0 million, driven by the Kurt Geiger acquisition which also increased operating expenses and expanded the balance sheet [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1.90 billion and liabilities to $1.03 billion by June 30, 2025, primarily due to the Kurt Geiger acquisition and related long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$1,895,078** | **$1,411,771** | **+34.2%** | | Cash and cash equivalents | $111,714 | $189,924 | -41.2% | | Inventories | $436,968 | $257,625 | +69.6% | | Goodwill | $266,602 | $183,737 | +45.1% | | Intangibles, net | $282,372 | $113,432 | +148.9% | | **Total Liabilities** | **$1,031,715** | **$535,774** | **+92.6%** | | Long-term debt | $287,865 | $0 | N/A | | **Total Stockholders' Equity** | **$863,363** | **$875,997** | **-1.4%** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue grew 6.8% to $559.0 million, but a 61.2% surge in operating expenses, mainly from the Kurt Geiger acquisition, led to a net loss of $39.5 million Q2 2025 vs. Q2 2024 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $559,000 | $523,553 | +6.8% | | Gross Profit | $226,027 | $217,129 | +4.1% | | (Loss) / Income from Operations | ($40,258) | $46,870 | N/A | | Net (Loss) / Income Attributable to Steven Madden, Ltd. | ($39,477) | $35,376 | N/A | | Diluted (Loss) / Income Per Share | ($0.56) | $0.49 | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, cash from operations decreased to $47.6 million, while investing activities used $377.9 million for the Kurt Geiger acquisition, resulting in a $78.2 million net decrease in cash Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $47,635 | $93,801 | | Net cash used in investing activities | ($377,856) | ($10,185) | | Net cash provided by / (used in) financing activities | $249,466 | ($105,508) | | **Net decrease in cash and cash equivalents** | **($78,210)** | **($24,183)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the May 6, 2025 Kurt Geiger acquisition for $405.3 million, funded by new debt, which contributed $88.0 million in revenue and a $45.7 million net loss, alongside mixed segment performance and other financial disclosures - On May 6, 2025, the Company acquired Kurt Geiger (MATL) for a preliminary purchase price of **$405.3 million**, funded by a combination of debt and cash. This acquisition is intended to expand the company's international footprint and direct-to-consumer business[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - For the period from the acquisition date to June 30, 2025, the acquired Kurt Geiger business contributed **$88.0 million** in revenue and a net loss of **$45.7 million**[32](index=32&type=chunk) - In connection with the acquisition, the company entered into a new credit agreement on May 6, 2025, which includes a **$300 million** term loan facility and a **$250 million** revolving credit facility[101](index=101&type=chunk) Q2 2025 Revenue by Segment (in thousands) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Wholesale Footwear | $220,139 | $237,024 | -7.1% | | Wholesale Accessories/Apparel | $140,449 | $148,276 | -5.3% | | Direct-to-Consumer | $195,502 | $136,409 | +43.3% | | Licensing | $2,910 | $1,844 | +57.8% | | **Total** | **$559,000** | **$523,553** | **+6.8%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 6.8% Q2 revenue increase to $559.0 million to the Kurt Geiger acquisition, which offset organic declines, resulting in a $39.5 million net loss due to acquisition costs and a reduced gross margin, while maintaining strong liquidity [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q2 2025 consolidated revenue rose 6.8% to $559.0 million due to the Kurt Geiger acquisition, but gross margin declined and operating expenses surged, leading to an operating loss, with Direct-to-Consumer growth offsetting wholesale declines - Q2 2025 total revenue increased **6.8%** YoY, primarily due to incremental revenue from the newly acquired Kurt Geiger business, which was partially offset by declines in the organic business attributed to tariff-related impacts[147](index=147&type=chunk) - Operating expenses increased significantly to **47.2%** of revenue in Q2 2025, up from **31.3%** in Q2 2024. This was mainly due to acquisition-related costs, including **$38.8 million** in compensation expense from reallocated seller proceeds[149](index=149&type=chunk) - Direct-to-Consumer segment revenue increased **43.3%** in Q2 2025, driven by the Kurt Geiger acquisition. In contrast, Wholesale Footwear and Wholesale Accessories/Apparel revenues decreased by **7.1%** and **5.3%** respectively, primarily due to tariff impacts[152](index=152&type=chunk)[156](index=156&type=chunk)[160](index=160&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and a new credit facility, with $111.9 million in cash and equivalents as of June 30, 2025, following the Kurt Geiger acquisition funded by a $300 million term loan and $250 million revolving facility - As of June 30, 2025, the company had **$111.9 million** in cash, cash equivalents, and short-term investments, and working capital of **$501.2 million**[189](index=189&type=chunk)[190](index=190&type=chunk) - To fund the Kurt Geiger acquisition, the company entered into a new credit agreement on May 6, 2025, with a **$300 million** term loan and a **$250 million** revolving credit facility[192](index=192&type=chunk) - Subsequent to the quarter end, on August 1, 2025, the company made a voluntary early repayment of **$7.5 million** on its term loan facility[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces increased interest rate risk from its new $300 million variable-rate term loan and heightened foreign currency risk, particularly with the British pound, following the Kurt Geiger acquisition, partially mitigated by forward contracts - The company has **$300 million** in outstanding borrowings under a variable-rate term loan. A hypothetical **100 basis point** increase in interest rates would increase annual interest expense by approximately **$3.0 million**[207](index=207&type=chunk) - The acquisition of UK-based Kurt Geiger significantly increases the company's exposure to foreign currency exchange rate risk, particularly fluctuations in the British pound sterling (GBP)[210](index=210&type=chunk) - As of June 30, 2025, the company held forward foreign exchange contracts with notional amounts totaling **$112.9 million** to mitigate currency risk[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, with the assessment of internal control over financial reporting excluding the recently acquired Kurt Geiger business due to timing - Management evaluated and concluded that the company's disclosure controls and procedures were **effective** as of the end of the quarter[216](index=216&type=chunk) - The assessment of internal control over financial reporting excluded the Kurt Geiger business, which was acquired on May 6, 2025. The acquired business constituted **30.8%** of consolidated total assets as of June 30, 2025[218](index=218&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are expected to materially impact its financial condition or results of operations - The company is involved in various legal proceedings but does not expect them to have a **material impact** on its financial condition, results of operations, or liquidity[222](index=222&type=chunk) [Item 1A. Risk Factors](index=52&type=page&id=ITEM%201A.%20Risk%20Factors) New and heightened risks include challenges integrating Kurt Geiger, increased financial leverage, potential impairment of goodwill and intangibles, and ongoing adverse impacts from tariffs on imported goods - The company faces significant risks related to the integration of the newly acquired Kurt Geiger business, including operational, technological, and cultural challenges[224](index=224&type=chunk)[225](index=225&type=chunk) - Increased indebtedness from financing the acquisition could limit operational flexibility and exposes the company to interest rate risk on its new variable-rate debt[227](index=227&type=chunk)[228](index=228&type=chunk) - The acquisition resulted in over **$200 million** in goodwill and identifiable intangible assets, which are subject to impairment risk if the business underperforms[230](index=230&type=chunk)[231](index=231&type=chunk) - Tariffs on goods imported into the U.S. have had, and may continue to have, a **material adverse impact** on the business by increasing costs and reducing margins[233](index=233&type=chunk)[234](index=234&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the share repurchase program in Q2 2025, with $85.3 million remaining available, though 18,000 shares were acquired for employee tax obligations - No shares were repurchased under the Share Repurchase Program in the three months ended June 30, 2025[237](index=237&type=chunk) - As of June 30, 2025, approximately **$85.3 million** remained available for future repurchases under the authorized program[237](index=237&type=chunk) [Item 5. Other Information](index=55&type=section&id=ITEM%205.%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter[238](index=238&type=chunk) [Item 6. Exhibits](index=56&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Amended and Restated Credit Agreement, CEO and CFO certifications, and iXBRL data files

Core Insights - Steven Madden, Ltd. (SHOO) reported second-quarter 2025 results with total revenues increasing but earnings decreasing compared to the previous year, leading to a 9.3% drop in share price [1][4][9] - The company is facing challenges due to new tariffs on imported goods but remains focused on long-term growth and consumer engagement [2][3] Financial Performance - Adjusted quarterly earnings were 20 cents per share, missing the Zacks Consensus Estimate of 24 cents, and down 64.9% from 57 cents in the prior year [4][6] - Total revenues rose 6.8% year over year to $559 million, but missed the consensus estimate of $576 million; net sales grew 6.6% to $556.1 million, while licensing fee income increased 57.8% to $2.9 million [4][9] - Adjusted gross profit increased 7.8% to $234.3 million, surpassing estimates, with an adjusted gross margin of 41.9%, up 40 basis points [5] Operating Expenses and Margins - Adjusted operating expenses rose 30% year over year to $211.6 million, increasing as a percentage of revenues to 37.9%, up 680 basis points [5] - Adjusted operating income fell 58.5% to $22.6 million, with an adjusted operating margin decreasing 640 basis points to 4% [6] Segment Performance - Wholesale revenues declined 6.4% to $360.6 million, with a 12.8% drop excluding Kurt Geiger; footwear revenues decreased 7.1% and accessories and apparel revenues dropped 5.3% [7][9] - Direct-to-consumer revenues increased 43.3% to $195.5 million, but declined 3% when excluding Kurt Geiger, with a gross margin of 61.3%, down 300 basis points [8] Financial Health - At the end of the quarter, the company had cash and cash equivalents of $111.7 million and stockholders' equity of $863.4 million [12] - The company did not repurchase any shares during the quarter and announced a cash dividend of 21 cents per share [12] Guidance and Market Context - Due to macroeconomic uncertainty from new tariffs, the company has withheld financial guidance for 2025 [13] - Over the past month, SHOO shares gained 14.2%, compared to the industry’s growth of 33.6% [13]

Group 1 - The investment strategy focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective [1] - The approach does not prioritize market-driven dynamics or future price action, instead emphasizing long-term earnings power and competitive dynamics [1] - The majority of recommendations will be holds, indicating a cautious approach to market conditions and a belief that only a small fraction of companies are suitable for buying at any given time [1] Group 2 - The articles aim to provide important information for future investors and introduce skepticism in a generally bullish market [1] - There is a clear distinction made between the author's opinions and professional investment advice, emphasizing the need for readers to conduct their own due diligence [2][3]

Company Performance - Steven Madden, Ltd. (SHOO) reported a sharp revenue decline in Q2, leading to a decrease in profitability and a drop in stock price [1] - The footwear company's performance has raised concerns among investors regarding its financial health [1] Market Reaction - The stock experienced a decline on the day of the earnings report, reflecting market apprehension about the company's future prospects [1]

Core Viewpoint - Steven Madden's Q2 2025 earnings report highlighted challenges from new tariffs on U.S. imports and the integration of the Kurt Geiger acquisition, leading to operational headwinds and margin compression, with management withdrawing guidance for fiscal 2025 due to macroeconomic uncertainty [1][18]. Financial Performance - Adjusted earnings per share were $0.20, a significant decline of 64.9% from $0.57 in Q2 2024 [2] - GAAP revenue increased by 6.8% year-over-year to $559.0 million, but fell short of analyst estimates of $578.94 million [2] - Non-GAAP net income dropped to $13.9 million, down 66.3% from $41.2 million in Q2 2024 [2][8] - Gross profit margin was 41.9%, slightly up from 41.5% in Q2 2024, while operating margin fell sharply to 4.0% from 10.4% [2][7] Business Overview - Steven Madden is known for its trend-focused footwear, handbags, and accessories, with a diverse brand portfolio including Steve Madden, Dolce Vita, Betsey Johnson, and Kurt Geiger [3] - The company emphasizes creative design, rapid market response, and a mix of wholesale and direct-to-consumer channels [3] Strategic Focus - Recent priorities include accelerating product design, expanding international markets, and managing a multi-channel distribution network [4] - Key success factors involve staying close to consumer trends, maintaining supply chain flexibility, and managing costs [4] Acquisition Impact - The acquisition of Kurt Geiger contributed to top-line growth but introduced complexities, particularly due to its reliance on China for sourcing [6][12] - Management believes Kurt Geiger will be a long-term growth driver despite the challenges posed by tariffs [6] Revenue Breakdown - Wholesale revenue declined by 6.4%, with a 12.8% drop when excluding Kurt Geiger; DTC revenue surged 43.3% including Kurt Geiger, but organic DTC revenue fell 3% [5] - Licensing fee income grew 57.8% to $2.9 million year-over-year [5] Margin and Cost Analysis - Gross profit margin compressed due to rising input costs and tariffs, with wholesale adjusted gross margin falling to 30.9% from 33.1% in Q2 2024 [7] - Operating expenses rose to 47.2% of revenue, driven by acquisition-related costs, with a reported loss from operations of $40.3 million [8] Supply Chain Adjustments - The company is shifting sourcing away from China, expecting U.S. imports from China to fall to the mid-teens percentage of total production by fall 2025 [14] - New sourcing locations include Vietnam, Cambodia, Mexico, and Brazil, which may increase costs due to higher FOB prices [14] Brand Strategy - The integration of Kurt Geiger into Steven Madden's portfolio is a major focus, leveraging international and U.S. retail networks to scale the brand [17] Outlook - Management did not provide financial guidance for fiscal 2025 due to ongoing uncertainty regarding tariffs and trade conditions [18]

Core Insights - Steven Madden reported revenue of $559 million for the quarter ended June 2025, reflecting a 6.8% increase year-over-year, but fell short of the Zacks Consensus Estimate of $575.92 million by 2.94% [1] - The company's EPS was $0.20, down from $0.57 in the same quarter last year, resulting in an EPS surprise of -16.67% against the consensus estimate of $0.24 [1] Revenue Breakdown - Total Revenue (Net Sales) was $556.09 million, compared to the estimated $573.58 million, marking a 6.6% increase year-over-year [4] - Total Wholesale revenue was $360.6 million, below the estimated $395.65 million, representing a decline of 6.4% year-over-year [4] - Direct-to-Consumer revenue reached $195.5 million, exceeding the estimate of $142.39 million, with a significant year-over-year increase of 43.3% [4] - Licensing fee income totaled $2.91 million, surpassing the estimated $2.36 million, and showed a year-over-year growth of 57.8% [4] Stock Performance - Over the past month, Steven Madden's shares returned +4.4%, outperforming the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]