SHOO (2025 - Q2)

Release Date: Jul 30, 2025

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Stock Data provided by Financial Modeling Prep

Surprises

Revenue Increase

+6.8%

$559 million

In the second quarter, our consolidated revenue was $559 million, a 6.8% increase compared to the second quarter of 2024.

Organic Revenue Decline Excluding Kurt Geiger

-10%

Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 10%.

Wholesale Revenue Decline

-6.4%

$360.6 million

Our wholesale revenue was $360.6 million, down 6.4% compared to Q2 2024.

Direct-to-Consumer Revenue Increase

+43.3%

$195.5 million

In our direct-to-consumer segment, revenue increased 43.3% to $195.5 million.

Operating Income Decline

$22.6 million

Operating income for the quarter was $22.6 million or 4% of revenue compared to $54.5 million or 10.4% of revenue in the comparable period in the prior year.

Net Income Decline

$13.9 million

Net income attributable to Steve Madden Limited for the quarter was $13.9 million or $0.20 per diluted share compared to $41.2 million or $0.57 per diluted share in the second quarter of 2024.

Consolidated Revenue Increase

$559 million

In the second quarter, our consolidated revenue was $559 million, a 6.8% increase compared to the second quarter of 2024.

Organic Revenue Decline Excluding Kurt Geiger

-10%

Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 10%.

Wholesale Revenue Decline

$360.6 million

Our wholesale revenue was $360.6 million, down 6.4% compared to Q2 2024.

Direct-to-Consumer Revenue Increase

$195.5 million

In our direct-to-consumer segment, revenue increased 43.3% to $195.5 million.

Gross Margin Pressure from Tariffs

230 basis points

The impact of tariffs, net of supplier discounts resulted in 230 basis points of pressure to gross margin.

Operating Income Decline

$22.6 million

Operating income for the quarter was $22.6 million or 4% of revenue compared to $54.5 million or 10.4% of revenue in the comparable period in the prior year.

Net Income Decline

$13.9 million

Net income attributable to Steve Madden Limited for the quarter was $13.9 million or $0.20 per diluted share compared to $41.2 million or $0.57 per diluted share in the second quarter of 2024.

Inventory Increase

$437 million

Inventory was $437 million compared to $241.6 million in the second quarter of 2024.

Impact Quotes

Our team's primary focus remains on positioning the company for long-term growth by executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing.

Our team's primary focus remains on positioning the company for long-term growth by executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing.

We have moved certain production for fall back to China, where we felt it would be difficult to ensure on-time delivery, appropriate product quality and/or reasonable pricing in an alternative country.

We have moved certain production for fall back to China, where we felt it would be difficult to ensure on-time delivery, appropriate product quality and/or reasonable pricing in an alternative country.

So far, we've been pleased overall with consumer acceptance of the price increases, particularly on new fashion, but it's still early, and we will continue to monitor the elasticity of demand carefully and react accordingly.

So far, we've been pleased overall with consumer acceptance of the price increases, particularly on new fashion, but it's still early, and we will continue to monitor the elasticity of demand carefully and react accordingly.

The Kurt Geiger London brand continues to have strong momentum, and we are more confident than ever in its potential to be a significant driver of growth for the company in the years ahead.

The Kurt Geiger London brand continues to have strong momentum, and we are more confident than ever in its potential to be a significant driver of growth for the company in the years ahead.

The impact of tariffs, net of supplier discounts resulted in 230 basis points of pressure to gross margin.

Due to the continued uncertainty related to the impact of new tariffs on goods imported into the United States, we will not be providing 2025 financial guidance at this time.

Nearly 95% of the wholesale revenue shortfall in the organic business versus last year came from off-price and mass channels.

Nearly 95% of the wholesale revenue shortfall in the organic business versus last year came from off-price and mass channels.

The Nordstrom anniversary event went very well for us. We're really excited about what we saw there. I think it was the best sell-through performance that we've had in that event in a number of years.

The Nordstrom anniversary event went very well for us. We're really excited about what we saw there. I think it was the best sell-through performance that we've had in that event in a number of years.

We continue to see nice performance in our international business. Excluding Kurt Geiger, it was up about 8% in revenue or about 10% constant currency in the quarter.

We continue to see nice performance in our international business. Excluding Kurt Geiger, it was up about 8% in revenue or about 10% constant currency in the quarter.

Notable Topics Discussed

  • Tariffs on Chinese imports reduced from 145% to 30%, affecting sourcing decisions.
  • Approximately 30% of U.S. imports now sourced from China, down from 71% in 2024.
  • Tariffs caused a 230 basis point pressure on gross margins in Q2, with expectations of continued impact into Q3.
  • Shipment delays, order cancellations, and increased landed costs due to tariffs significantly disrupted sales and margins.
  • Moving production to alternative countries like Brazil and Vietnam, but facing uncertainty due to tariffs.
  • Sourcing diversification efforts are ongoing, with a focus on reducing reliance on China.
  • Kurt Geiger's international growth, especially in Europe, Mexico, and Asia, is a key part of long-term strategy.
  • Current China sourcing for Kurt Geiger is around 60%, down from 80% previously, with plans to expand retail and wholesale presence in the U.S. and globally.
  • Acquired Kurt Geiger on May 6, 2025, with strong momentum and double-digit digital growth, especially in the U.S.
  • Retail stores in the U.S. are performing well, with 6 stores opened and positive consumer response.
  • International expansion in Europe, Mexico, and Asia is a major growth driver.
  • Margins are expected to be lower initially due to tariffs, but long-term profitability and double-digit margins are targeted.
  • Average price increases of about 10% are being implemented, with positive consumer acceptance, especially on new fashion items.
  • Price increases are more challenging in categories like sandals and fashion sneakers.
  • Monitoring demand elasticity carefully, with full impact to be clearer after fall deliveries and competitive responses.
  • Investing in top and mid-funnel marketing channels like YouTube, Pinterest, and Snapchat to boost brand awareness among Gen Z and millennials.
  • Using viral campaigns, such as Steve Madden’s appearance on a fashion podcast, to increase brand relevance and cultural connection.
  • Completed ERP and POS system upgrades in Q2, which caused temporary disruptions estimated at 110 basis points in DTC margins.
  • Post-implementation, no further system-related impacts are expected, with some improvement seen in July.
  • Betsey Johnson outperformed other brands in the quarter.
  • Boot category experienced a strong upswing, with tall shaft Western and Moto boots performing well, especially in DTC channels.
  • Fashion sneakers saw some softening, contrasting with the boot category’s growth.
  • International markets, excluding Kurt Geiger, grew about 8% in revenue, with high single-digit growth expected for the year.
  • Growth was observed across EMEA, APAC, and the Americas, with strong demand in Europe, Mexico, and untapped Asian markets.
  • Excluding Kurt Geiger, inventory increased by only 1%, with higher levels due to tariffs and longer transit times from diversification efforts.
  • Inventory turnover remains high, around 10 times annually, indicating efficient inventory management.
  • No specific guidance due to tariff uncertainty, but a long-term goal to return to double-digit EBIT margins.
  • Margin recovery depends on tariff resolution, demand elasticity, and successful execution of growth strategies in Kurt Geiger and core brands.

Key Insights:

  • Board approved a quarterly dividend of $0.21 per share payable September 23, 2025.
  • CapEx was $7.7 million in the quarter, and no share repurchases were made.
  • CapEx was $7.7 million in the quarter; no share repurchases were made.
  • Consolidated revenue for Q2 2025 was $559 million, up 6.8% compared to Q2 2024, but excluding Kurt Geiger, revenue decreased 10%.
  • Direct-to-consumer (DTC) revenue increased 43.3% to $195.5 million, but excluding Kurt Geiger, DTC revenue decreased 3%.
  • Direct-to-consumer (DTC) revenue increased 43.3% to $195.5 million; excluding Kurt Geiger, DTC revenue decreased 3%.
  • Gross margin was 41.9%, slightly up from 41.5% in prior year, with tariff impacts causing 230 basis points of pressure offset by a higher mix of DTC business.
  • Gross margin was 41.9%, slightly up from 41.5% in Q2 2024, pressured by tariffs by 230 basis points but offset by a higher mix of DTC business and Kurt Geiger acquisition.
  • Inventory increased to $437 million from $241.6 million in Q2 2024; excluding Kurt Geiger, inventory rose 1%.
  • Inventory increased to $437 million from $241.6 million, with a 1% increase excluding Kurt Geiger.
  • Net debt stood at $181.6 million with $293.5 million debt and $111.9 million cash and equivalents.
  • Net income attributable to Steve Madden was $13.9 million or $0.20 per diluted share, compared to $41.2 million or $0.57 per share in Q2 2024.
  • Net income attributable to Steve Madden was $13.9 million or $0.20 per diluted share, compared to $41.2 million or $0.57 per share last year.
  • Operating expenses increased to $211.6 million (37.9% of revenue) from $162.8 million (31.1%), driven partly by Kurt Geiger acquisition.
  • Operating expenses rose to $211.6 million (37.9% of revenue) from $162.8 million (31.1% of revenue) in Q2 2024.
  • Operating income was $22.6 million (4% of revenue), down from $54.5 million (10.4%) in prior year.
  • Operating income was $22.6 million (4% of revenue), down from $54.5 million (10.4%) in the prior year period.
  • Wholesale footwear revenue declined 7.1% (11.7% excluding Kurt Geiger), and wholesale accessories/apparel revenue declined 5.3% (14.6% excluding Kurt Geiger).
  • Wholesale gross margin declined to 31% from 33.1%, and DTC gross margin declined to 61.3% from 64.3%, impacted by tariffs and Kurt Geiger's lower margin.
  • Wholesale gross margin declined to 31% from 33.1% due to tariff pressures; DTC gross margin was 61.3%, down from 64.3%, impacted by Kurt Geiger's lower margin and tariffs.
  • Wholesale revenue was $360.6 million, down 6.4% year-over-year; excluding Kurt Geiger, wholesale revenue declined 12.8%.
  • Wholesale revenue was $360.6 million, down 6.4% year-over-year, or down 12.8% excluding Kurt Geiger.
  • Due to uncertainty from new tariffs on imports, the company is not providing 2025 financial guidance at this time.
  • Due to uncertainty from new tariffs on imports, the company is not providing full-year 2025 financial guidance at this time.
  • Long-term growth is expected to be driven by core brand strength, marketing initiatives, and the integration and expansion of Kurt Geiger.
  • Long-term growth is expected to be driven by core strengths, brand power, and the Kurt Geiger acquisition.
  • Management cannot provide a timeframe for returning to double-digit EBIT margins until tariff impacts are clearer.
  • Management expects continued pressure on wholesale channels, especially mass and off-price segments, but anticipates gradual recovery.
  • Management expects continued tariff-related disruption in Q3, with hopes for improvement by Q4 but no specific guidance provided.
  • Price increases averaging about 10% are being implemented selectively, with early positive consumer acceptance especially on new fashion items.
  • Price increases averaging around 10% are being implemented selectively, with early positive consumer acceptance, especially on new fashion items.
  • The company is monitoring demand elasticity carefully and will adjust pricing as needed.
  • The company will monitor demand elasticity closely and adjust pricing and sourcing strategies accordingly.
  • The tariff-related disruption is expected to continue impacting Q3, with hopes for improvement by Q4.
  • Certain production was moved back to China due to tariff reduction from 145% to 30% and challenges in alternative sourcing countries.
  • Certain production was moved back to China to ensure on-time delivery, quality, and pricing.
  • Design teams delivered strong assortments, especially in dress shoes and boots, with positive consumer response across DTC and wholesale.
  • ERP and POS system implementations in DTC completed, causing temporary disruptions but now behind the company.
  • ERP and POS system implementations in DTC were completed in Q2 but caused some temporary disruptions.
  • Expansion of Steve Madden apparel footprint in premium distribution with consistent product flow and growth.
  • Integration of Kurt Geiger acquisition is progressing smoothly, focusing on revenue synergies and cost savings in freight and logistics.
  • Kurt Geiger is expanding internationally through Steve Madden's network and growing Steve Madden's presence in the U.K. via Kurt Geiger.
  • Marketing spend is being rebalanced to increase investment in top and mid-funnel tactics and diversify channels including YouTube, Pinterest, and Snapchat.
  • Plans to expand Kurt Geiger internationally through Steve Madden's network and grow Steve Madden in the U.K. through Kurt Geiger's platform.
  • Price increases have been implemented selectively across wholesale and consumer channels.
  • Price increases have been selectively applied to wholesale customers and consumers, with good acceptance on new fashion.
  • Sourcing diversification efforts continue, with a shift from 71% China sourcing in 2024 to approximately 30% for fall 2025 due to tariff reductions.
  • Sourcing diversification efforts continue, with fall 2025 expected to source about 30% of U.S. imports from China, down from 71% in 2024.
  • Steve Madden's appearance on a fashion podcast sparked viral interest on TikTok, boosting brand awareness among Gen Z and millennials.
  • Steve Madden's design teams delivered strong assortments, with positive consumer response in dress shoes and boots categories.
  • The company ended Q2 with 392 company-operated stores, including 98 outlets, 7 e-commerce websites, and 130 international concessions.
  • The Nordstrom anniversary event showed very strong performance, indicating positive momentum.
  • CEO Ed Rosenfeld emphasized the challenging quarter due to tariffs but highlighted swift adaptation through sourcing diversification and price increases.
  • CEO Ed Rosenfeld emphasized the challenging quarter due to tariffs but highlighted swift adaptation through sourcing diversification and supplier negotiations.
  • CEO Rosenfeld noted that consumer spending is holding up reasonably well despite a tough environment.
  • CFO Zine Mazouzi highlighted the strong financial foundation despite challenges, including manageable net debt and controlled CapEx.
  • CFO Zine Mazouzi highlighted the strong financial foundation despite challenges, with a robust balance sheet and controlled CapEx.
  • Ed acknowledged the complexity and uncertainty of tariff impacts and refrained from providing specific margin or revenue guidance.
  • Ed expressed confidence in Kurt Geiger's potential as a significant growth driver and praised the strong team and brand momentum.
  • Ed noted the importance of retail stores and marketing investment to build Kurt Geiger brand awareness in the U.S.
  • Ed Rosenfeld expressed confidence in Kurt Geiger's growth potential, describing it as a significant new growth engine with strong momentum in the U.S. and internationally.
  • Management is cautiously optimistic about consumer acceptance of price increases, especially in trending categories like dress shoes and boots.
  • Management is focused on deepening consumer connections through compelling product and effective marketing to drive long-term growth.
  • Management noted the importance of retail stores and marketing investment to build Kurt Geiger brand awareness in the U.S.
  • Management refrained from providing specific margin or revenue guidance due to tariff uncertainties but committed to updating when clarity improves.
  • Management stressed the importance of monitoring demand elasticity and adjusting strategies as market conditions evolve.
  • The company is cautious but optimistic about consumer acceptance of price increases, especially in trending categories like dress shoes and boots.
  • The company is focused on deepening consumer connections through compelling product and effective marketing to drive long-term growth.
  • Betsey Johnson brand outperformed other key brands and channels in the quarter.
  • Boots category performed strongly in spring and summer, with increased consumer interest, especially in DTC channels.
  • Boots category performed well in spring and summer, with increased consumer interest, especially in DTC channels.
  • Brazil sourcing plans are uncertain due to potential 50% tariffs; company is monitoring tariff developments by country.
  • Consumer acceptance of price increases has been positive so far, especially on new fashion items like dress shoes and boots; less so in sandals and fashion sneakers.
  • DTC system implementations caused about 110 basis points of comp disruption; tariff-related inventory issues caused about 160 basis points impact.
  • DTC system implementations caused about 110 basis points of comp impact; tariff disruptions added about 160 basis points impact.
  • E-commerce outperformed brick-and-mortar stores in the DTC segment excluding Kurt Geiger.
  • International business excluding Kurt Geiger grew about 8% in revenue (10% constant currency), with growth across EMEA, APAC, and Americas ex-U.S.
  • International business excluding Kurt Geiger grew about 8% in revenue, with growth across EMEA, APAC, and Americas ex-U.S.
  • Inventory increases are driven by tariffs inflating value and longer transit times from diversified sourcing countries like Cambodia.
  • Inventory increases are partly due to tariffs inflating value and longer transit times from diversified sourcing countries like Cambodia.
  • Kurt Geiger is on a growth trajectory with strong digital momentum, successful new U.S. retail stores, and international expansion opportunities.
  • Kurt Geiger is on track to be a $1 billion brand with strong digital growth, retail store performance, and international expansion opportunities.
  • Kurt Geiger's margin profile is expected to be pressured this year due to tariffs but targeted to reach double-digit EBIT margins over time.
  • Management expects continued tariff impact in Q3 with potential improvement in Q4 but no specific guidance provided.
  • Management is monitoring tariff impacts on sourcing countries like Brazil and Mexico, awaiting clarity on tariff rates before further shifts.
  • Mass channel customers canceled orders due to high tariffs, especially when tariffs were at 145%.
  • Price increases averaging 10% are being accepted well by consumers on new fashion items, especially dress shoes and boots; less price elasticity in sandals and fashion sneakers.
  • Steve Madden apparel showed revenue growth and expanding distribution in premium channels despite the tough environment.
  • Steve Madden apparel showed revenue growth and expanding footprint in premium distribution.
  • Tariff-related disruption is expected to continue impacting Q3, with some improvement hoped for in Q4 but no specific guidance given.
  • Tariff-related disruptions and shipment delays caused order cancellations and pushed deliveries to later periods, impacting revenue and gross margin.
  • Wholesale order cancellations and revenue shortfalls were concentrated in the mass and off-price channels, accounting for about 95% of the organic shortfall.
  • Wholesale order cancellations and revenue shortfalls were concentrated in the mass and off-price channels, accounting for approximately 95% of the organic wholesale revenue decline.
  • Inventory turns about 10 times per year in wholesale business, making tariff timing impactful on P&L.
  • Kurt Geiger had EBIT margins of about 9.3% prior to acquisition; margins expected to be pressured this year due to tariffs but targeted to be double-digit over time.
  • Kurt Geiger sourcing from China is currently in the low 60% range, down from about 80% previously.
  • Kurt Geiger's U.S. retail stores (6 opened) are performing well and contributing to brand growth.
  • Licensing royalty income increased to $2.9 million from $1.8 million year-over-year.
  • Longer transit times from new sourcing countries and overall disruption increased inventory in transit.
  • Tariff rates on Chinese imports were temporarily reduced from 145% to 30%, influencing sourcing decisions.
  • The Board declared a quarterly dividend of $0.21 per share payable in September 2025.
  • The company completed the acquisition of Kurt Geiger on May 6, 2025.
  • The company did not repurchase any shares in Q2 2025.
  • The company is cautious about Brazil as a sourcing country due to potential 50% tariffs.
  • The company is expanding marketing investments in digital platforms to increase brand heat and cultural relevance.
  • The company is not repurchasing shares currently but declared a dividend.
  • The company operates 392 company-operated brick-and-mortar stores including 98 outlets and 7 e-commerce websites.
  • The Nordstrom anniversary sale was the best sell-through performance in years, providing optimism for fall season.
  • Kurt Geiger's U.S. retail stores are performing ahead of expectations with strong 4-wall profitability.
  • Price increases are style-level and category-specific rather than uniform across all products.
  • Steve Madden is leveraging viral marketing opportunities, including Steve's appearance on a fashion podcast that sparked TikTok interest.
  • The company expects outlet store opportunities for Kurt Geiger to be profitable over time.
  • The company is balancing short-term tariff mitigation with long-term growth strategies.
  • The company is cautious about the evolving tariff environment and is prepared to react to changes in tariff rates by country.
  • The company is focused on expanding Kurt Geiger distribution thoughtfully in Europe, Mexico, Central and South America, and Asia.
  • The company is focusing on expanding Kurt Geiger's distribution thoughtfully in Europe, Mexico, Central and South America, and Asia.
  • The company is increasing marketing investments in digital platforms favored by Gen Z and millennials, such as TikTok, YouTube, Pinterest, and Snapchat.
  • The company is leveraging viral social media exposure to enhance brand awareness among younger consumers.
  • The company is monitoring consumer demand elasticity closely to adjust pricing and product strategies.
  • The company is monitoring consumer spending environment as 'okay' but not robust for fashion.
  • The ERP and POS system implementations in DTC caused temporary operational disruptions but are now complete with no expected future impact.
  • The fashion sneaker category has softened recently, while boots have gained consumer traction.
  • The fashion sneaker category has softened while boots have gained consumer traction.
  • Wholesale footwear revenue declined 7.1% year-over-year, and wholesale accessories and apparel revenue declined 5.3%.
Complete Transcript:
SHOO:2025 - Q2
Operator:
Good day, and thank you for standing by. Welcome to the Second Quarter 2025 Steve Madden Limited Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead. Danielle
Danielle Marie McCoy:
Thanks, Stephen, and good morning, everyone. Thank you for joining our Second Quarter 2025 Earnings Call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings that we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis, unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer; and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I'll turn the call over to you, Ed. Ed?
Edward R. Rosenfeld:
Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's second quarter 2025 results. As anticipated, the second quarter was extremely challenging, driven largely by the impact of new tariffs on goods imported into the United States. As we highlighted on the last earnings call, our team moved swiftly to adapt to the changing landscape, sharply diversifying our sourcing out of China, negotiating meaningful discounts with suppliers and implementing surgical price increases. That said, wholesale customers canceled orders and reduced open-to-buys, shipment delays led to lost sales and pushed deliveries to later periods and organic gross margins declined due to the significant increase in our landed costs, resulting in substantial pressure on both revenue and earnings. Since the last call, our team has remained focused on mitigating near-term impacts while positioning the company for long-term growth. We've continued to move forward with our sourcing diversification efforts, although due to the agreement reached with the Chinese government to temporarily reduce the new tariff on Chinese imports from 145% to 30%. We have moved certain production for fall back to China, where we felt it would be difficult to ensure on-time delivery, appropriate product quality and/or reasonable pricing in an alternative country. 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 to wholesale customers and consumers. So far, we've been pleased overall with consumer acceptance of the price increases, particularly on new fashion, but it's still early, and we will continue to monitor the elasticity of demand carefully and react accordingly. While these short-term mitigating actions are important, our team's primary focus remains on positioning the company for long-term growth by executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing. Our design teams are delivering strong assortments, and we're seeing positive consumer response to new fashion offerings, particularly in the dress shoe and boot categories across both DTC and wholesale channels, including very strong performance in the Nordstrom anniversary event. And we are amplifying these assortments with marketing campaigns and initiatives designs to drive sustained brand heat and cultural relevance. In the flagship brand, we are capitalizing on Steve's appearance on fashion podcast, the Cutting Room Floor, which sparks viral interest on TikTok by continuing to rebalance our marketing spend across the funnel, increasing our investment in top and mid-funnel tactics and diversify our spend by channel, expanding our investment in YouTube, Pinterest and Snapchat. And these efforts are driving results with measurable increases in awareness and consideration for the brand with our key Gen Z and millennial consumers. Another key priority is integrating our new acquisition, Kurt Geiger, which closed May 6. The Kurt Geiger London brand continues to have strong momentum, and we are more confident than ever in its potential to be a significant driver of growth for the company in the years ahead. The integration is proceeding smoothly, and our teams are making strong progress on work streams related to revenue synergies, including expanding Kurt Geiger in international markets through the Steve Madden network and growing Steve Madden in the U.K. through the Kurt Geiger platform as well as cost savings opportunities in areas like freight and logistics. So in sum, our financial performance in the second quarter was not up to our usual standards as we grappled with the impact of tariffs, and we know the path forward will continue to be bumpy in the near term. But as we look out further, we believe our core strengths, powerful brands, a robust balance sheet and a proven business model supplemented by a powerful new growth engine in Kurt Geiger, positioned us well to navigate the current disruption and deliver sustainable growth over time. And now I'll turn it over to Zine to review our second quarter 2025 financial results in more detail.
Zine Mazouzi:
Thanks, Ed, and good morning, everyone. In the second quarter, our consolidated revenue was $559 million, a 6.8% increase compared to the second quarter of 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 10%. Our wholesale revenue was $360.6 million, down 6.4% compared to Q2 2024. Excluding Kurt Geiger, our wholesale revenue decreased 12.8%. Wholesale footwear revenue was $220.1 million, a 7.1% decrease from the comparable period in 2024 or down 11.7%, excluding Kurt Geiger. Wholesale accessories and apparel revenue was $140.4 million, down 5.3% compared to the second quarter in the prior year or down 14.6%, excluding Kurt Geiger. The majority of the organic decline in wholesale revenue can be attributed to order cancellations, lost orders due to delivery delays or pricing, shipments moved out to the following quarter and other impacts related to the disruption from tariffs. In our direct-to-consumer segment, revenue increased 43.3% to $195.5 million. Excluding Kurt Geiger, our direct-to-consumer revenue decreased 3% with declines in both the brick-and-mortar and e-commerce channels. We saw negative impact to DTC revenue in the quarter from canceled and delayed deliveries due to tariff-related disruption as well as systems migration we completed in the quarter. Looking ahead to the third quarter, we expect the continued impact from tariff- related disruption, but the systems implementations are behind us and should not have a further impact. We ended the quarter with 392 company-operated brick-and-mortar retail stores, including 98 outlets as well as 7 e-commerce websites and 130 company-operated concessions in international market. This includes 73 company-operated brick-and-mortar retail stores, including 27 outlets as well as 2 e-commerce websites and 72 concessions related to Kurt Geiger. Our licensing royalty income was $2.9 million in the quarter compared to $1.8 million in the second quarter of 2024. Consolidated gross margin was 41.9% in the quarter compared to 41.5% in the comparable period of 2024. The impact of tariffs, net of supplier discounts resulted in 230 basis points of pressure to gross margin. This was offset by a significantly greater mix of higher-margin DTC business compared to the prior year due mostly to the acquisition of Kurt Geiger and a mix shift to DTC in the existing business. Wholesale gross margin was 31% compared to 33.1% in the second quarter of 2024, due primarily to pressure from tariffs. Direct-to-consumer gross margin was 61.3% compared to 64.3% in the comparable period in 2024, due primarily to the addition of Kurt Geiger, which had lower DTC margin in the quarter than the existing business, driven by the concessions business as well as pressure from tariffs. Operating expenses were $211.6 million or 37.9% of revenue in the quarter compared to $162.8 million or 31.1% of revenue in the second quarter of 2024. Operating income for the quarter was $22.6 million or 4% of revenue compared to $54.5 million or 10.4% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 25.6% compared to 23.4% in the second quarter of 2024. Finally, net income attributable to Steve Madden Limited for the quarter was $13.9 million or $0.20 per diluted share compared to $41.2 million or $0.57 per diluted share in the second quarter of 2024. Moving to the balance sheet. Our financial foundation remains strong. As of June 30, 2025, we had $293.5 million of outstanding debt and $111.9 million in cash, cash equivalents and short-term investments for a net debt of $181.6 million. Inventory was $437 million compared to $241.6 million in the second quarter of 2024. Excluding Kurt Geiger, inventory increased 1% compared to the same period last year. Our CapEx in the second quarter was $7.7 million. And during the second quarter, the company did not repurchase any shares of its common stock in the open market. The company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on September 23, 2025, to stockholders of record as of the close of business on September 12, 2025. Due to the continued uncertainty related to the impact of new tariffs on goods imported into the United States, we will not be providing 2025 financial guidance at this time. Now I would like to turn the call over to the operator for questions. Stephen?
Operator:
[Operator Instructions] Our first question comes from the line of Paul Lejuez of Citi.
Paul Lawrence Lejuez:
Curious if you can talk about which channels of wholesale where you see the significant order cancellations that impacted 2Q? And how has that ordering behavior changed as we've gotten a little bit more clarity on the tariff front? I think you mentioned some shipment timing. So if you can maybe just talk about that a little bit more. And then also on the gross margin pressure in the core business in the second quarter that you saw as a result of higher tariffs. Can you frame maybe what you expect in 3Q and 4Q relative to the 2Q pressure?
Edward R. Rosenfeld:
Okay. Great. So in terms of the channels that saw the pressure from the tariff-related disruption, it was really very concentrated in the value price channels. So specifically the mass channel and the off-price channel. And I can tell you actually that nearly -- if you look at the wholesale revenue shortfall in the organic business versus last year, approximately 95% of that shortfall came from off-price and mass. So I think that really illustrates the story there. In terms of how that's looking going forward, I still -- I think we're going to see continued pressure on those channels going forward. It should get better. There was a complete pause for a period there, and both of those channels are now once again taking in goods and placing forward orders, but you will see an impact in Q3 as well. In terms of the gross margin pressure from tariffs, again, we articulated that was about 230 basis points. That's not the gross. That's the net after we got the supplier discounts for Q2. Look, we're not providing guidance going forward. So we're not going to be specific there. But I think that you should still see -- you're still going to see a significant impact certainly in Q3. Hopefully, by Q4, that number will start to get smaller.
Paul Lawrence Lejuez:
Does 3Q mark the weakest point in terms of the tax impact on gross margin at 3Q?
Edward R. Rosenfeld:
Again, I'm not going to try to get specific and there's so many moving parts here. But certainly, I don't think it will get better.
Operator:
Our next question comes from the line of Aubrey Tianello of BNP Paribas.
Aubrey Leland Tianello:
I wanted to go back to your comments on price. And if you could maybe comment a little bit on just the consumer response to price increases, what you're seeing in terms of elasticity maybe by product category. And I think last quarter, you mentioned price increases on average about 10%. Is that still the way we should think about it given the change in tariffs?
Edward R. Rosenfeld:
Yes. We are still looking at average price increases of 10%. Again, that's not a one-size fits-all number. We're looking at this on a style level. But in average, we're looking at prices up about 10%. So far, I think we've been pretty pleased with the consumer acceptance of the price increases that we flowed through. It's been pretty much what we expected that we've seen very little resistance on new fashion items and particularly in the categories that are really trending like dress shoes and our summer boots that have been performing very well for us. And I would say where we think there's less ability to take price was in the sandal category and in fashion sneakers. But I do want to caution you that it's still early because we started to layer in these prices in May, but on new deliveries in May, now that's really at the end of the season and then so you -- and then you go into sort of a markdown period. So we really won't know -- I think we'll know a lot more, I should say, once we get fully into the fall season, and you've got all the new deliveries in fall at the higher prices. And also, you'll have our competitors will have their products out there, as we believe, higher prices, and we'll see what the consumer does then.
Aubrey Leland Tianello:
Got it. And then maybe on Kurt Geiger, you called it out as being on a journey to being a $1 billion brand. Now that you've owned it for a few months, can you talk about some of the things you've learned and how you're thinking about that path to potentially getting to $1 billion in revenue from Kurt Geiger?
Edward R. Rosenfeld:
Yes. Look, I mean, I think that we we feel better than ever after having spent more time really digging into the business here and working with the team. It's a very strong team, and we just believe that the brand has tremendous runway. The U.S. business has been such an incredible growth story for them over the last several years, but it's just scratching the surface of what it can be. And frankly, there's still a relatively low brand awareness. So one of the things that we really have to do in the coming years in the United States is to build that brand awareness. I think that retail stores will be an important part of that. They've opened now 6 retail stores in the U.S. that are performing very well. So I think that will -- and they're beautiful stores and really communicate -- it's really the best expression of what the brand is about, and I think communicate to the consumer what the Kurt Geiger lifestyle is about. So that will be a part of the story. Obviously, there will be some marketing investment. I think we'll focus on full-price stores initially, but clearly, I think there's an outlet store opportunity that should be big and profitable over time. They've got a very good wholesale business in the United States with limited partners and they've built a big business with just a handful of partners. And so I think there's some nice opportunity to grow that as well. And then, of course, the digital business is -- I probably should have said that first, because that's extremely important and has extremely strong momentum. And so we're going to continue to fuel that. So that's the U.S. story. I think -- but there's also a huge opportunity around the world. Because, obviously, they've got a very strong business in their home market of the U.K. but relatively early stages of their growth in the rest of the world. And we've talked about Europe as being a huge opportunity for them. They're positioned in the key distribution points, image accounts in many -- most of the key European markets, and the brand is seeing very strong demand. So we know it resonates. But there's a big opportunity now to expand the distribution thoughtfully, of course, and really start to build that business. And then we've talked about they're having a lot of success in Mexico, for instance, but there's tremendous opportunity in the rest of Central and South America, I should say. And then Asia is really untapped. So a lot of just tons of runway really all over the world with this brand.
Operator:
Our next question comes from the line of Marni Shapiro of The Retail Tracker.
Marni Shapiro:
The Retail Tracker:
I was wondering if you could just talk about a couple of quick things. The apparel business, you have -- I know it's a smaller part of the business, but you have an improving footprint in several stores and the product flow has been consistent and very good. So I'm curious if you could talk a little bit about that. And then also just touching back on the boot business. You had a strong boot business in spring. I was curious if it held through summer. And as we sort of turn the corner to back-to-school, what are you seeing as far as boots versus sneakers and just your instinct as to where the business is going for back-to-school? .
Edward R. Rosenfeld:
Sure. Yes. No, I appreciate your comments about Steve Madden apparel because we're proud of the progress that we're making there. That was one of the few businesses that was up for us in the quarter. So even in this tough environment, we had a nice revenue growth in Steve Madden apparel. As you pointed out, we've been slowly expanding the distribution there and keeping it in premium distribution, regular price distribution, but expanding the footprint there, expanding our assortments within existing doors. And most importantly, the product is selling through, and the team is doing a great job. So excited about the path that we're on there. And then you asked about boots. And yes, that was really a highlight for us -- has been a highlight for us this spring and summer is the performance of boots. It's really not such a seasonal category anymore. Girls are wearing a lot of boots with dresses and shorts and skirts and at this time of year. And I think we've really nailed that. It's a bigger play for us in our DTC channels than in wholesale because some of the wholesale partners are -- haven't fully gotten on board with the way consumers are shopping right now. But it's been very successful for us. These are primarily tall shaft boots, Western Moto, et cetera, have been very good for us. And so we feel good about boots going forward. And to your point, we've seen more energy in that category. That's been on the upswing, whereas the fashion sneaker category has softened a bit.
Marni Shapiro:
The Retail Tracker:
That makes sense. And then could you just follow up? I think you said it was the off-price and the mass business that was slowing. And I think you mentioned very briefly -- or one of you guys mentioned briefly some cancellations. Were the cancellations coming out of the mass area? And is something -- is it their customer? Or is it just their caution or price increases that they can take? I'm curious what they're saying and seeing versus what the department stores are seeing.
Edward R. Rosenfeld:
I would say there were cancellations across channels, although, again, the biggest issues were in mass and off-price. And particularly in Q2, I just want to point out with the mass channel because we do that -- a lot of the business that we do in those channels on an FOB basis where our wholesale -- where our customers are bringing the goods in and they are the important record and therefore, they are responsible for the tariff. Certainly, when we were looking at 145% tariffs out of China, they were canceling a lot of merchandise. So that was a lot of what you're seeing there.
Operator:
Our next question comes from the line of Sam Poser of Williams Trading.
Samuel Marc Poser:
I just want to follow up on that last question. You talked about the 95% of the downdraft was from those channels. Were there channels that were up in the quarter? And if so, what within wholesale or brands that were up like Steve Madden, the core Steve Madden business or Dolce and so on?
Edward R. Rosenfeld:
I think Betsey Johnson was up in the quarter. We're really outperforming there. The team is doing a great job with the product there. Other than that, I think the key brands and channels were down in the quarter.
Samuel Marc Poser:
And moving on to the sourcing. What's -- you were moving product to -- you were moving some product to Brazil, and now Brazil looks like an absolute headache. So how are you thinking about the shifting of sourcing -- because I thought Brazil and Mexico were going to become a much larger part, but now it looks like a 50% tariff might put a [indiscernible] on some of that in Brazil. So I was just wondering where you're going with that.
Edward R. Rosenfeld:
Yes. To your point, we were focused on moving a lot of product to Brazil. We're going to have to wait and see what happens. I think that really goes not just for Brazil, but for a lot of the countries that we work with. So we've tried to create a more diversified sourcing footprint. And -- but there's obviously a lot of uncertainty still about where the ultimate tariff rates will land by country. And so we're going to have to wait and see what happens and then react accordingly. That's all we can do.
Samuel Marc Poser:
And when we -- I know you're not guiding, but when we look -- it sounds to me like from a wholesale perspective, excluding Kurt Geiger, it looks like -- I mean, it looks like the back half of the year, Q3 will look similar to Q2 and maybe slightly less worse and then there could be -- I mean, how are you sort of thinking about it? Just -- I mean, I know you don't want to give us guidance, but how are you sort of thinking about the responses that you're seeing and so on right now from more on the wholesale side of things?
Edward R. Rosenfeld:
Well, yes, we're not giving guidance, but I think you should assume that there will be continued impact from the tariff-related disruption. I think that's all as much as we're going to say about that.
Samuel Marc Poser:
And have you seen it hit the consumers yet? Or is this more like nervousness from the -- from your wholesale partners ahead of what they're nervous about with consumers, if that makes sense?
Edward R. Rosenfeld:
Yes. Overall, I think the consumer is basically hanging in there. I would say it's not the most robust consumer spending environment for fashion I've ever seen, but it's okay.
Samuel Marc Poser:
And then lastly, within your DTC business ex Kurt Geiger, can you talk about maybe a variance between what the store comps were and your e-commerce comps were in the DTC business? Were store -- did the stores outperform e-commerce -- or did e-commerce from a year-over-year outperform...
Edward R. Rosenfeld:
E-commerce was quite a bit better than stores.
Samuel Marc Poser:
For the core Steve Madden, excluding Kurt Geiger?
Edward R. Rosenfeld:
Correct.
Operator:
Our next question comes from the line of Corey Tarlowe of Jefferies.
Corey Tarlowe:
Just had a question for you on inventory. Is there any way to dimensionalize what was AUR versus units and the Kurt Geiger acquisition, just so we can have a bit of a more color and dimensionalization of what that up significantly number, what that number kind of dissects into?
Edward R. Rosenfeld:
Yes. So look, if you back out Kurt Geiger, the inventory was only up 1% year-over -- versus the Q2 of last year. And keep in mind, there's a couple of things impacting that. One is the tariffs that we pay, those inflate the inventory value or increase the inventory value. And then also, there's an impact to -- in transit from longer transit times. And there's really 2 pieces to that. One is as we diversify the transit times for our sourcing, the transit times from Cambodia, for instance, are longer than the transit times from China. And then also there -- just because of the overall disruption, there's sort of apples-to-apples increase in transit times. So China to China is a little bit -- it's about 3 days longer and so does Cambodia than it was a year ago. So those are really the 2 reasons. If you back those out, our inventory year-over-year, excluding Kurk Geiger, is really right in line with the revenue decline.
Corey Tarlowe:
Okay. That's really helpful. I was wondering, could we also just run through a similar exercise with the OpEx as well because that was also up quite substantially, and it would be good to get a bit more color as to kind of what drove that.
Edward R. Rosenfeld:
Yes. Excluding Kurt Geiger, OpEx was up a little less than 3%.
Operator:
Our next question comes from the line of Janine Stichter of BTIG.
Ethan Siavosh Saghi:
You have Ethan Saghi on for Janine. For my first question, I was just wondering on Kurk Geiger. Could you provide some more color on how the brand has performed since the acquisition closed as well as the current margin profile for the brand and where China sourcing sits today compared to the 80% number you gave last call?
Edward R. Rosenfeld:
Yes, the brand continues to perform. As I mentioned, we continue to see very strong growth, double-digit -- strong double-digit growth in digital. Particularly in the U.S., very strong performance and momentum there. As I mentioned, the new stores that they've opened are performing extremely well, ahead of where we expected them to be and on track to drive very strong 4-wall profitability. And then the brand is comping positively in the home market of the U.K. and its existing footprint. So continue to feel very good about the momentum there. In terms of the margin profile, again, look, we're not providing guidance, but what we've said, just to remind you is that last year, the business had EBIT margins of about 9.3%. That was in the year prior to our acquisition of them. We do expect that number to come down a bit this year because of pressure from tariffs. But obviously, over time, we think we can -- this will be double digit and then profitability.
Ethan Siavosh Saghi:
Got it. And then on the China sourcing, just where it sits today compared to the 80% number you gave last call.
Edward R. Rosenfeld:
Yes. I am sorry. Yes. So I think that they're in the low 60s currently out of China.
Operator:
Our next question comes from the line of Anna Andreeva of Piper Sandler.
Anna A. Andreeva:
To Zine. Just a follow-up on DTC on systems implementation. Did you say what that impact was to the second quarter? And curious what are you guys seeing in the DTC business quarter-to-date? And then to Ed, you've talked about getting back to double-digit margins in the past. Can you just talk about how we should think about that path of a margin recapture and just any time frame that you guys could provide?
Edward R. Rosenfeld:
Sure. Yes. Yes, I'll take those. So in DTC, yes, we did do -- we completed an ERP implementation in our DTC business and also a new POS in Q2. And I think the team did a great job. But as always, there's going to be a little bit of disruption. There were certain related to sort of moving inventory around, and we were limited in what we could do from an allocation standpoint for a period, couldn't do the fulfilling e-commerce orders from stores from a certain point, what we call send sales where we take an order in a store and send from another store. So anyway, we were limited for a period of time. We estimate that hit us about 110 basis points of comp in the quarter, something like that. And then we also had inventory disruptions from tariffs in the quarter. That was probably another 160 basis points or so, because we canceled orders or had delayed orders because of the tariff disruption. So that did impact DTC in the quarter. But the good news is the system stuff is completely behind us, and we don't expect that to impact us going forward. We have seen a slight improvement in July versus Q2 in terms of comp quarter-to-date. In terms of getting the overall margins, EBIT margins back to double digits, look, there's no way we can provide any kind of time frames right now with all the uncertainty until we understand what the tariff regime is and can react to that, we can't provide any color around that. But as soon as we know what the rules of the game are, we'll be happy to tell you the path and the timing.
Anna A. Andreeva:
Okay. That's very helpful. And just as a follow-up, do you think KG should be a higher-margin business over time than the core business?
Edward R. Rosenfeld:
I certainly think there's an opportunity for it to be, yes.
Operator:
Our next question comes from the line of Tom Nikic of Needham.
Matthew Julius Quigley:
This is Matt Quigley on for Tom. Can you just talk a little bit more about how the international business performed in the quarter, excluding Kurt Geiger you've seen any differences in performance by region?
Edward R. Rosenfeld:
Yes. We continue to see nice performance in our international business. Excluding Kurk Geiger, it was up about 8% in revenue or about 10% constant currency in the quarter. And we're on track to have high single-digit growth for the year in dollars, again, double digits in constant currency. And it's really -- we're seeing growth across all of the 3 primary regions. So EMEA, APAC and Americas ex U.S., all on track to see that kind of high single-digit type growth in U.S. dollars.
Operator:
Our next question comes from the line of Dana Telsey of Telsey Advisory Group.
Dana Lauren Telsey:
As you think about current trends Z, how was the Nordstrom anniversary sale? Is there any indicators from that as I've always thought about it as a read forward to potential holiday and what you're seeing? And then when you think about the trends at Kurt Geiger and what you're seeing sell-through there, how is it different or the same of what you're seeing with your brands? And then a follow-up.
Edward R. Rosenfeld:
Sure. Yes. The Nordstrom anniversary event went very well for us. We're really excited about what we saw there. I think it was the best sell-through performance that we've had in that event in a number of years. And so that gives us a lot of optimism going forward about fall and the products that our design team is creating. In terms of KG -- excuse me, Kurt Geiger sell-through, again, continues to be very strong, as we said, overall. And it's just a brand with very good momentum. But we're seeing good strong sell-through in Steve Madden and Dolce Vita and other brands as well.
Dana Lauren Telsey:
Got it. And then on Kurt Geiger, the small portion that is in the U.S., are they -- are you increasing the prices a similar amount to what you're increasing for Steve Madden? And when does distribution of Kurt Geiger in any format, how do you see that expanding in the U.S. in terms of timing-wise? Is it this year or next year?
Edward R. Rosenfeld:
Yes. In terms of price increases, it's pretty similar to what we're doing in our other brands, maybe a little bit more. In Kurt Geiger I think we have a little bit more room there. And so we'll probably test going a little bit higher there. And then in terms of distribution, I think in the U.S., the big difference would be just opening more of our own retail stores over the -- in the coming years.
Operator:
Our next question comes from the line of Jay Sole of UBS.
Unidentified Analyst:
This is Natalie [indiscernible] on for Jay Sole. I wanted to ask about the amount of inventory you have on hand, especially for inventory coming from non-China. I mean do you have enough to last you through Q3 before the higher rates we're seeing from Cambodia, Vietnam and other countries go into effect? Or when would you expect the higher rate to kind of start flowing through the P&L?
Edward R. Rosenfeld:
Yes. Most of what we're going to deliver in Q3 would not be impacted. But as you know, we turn our inventory very quickly. And particularly in our wholesale business, we turn our inventory in and around 10 times a year. And so we do feel these impacts from tariffs when they're implemented earlier than others because we're bringing goods in and shipping them right out. So let's just keep that in mind.
Operator:
I am showing no further questions at this time. I would now like to turn it back to Ed for closing remarks.
Edward R. Rosenfeld:
Okay. Well, thanks so much for joining us today. We hope you all have a great day, and we look forward to speaking with you on the next call.
Operator:
All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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