Steven Madden(US:SHOO)2025-08-05 14:28PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements 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 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 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 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 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 business283031 - 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 million32 - 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 facility101 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 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 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 impacts147 - 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 proceeds149 - 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 impacts152156160 Liquidity and Capital Resources 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 million189190 - 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 facility192 - Subsequent to the quarter end, on August 1, 2025, the company made a voluntary early repayment of $7.5 million on its term loan facility196 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 million207 - 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 - As of June 30, 2025, the company held forward foreign exchange contracts with notional amounts totaling $112.9 million to mitigate currency risk212 Item 4. Controls and Procedures 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 quarter216 - 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, 2025218 PART II – OTHER INFORMATION Item 1. Legal Proceedings 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 liquidity222 Item 1A. Risk Factors 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 challenges224225 - Increased indebtedness from financing the acquisition could limit operational flexibility and exposes the company to interest rate risk on its new variable-rate debt227228 - The acquisition resulted in over $200 million in goodwill and identifiable intangible assets, which are subject to impairment risk if the business underperforms230231 - 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 margins233234 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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, 2025237 - As of June 30, 2025, approximately $85.3 million remained available for future repurchases under the authorized program237 Item 5. Other Information 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 quarter238 Item 6. Exhibits 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