Steven Madden(US:SHOO)2025-05-07 13:32Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was $553.5 million, a 0.2% increase compared to Q1 2024 [15] - Net income attributable to Steve Madden Limited for the quarter was $42.4 million, or $0.60 per diluted share, compared to $47 million, or $0.65 per diluted share in Q1 2024 [18] - Operating income for the quarter was $56.1 million, or 10.1% of revenue, compared to $61 million, or 11% of revenue in the comparable period in the prior year [17] Business Line Data and Key Metrics Changes - Wholesale revenue was $439.3 million, up 0.2% compared to Q1 2024, with wholesale footwear revenue at $296.1 million, a 0.2% increase [15] - Direct to consumer segment revenue declined 0.2% to $112.1 million, with a modest increase in digital business offset by a decline in brick and mortar [16] - Licensing royalty income was $2.2 million in the quarter, compared to $1.8 million in Q1 2024 [16] Market Data and Key Metrics Changes - The company expects to reduce production sourced from China to the mid-teens for fall 2025 and to the mid-single digits by spring 2026 [9] - The effective tax rate for the quarter was 24%, compared to 23.6% in Q1 2024 [18] Company Strategy and Development Direction - The acquisition of Kurt Geiger was highlighted as a significant investment, with an enterprise value of £289 million [11] - The company is focusing on shifting production out of China to countries like Vietnam, Cambodia, Mexico, and Brazil to mitigate tariff impacts [9][26] - The company plans to continue investing in marketing and strategic initiatives to position for long-term growth despite short-term challenges [10] Management Comments on Operating Environment and Future Outlook - Management acknowledged meaningful headwinds and uncertainty due to new tariffs on goods imported into the U.S. [8] - The company is confident in its ability to navigate current disruptions and return to profitable growth in the future [12] - Management noted that consumer demand remains stable but is being monitored closely due to recent declines in consumer confidence [69] Other Important Information - The company withdrew its 2025 financial guidance due to uncertainty related to new tariffs [20] - The company ended the quarter with $147.2 million in cash and no debt [18] Q&A Session Summary Question: How is the company handling orders from China? - The company is taking the majority of production that was far along in the process and negotiating price concessions to mitigate damage [24] Question: What countries is the company moving production to? - Production is being moved to countries like Cambodia, Vietnam, Mexico, and Brazil, with a focus on improving speed and reducing tariff risks [26] Question: What is the impact of tariffs on margins? - The company is accepting lower margins when moving production to other countries and is experiencing price pressure due to increased demand [31] Question: How is the company managing inventory levels? - Inventory is up 18%, primarily due to longer lead times and the decision to accelerate certain shipments ahead of tariff announcements [19][46] Question: What is the outlook for the handbag category? - The company expects continued pressure in the handbag category due to excess inventory and tariff disruptions [91] Question: What are the expectations for the Kirk Geiger acquisition? - The company is looking at a more conservative revenue expectation for both the existing business and Kirk Geiger due to current market conditions [102]