Steven Madden (SHOO 1.40%), a New York-based footwear, accessories, and apparel company, released its second quarter 2025 earnings on July 30, 2025. The headline news from the quarter was the impact of new tariffs on U.S. imports and the integration of the Kurt Geiger acquisition. Adjusted earnings per share were $0.20, while GAAP revenue rose 6.8% to $559.0 million compared to Q2 2024, below analyst projections of $578.94 million (GAAP). While the reported top-line benefited from the Kurt Geiger acquisition, the underlying business showed contraction. Management withdrew guidance for fiscal 2025, citing heightened macroeconomic uncertainty and tariff-related disruption. Overall, the period reflected operational headwinds, margin compression, and limited earnings visibility.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.20 | $0.20 | $0.57 | (64.9%) |
| Revenue (GAAP) | $559.0 million | $578.94 million | $523.6 million | 6.8% |
| Gross Profit Margin (Non-GAAP) | 41.9% | 41.5% | 0.4 pp | |
| Operating Margin (Non-GAAP) | 4.0% | 10.4% | (6.4 pp) | |
| Net Income (Non-GAAP) | $13.9 million | $41.2 million | (66.3%) |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
Steven Madden is recognized for its trend-focused footwear, handbags, and accessories. The company builds its brand through creative design, rapid response to market trends, and a mix of wholesale and direct-to-consumer (DTC) channels. With a broad portfolio including Steve Madden, Dolce Vita, Betsey Johnson, and now Kurt Geiger, it serves a wide audience with products ranging from casual shoes to fashion accessories.
Recent priorities have included accelerating product design, expanding international markets, and managing a multi-channel distribution network. Key success factors are staying close to consumer trends, maintaining supply chain flexibility, and managing costs. The company emphasizes speed-to-market, robust brand recognition, and diversified sourcing as important levers for competitiveness, especially amid industry change.
Quarter in Review: Revenue, Margins, and Major Events
The company's reported GAAP revenue increased 6.8% year-over-year, primarily due to the acquisition of Kurt Geiger, a footwear and accessories brand. Excluding this new business, both wholesale and DTC sales actually declined year-over-year. Wholesale revenue dropped 6.4%, and when excluding Kurt Geiger, the decline was 12.8%. In DTC, revenue surged 43.3% including Kurt Geiger, but organic DTC revenue fell 3% year-over-year, with both physical stores and e-commerce channels down year over year. Licensing fee income, which comes from royalties paid by third parties for using company brands, grew 57.8% to $2.9 million (GAAP) year-over-year.
The acquisition of Kurt Geiger was a material event for the quarter, contributing to top-line growth but bringing new complexities. Kurt Geiger’s sourcing is more dependent on China, which increases exposure to recent U.S. tariffs. Management reported that the integration of the brand is on track, and they believe Kurt Geiger will become an important driver of growth over the long term.
Gross profit margin, a measure of profitability after production costs but before operating expenses, compressed amid rising input costs and tariffs. Adjusted gross margin was 41.9%, but wholesale adjusted gross margin contracted to 30.9% from 33.1% versus Q2 2024, and DTC adjusted gross margin dropped to 61.3% from 64.3% in Q2 2024. Management directly attributed margin compression to new tariffs on U.S.-bound goods and integration costs from acquisitions. Operating margin narrowed sharply, falling to 4.0% on a non-GAAP basis from 10.4% in Q2 2024.
Higher costs, especially those linked to the Kurt Geiger deal, pushed operating expenses up as a percentage of revenue. On a reported (GAAP) basis, operating expenses rose to 47.2% of revenue, including $38.8 million in acquisition compensation expenses and other non-recurring items. Even after these adjustments, adjusted operating expenses jumped to 37.9% of revenue, up from 31.1% in Q2 2024. On a GAAP basis, the company posted a loss from operations of $40.3 million. Non-GAAP net income fell sharply to $13.9 million, compared to $41.2 million in Q2 2024.
The quarter involved significant adjustments and non-recurring charges. These included compensation and inventory step-ups linked to the Kurt Geiger acquisition, legal settlement costs, severance for workforce reductions, and gains on derivatives. Cash and cash equivalents at quarter-end were $111.9 million, with net debt at $181.6 million as of June 30, 2025, after financing the acquisition mainly with a $300 million term loan.
Operating Model: Products, Brands, and Distribution
The Steve Madden business is anchored by an ability to spot and develop emerging fashion trends through its design team and global sourcing network. Its footwear line includes heels, boots, sneakers, and sandals, while accessories feature handbags and small leather goods. Apparel items complement its core focus on footwear and bags.
Distribution is split between wholesale (sales to large department stores and specialty chains) and DTC channels. The company supplies department stores like Nordstrom and Dillard’s, operates 392 company-owned stores—including outlets and 130 international concessions—and runs seven branded e-commerce sites. The DTC model provides higher margins but is currently under pressure from declines in both in-store and online sales. Wholesale, which remains the largest channel, also showed contraction due to inventory delays, price pushback from partners, and shipment timing disruptions linked to supply chain migration.
The acquisition of Kurt Geiger adds a premium footwear and accessories brand with particular strength in digital and international sales. Kurt Geiger’s reliance on China for manufacturing (about 80% of its products in the most recent fiscal year) introduces new risks under the current tariff climate, but the business remains less exposed to U.S. tariffs than legacy Steve Madden brands, as only 35% of its revenue was in the U.S. in the most recent fiscal year.
Price increases are underway across select product lines, with management targeting an average 10% rise to offset tariff-related costs. The approach is nuanced, with decisions made style-by-style, reflecting anticipated consumer demand and willingness to pay. Early in the quarter, the company also took steps to accelerate inventory purchases ahead of tariff implementation, resulting in higher inventory levels.
Supply Chain, Sourcing Moves, and Margin Impact
To reduce tariff exposure, Steven Madden is pivoting its sourcing away from China at a rapid pace. For fall 2025, management expects U.S. imports from China (excluding Kurt Geiger) to fall to the mid-teens as a percentage of total production, from 71% in 2024. Sourcing is now shifting to Vietnam, Cambodia, Mexico, and Brazil. This move, while reducing tariff impacts, raises some costs. Sourcing in new countries often results in higher “free on board” (FOB) purchase prices—sometimes up 10% to 15% compared to China—due to increased demand for capacity and less efficient supply chains in those locations, according to management commentary in Q1 2025.
These supply chain changes come with operational challenges. Lead times for products sourced from Asia can be one to 1.5 months longer than before. This may delay some deliveries and affect the timing of reorders, especially for products reliant on fast fashion cycles. Management highlighted that production agility is being maintained, though certain categories, such as kids’ shoes, present more complexity. The company does not own its own factories, relying instead on a network of manufacturing partners. This model, while flexible, means close oversight is required to ensure quality and reliability during the geographic transition.
Wholesale partners—including department stores and large off-price retailers—are cautious about accepting price increases and may cancel orders if deliveries slip or costs rise. Some partners purchase goods “free on board” (meaning they import products directly and bear the tariff cost), and increased cancellations here have resulted. The company is trying to mitigate price increases with cost concessions from factories and by negotiating supplier discounts. Operating efficiency efforts, including a recent workforce reduction expected to provide $12 million in annual savings, are in place to limit cost escalation.
Brand strategy remains a major focus, particularly as Kurt Geiger is integrated into Steven Madden’s broader portfolio. The company aims to use its international and U.S. retail networks to scale Kurt Geiger, which has strong store, digital, and wholesale momentum in both the U.K. and U.S.
Outlook and Financial Guidance
Management did not provide financial guidance for fiscal 2025, citing ongoing uncertainty regarding tariffs and trade conditions. According to its statement: “Due to continued macroeconomic uncertainty related to the impact of new tariffs on goods imported into the United States, the company is not providing 2025 financial guidance at this time.”
No timeline was given for resuming guidance. No share buybacks occurred during the period. The company maintained its quarterly dividend at $0.21 per share, unchanged from Q2 2024.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
