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Date

Wednesday, Nov. 5, 2025, at 8:30 a.m. ET

Call participants

  • Chairman and Chief Executive Officer — Ed Rosenfeld
  • Chief Financial Officer and Executive Vice President of Operations — Zine Mazouzi
  • Director of Investor Relations — Danielle McCoy

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Risks

  • Tariff impact — Ed Rosenfeld said, "the third quarter was challenging, driven largely by the impact of new tariffs on goods imported into the United States," and noted wholesale customers cut back "meaningfully on orders," resulting in shipment delays and "substantial pressure on both revenue and earnings."
  • Gross margin pressure — Zine Mazouzi stated that, "Wholesale gross margin was 33.6%, compared to 35.5% in 2024, due to pressure from tariffs partially offset by our mitigation efforts."
  • Inventory build — Inventory rose to $476 million at the end of the fiscal third quarter ended September 30, 2025, up from $268.7 million in 2024; Excluding Kurt Geiger, inventory was $275.6 million, a 2.6% increase from the same period last year, indicating elevated working capital requirements following the acquisition and related disruption.
  • Outlet weakness — Ed Rosenfeld highlighted that in direct-to-consumer, "Outlet remains a drag," referencing major traffic declines at border outlet stores and heightened supply chain disruption.

Takeaways

  • Consolidated revenue -- $667.9 million, up 6.9% with the inclusion of Kurt Geiger (adjusted basis); Excluding Kurt Geiger, total revenue fell 14.8% (adjusted basis) due to wholesale order reductions, tariff-related shipment delays, and production disruption.
  • Wholesale revenue -- $442.7 million, down 10.7% from fiscal Q3 2024; Excluding Kurt Geiger, wholesale revenue decreased 19%, driven by cutbacks in wholesale footwear and accessories/apparel.
  • Direct-to-consumer revenue -- $221.5 million, a 76.6% increase from fiscal Q3 2024; Excluding Kurt Geiger, DTC revenue grew 1.5%, reflecting the segment’s comparative resilience.
  • Kurt Geiger performance -- Comparable sales increased by a "mid-teens" percentage, and the brand contributed to higher consolidated revenue and gross margin due to its DTC-heavy model.
  • Gross margin -- Consolidated gross margin (adjusted) rose to 43.4% from 41.6% in fiscal Q3 2024. DTC gross margin declined to 61.9% in fiscal Q3 2025 (adjusted); The addition of Kurt Geiger drove the consolidated increase despite softer margins at the segment level on an adjusted (non-GAAP) basis.
  • Operating income -- $46.3 million or 6.9% of revenue, compared to $84.854 million or 13.7% in fiscal Q3 2024, underscoring margin compression from tariffs and higher costs.
  • Net income and diluted EPS -- Net income attributable to Steven Madden was $30.4 million, or $0.43 per diluted share for fiscal Q3 2025, significantly lower than $64.8 million, or $0.91 for fiscal Q3 2024.
  • Store and digital footprint -- The company ended fiscal Q3 2025 with 397 company-operated brick-and-mortar stores, seven e-commerce websites, and 133 international concessions.
  • SG&A trend -- Operating expenses rose to $243.4 million, or 36.4% of revenue, up from $174.2 million, or 27.9%, in fiscal Q3 2024.
  • Dividend and capital allocation -- The Board declared a $0.21 per share cash dividend, scheduled for December 26, 2025, with no share repurchases during fiscal Q3 2025.
  • Fourth quarter guidance -- Management expects revenue to grow 27%-30% and earnings per share of $0.41-$0.46 on an adjusted basis for fiscal Q4 2025. Core business revenue (excluding Kurt Geiger) is guided to be down 2%-4% for fiscal Q4 2025, with increases in both wholesale footwear and DTC, while a decline in wholesale accessories and apparel offsets total core growth.

Summary

Steven Madden (SHOO +11.45%) reported mixed fiscal third quarter 2025 results (on an adjusted, non-GAAP basis), adversely impacted by steep new China tariffs that led to significant reductions in wholesale customer orders and shipment delays, compressing earnings and margins across most segments. Kurt Geiger’s strong performance, including mid-teens comp sales and a profitable DTC-heavy mix, materially offset core business declines and lifted reported revenue and consolidated gross margin. Management confirmed inventory and operating expenses rose due to acquisition effects and supply chain turbulence, but emphasized ongoing margin mitigation efforts, a recovering order pattern, and improved sell-throughs, particularly in the Steve Madden and Kurt Geiger brands.

  • Mainland supply chain disruptions forced the company to shift production out of China midstream, delaying shipments but also leading to more diversified sourcing as management remains cautious about overconcentration risk, despite tariff moderation.
  • CEO Rosenfeld stated, "Order patterns from our wholesale customers are normalizing, and we are mitigating a larger percentage of the gross margin pressure through strategic pricing actions and sourcing initiatives," signaling that the worst effects of past tariffs may be receding.
  • Direct-to-consumer performance accelerated in fiscal Q3 2025, with higher average unit retail (AUR) driven by increased pricing—mainly from tariffs—and a favorable product mix led by boots and fashion-forward categories.
  • While marketing investment is increasing, especially across digital and social channels, the company reported lower promotional activity in DTC channels year-over-year in fiscal Q4 2025 to date, reflecting improved trends and consumer response to new assortments.
  • Integration of Kurt Geiger remains on track, with expected revenue synergies in international markets and identified opportunities to improve margins through operating leverage and SG&A efficiencies in future periods.

Industry glossary

  • AUR: Average Unit Retail — the average selling price per item, a key metric in retail and brand margin analysis.
  • DTC: Direct-to-Consumer — sales through company-operated physical stores, digital platforms, and online channels, as distinct from wholesale distribution.
  • FOB: Free On Board — a standard international commercial term defining the point at which ownership and risk of goods transfer from seller to buyer, used for analyzing sourcing costs.
  • Concessions: Company-operated points of sale within larger retailers—such as department stores—under the brand’s direct control, distinct from traditional wholesale placements.

Full Conference Call Transcript

Danielle McCoy: Thanks, Britney, and good morning, everyone. Thank you for joining our third 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 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 are 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 Ed. Ed?

Ed Rosenfeld: Alright. Thanks, Danielle, and good morning, everyone. And thank you for joining us to review Steven Madden, Ltd.'s third quarter 2025 results. As anticipated, the third quarter was challenging, driven largely by the impact of new tariffs on goods imported into the United States. During the period in April and May, when new tariffs on Chinese imports reached 145%, wholesale customers cut back meaningfully on orders for the third quarter. We shifted large amounts of production out of China midstream, which led to shipment delays. These factors, together with the negative impact on gross margin from the significant increase in our landed costs, resulted in substantial pressure on both revenue and earnings in Q3.

Fortunately, while we will continue to see negative impacts from tariffs, we believe the worst is behind us. Order patterns from our wholesale customers are normalizing, and we are mitigating a larger percentage of the gross margin pressure through strategic pricing actions and sourcing initiatives. Most importantly, underlying consumer demand for our brands and products is strong. Despite the noise from tariffs, our team has stayed laser-focused on executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing. We are seeing those efforts pay off, particularly in our flagship Steve Madden brand.

Steve and his design team have created an outstanding fall product assortment that is resonating with consumers, enabling us to outperform the competition. Boots have been the standout, led by our casual tall shop styles. We are also seeing strong performance in dress shoes across various heel heights, as well as casuals like loafers, Mary Janes, and mules. Our marketing team is amplifying this great assortment with richer brand and product storytelling and increased investment across YouTube, TikTok, Snapchat, and Pinterest, which is driving measurable increases in awareness and conversion with our key Gen Z and millennial consumers. As a result, both wholesale sell-through and DTC sales trends for Steve Madden have accelerated meaningfully in recent months.

Our new brand, Kurt Geiger London, also has strong momentum, as consumers continue to respond to its bold, statement-making designs and eye-catching marketing, including the current campaign featuring Emily Ratajkowski. Comp sales for the brand were up mid-teens in the third quarter. Overall, the acquisition integration remains on track, and our teams continue to make progress on revenue synergies, including expanding Kurt Geiger in international markets through the Steve Madden network and growing Steve Madden in the UK through the Kurt Geiger platform, as well as cost savings opportunities in areas like freight and logistics. We are also making meaningful progress in advancing our other owned brands.

In Dolce Vita, we are building on the outstanding success we've had over the last several years in our U.S. footwear business by expanding into international markets and extending the brand into other categories like handbags. In Betsey Johnson, we are driving renewed cultural relevance for the brand with elevated talent partnerships, authentic community engagement, high-impact activations, and differentiated merchandise assortments. Both Dolce Vita and Betsey Johnson are on track to deliver revenue gains for the full year 2025, despite the headwinds from tariffs.

So in sum, while the third quarter was undeniably challenging and our financial results were not up to our usual standards, our team's disciplined execution of our strategy is strengthening our brands and building relevance and demand with consumers. We are confident that we will begin to see improved financial performance in the fourth quarter. Looking out further, we have the brands, business model, and strategy to drive sustainable revenue and earnings growth over the long term. And now, I'll turn it over to Zine to review our third quarter 2025 financial results in more detail.

Zine Mazouzi: Thanks, Ed, and good morning, everyone. In the third quarter, our consolidated revenue was $667.9 million, a 6.9% increase compared to 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 14.8%. Our wholesale revenue was $442.7 million, down 10.7% compared to Q3 2024. Excluding Kurt Geiger, our wholesale revenue decreased 19%. Wholesale footwear revenue was $266.5 million, a 10.9% decrease from the comparable period in 2024, or down 16.7% excluding Kurt Geiger. Wholesale accessories and apparel revenue was $176.2 million, down 10.3% compared to the third quarter in the prior year, or down 22.5% excluding Kurt Geiger.

The majority of the organic decline in wholesale revenue can be attributed to tariff-related order reductions, shipment delays, and other impacts related to the production disruption. In our direct-to-consumer segment, revenue increased 76.6% to $221.5 million. Excluding Kurt Geiger, our direct-to-consumer revenue increased 1.5%. We ended the quarter with 397 company-operated brick-and-mortar retail stores, including 99 outlets, as well as seven e-commerce websites and 133 company-operated concessions in international markets. Our license and royalty income was $3.7 million in the quarter, compared to $3.5 million in 2024.

Consolidated gross margin was 43.4% in the quarter, up from 41.6% in the comparable period of 2024, due to the impact of Kurt Geiger, which has a much higher mix of DTC than the legacy business and therefore has a higher overall gross margin. Wholesale gross margin was 33.6%, compared to 35.5% in 2024, due to pressure from tariffs partially offset by our mitigation efforts. Direct-to-consumer gross margin was 61.9%, compared to 64% in the comparable period in 2024, due to pressure from tariffs, as well as the addition of Kurt Geiger, which had lower DTC margin in the quarter than the existing business, driven by the concessions business.

Operating expenses were $243.4 million, or 36.4% of revenue, in the quarter compared to $174.2 million, or 27.9% of revenue, in 2024. Operating income for the quarter was $46.3 million, or 6.9% of revenue, compared to $84.854 million, or 13.7% of revenue, in the comparable period in the prior year. The effective tax rate for the quarter was 23.4%, compared to 23.8% in 2024. Finally, net income attributable to Steven Madden, Ltd. for the quarter was $30.4 million, or $0.43 per diluted share, compared to $64.8 million, or $0.91 per diluted share, in 2024. Moving to the balance sheet, our financial foundation remains strong.

As of September 30, 2025, we had $293.8 million of outstanding debt and $108.9 million of cash, cash equivalents, and short-term investments, for a net debt of $185 million. Inventory at the end of the quarter was $476 million, compared to $268.7 million in 2024. Excluding Kurt Geiger, inventory was $275.6 million, a 2.6% increase compared to the same period last year. Our CapEx in the third quarter was $11.6 million. During the third 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 December 26, 2025, to stockholders of record as of the close of business on December 15, 2025. Turning to our fourth quarter 2025 guidance, we expect revenue to increase 27% to 30% compared to 2024, and we expect earnings per share to be in the range of $0.41 to $0.46. Now I'd like to turn the call over to the operator for questions. Brittany?

Operator: Thank you. At this time, we will be conducting a question and answer session. As a reminder, to ask a question during the session, you will need to press 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. One moment while we compile our Q&A roster. Our first question comes from the line of Paul Lejuez with Citi. Your line is now open.

Kelly Crago: Hi there. This is Kelly on for Paul. Thanks for taking our question. Ed, you sounded pretty positive on what you're seeing on the fashion front. I'm just curious if you could talk more about how you're seeing the fashion develop this fall, how inventory levels in the wholesale channel are looking, and if that makes you think differently about the prospects for spring in the wholesale channel.

Ed Rosenfeld: Yeah. Good morning, Kelly. Yeah. We feel really good about what we've seen in fall. As we've seen a pretty meaningful acceleration in the trends, particularly in that core Steve Madden women's shoe business. And as I called out, I think the biggest driver has been boots. The boot assortment has just seen really strong performance. We called out that it's been led by the casual tall style. Those have been most important, but we've got a number of other things working in the boot and booty category as well. And then, you know, as I said earlier, it's not just about boots, because we've really seen a nice improvement in the dress shoe category.

That's obviously a category where we think we have a really strong competitive positioning. And our team has executed there. We're seeing strength in a number of different looks within the dress category. As I mentioned, really at various heel heights. And then casuals have been important too. So, you know, the fashion sneaker business has downshifted a bit, and we're picking that business up and then some in loafers and mules and Mary Janes. So, really feeling better than we have in some time about our fashion in Steve Madden and how it's performing. And yes, it does give us confidence going into spring.

I think we feel better than we did a few months ago about how spring is shaping up.

Kelly Crago: Great. Good to hear there. And then on the 4Q guide, well above sort of where consensus is looking, could you just break that down a bit for us in terms of what you're expecting from the core relative to the kind of down 15% you saw in the third quarter? Whether there's any shifts there or what's kind of driving any acceleration there and just what you would expect from Kurt Geiger in the fourth quarter.

Ed Rosenfeld: Sure. Yeah. So the core business, if you exclude Kurt Geiger, the revenue guide is essentially down two to down four. And that includes increases in both wholesale footwear and DTC, but still a decline offset by a decline in wholesale accessories and apparel. And then the Kurt Geiger contribution to revenue, I think at the low end, we're 182 and the high end, 187.

Kelly Crago: And any sense of sort of the breakdown when we think about our models and how much of that Kurt Geiger revenue is coming from the DTC channel in the fourth quarter and kind of impact that'll have on the grosses?

Ed Rosenfeld: Yeah. I mean, as you know, overall, Kurt Geiger is over 70% DTC. I think I'd have to, I mean, I want to say it's probably about $135 million, something like that in the fourth quarter coming from DTC. And obviously, it does have a meaningful mix impact to gross margin.

Kelly Crago: Got it. Thank you. Best of luck.

Ed Rosenfeld: Thank you.

Operator: Thank you so much. Our next question comes from the line of Anna Andreeva with Piper Sandler. Your line is now open.

Anna Andreeva: Great. Thank you so much. Good morning, and congrats. Nice results. A couple of questions. Are you seeing stock outs in the core Madden business just given everything that's going on with the supply chain? And how quickly can you chase? Great to hear about DTC, as XKG bouncing back to positive. And Ed, you mentioned a strong consumer response to a number of categories. But can you parse out how own e-com did versus brick and mortar? And how does the 10% reduction in China affect your thinking about sourcing?

Ed Rosenfeld: Sure. Yeah. Look. You know, are there certain styles where we've had stock outs? Yes. But generally speaking, we've been able to chase some of the additional demand in the core Steve Madden business. As you point out, because of the supply chain disruption, we don't have the ability to chase that we normally do and the speed that we normally do. But we did front load some merchandise here because we had good reads on these products. And so, we were in a position to fill some reorders, for instance, in Steve Madden. And then also, some of this product is coming or a good portion of it's coming from Mexico.

And obviously, that's where we have a lot of speed, and we can get back into reorders in thirty days. So that, I think, has been an okay story. In short, I think the second quarter was about e-commerce versus bricks and mortar. In both Steve Madden and Kurt Geiger, e-commerce is outpacing bricks and mortar, but we've seen, you know, we talked about the acceleration in Steve Madden. We've seen that in both e-com and stores in recent months. And then in terms of the final question, I think it was how does the China reduction impact our sourcing? It's obviously a welcome development to see the reduction in the tariff on China.

The way that this tariff regime looks right now, the math would tell us we would move quite a bit back to China. I think that we're going to be careful about that. We remain diversified. We don't want to get back into a position where we have 70 plus percent of our sourcing coming from one country. And so, we're going to continue to try to be diversified, but it obviously does give us greater flexibility to go back to China where we need to, to get the right deliveries and quality pricing speed, etcetera.

Anna Andreeva: Makes sense. No. Thank you for that. Just as a follow-up, we think about the KG rollout plan, as we look into next year, just any color you could provide how we should think about the store growth versus wholesale?

Ed Rosenfeld: Yeah. Well, we will be we're gonna, you know, I think not get into a lot of detail about '26 overall, because obviously be talking about that on next call. But I can tell you that we do plan to open a handful of stores in The United States next year for Kurt Geiger, and we're working on those plans now. But as we've talked about the initial six stores in The United States are performing very well. And so, we're getting pretty close on a handful of leases for next year. To continue that rollout. But there'll be some wholesale growth as well. Because I think that we have opportunity in both channels.

Anna Andreeva: Awesome. Thanks so much again.

Ed Rosenfeld: Thank you. Thank you so much.

Operator: Our next question comes from the line of Jay Sole with UBS. Your line is now open.

Jay Sole: Great. Thank you so much. I think I heard you say that Legacy's team management should be down, like, two to 4% with wholesale footwear. And DTC positive. Can you just talk about how you're thinking about 4Q for the entire wholesale footwear segment and then wholesale accessories? That'd be helpful. Thank you. Yeah. Wholesale including Kurt Geiger or excluding Kurt Geiger? I guess excluding Kurt Geiger. Excluding Kurt Geiger, wholesale footwear, we're looking at up two to up four and a half. And wholesale accessories and apparel, excluding Kurt Geiger, still down mid to high teens.

Jay Sole: Got it. Okay. Alright. So that makes sense. And then I guess, if you think about Kurt Geiger retail versus wholesale, I mean, how are you thinking about that? Well, we've provided the DTC revenue for Kurt Geiger, which I said I think is gonna be around a 135. And then the overall number for Kurt Geiger you know, 182 to 187 is the range. Okay. Understood. Got that. Thank you for clarifying that.

And then I guess just you know, you've asked this already a couple times, but just on your visibility, I mean, have you taken orders If you take orders earlier, for Kurt Geiger relative to the Steve Madden business, I mean, do you have visibility out into Q1 and Q2 yet for Kurt Geiger? Or is it going be on the same sort of quick turning supply chain FeedMadden is on? No. We do take orders earlier there. And so we'll we'll have more visibility over time there. And I guess any comment on sort of you know, the order book and how that's shaping up right now?

Well, I think we're gonna postpone all discussion of 26 until the until the next call. But look, Kurt Geiger brand continues to perform very well. And we're going see growth next year. Got it. Okay. Thank you so much.

Operator: Thank you so much. Our next question comes from the line of Aubrey Tianello with BNP Paribas. Your line is not open.

Aubrey Tianello: Good morning. Thanks for taking the questions. I wanted to ask on Kurt Geiger as well. Appreciate the comment on comp sales up mid-teens. Any color you can share on how Kurt Geiger performed by region?

Ed Rosenfeld: Yeah. It's growing in all the core regions. So they performed well in their home market of The UK. Continues to grow in The US, and we're also growing in Europe.

Aubrey Tianello: Got it. And then and you've talked about the revenue synergy potential there and one of the first pieces of that being, you know, plugging sort of plugging KG into your existing international markets I know it's still early, but, any updates on that in terms how that's progressing or when you could start seeing some of those benefits?

Ed Rosenfeld: Yeah. We've been hard at work on that. Kurt Geiger CEO just went on a world tour. I think he was he hit I wanna say, four continents over a three-week period meeting with all of our international teams and international partners. And so that work is underway, and I think we'll start to see some benefits in '26, probably more, you know, I think anything that will be meaningful to the numbers would be towards the back end of '26.

Aubrey Tianello: Got it. Thank you.

Operator: Thank you so much. Our next question comes from the line of Marni Shapiro with The Retail Tracker. Your line is now open.

Marni Shapiro: Your stores have really looked beautiful. Could we just focus a little bit on some of your smaller but growing areas? It sounds like the handbags business was a little bit disrupted. I'm guessing some late deliveries. I'm curious if you could just talk a little bit about what's going on there. And then can we get an update on the apparel business both at stores like Macy's, Bloomingdale's, Revolve as well as Madden NYC at Walmart.

Ed Rosenfeld: Yeah. Sure. In terms of handbags, look, that's obviously been a category, if we're talking about Steve Madden handbags that we have talked about all year was going to be down based on the excess inventory in the channel and some of the, you know, market pressures that we've experienced there. That was so we came into the year expecting that business to be down double digits. That's been exacerbated by all the tariff disruption. And everything that's happened with the supply chain and deliveries and everything else. So, we certainly felt a lot of pressure there. And we're going to continue to feel that in Q4. The good news is that the underlying demand, I think, is improving.

And we've seen good sell-throughs in fall so far improved over spring. We've got a number of things working there. I think that our online HOBOs shoulder bags, East West bags, anything in Browns Way. So we've got the trends. And they're performing. And so I do expect that business to stabilize as we come into spring 2026. And then, apparel, as you know, has been a nice growth story for us. And the focus, of course, is Steve Madden apparel. And that's a business that you know, we've been you know, the sell-throughs have been good, we've been steadily growing it in those key accounts that you mentioned Nordstrom, Dillard's, Bloomingdale's, Dock Doors and Macy's, Revolve, etcetera.

And then to your point, we also have the mass business that we do with Walmart under Madden NYC. And that's an important business for us as well. Although, our overall business in the mass channel has definitely felt some pressure from tariffs. And so we're, you know, we expect that to get better as we go into '26.

Marni Shapiro: And then can I just follow-up on what's going on the backside in the department stores? I'm sorry, in the shoe side in the department Are you seeing a big difference between the higher end stores that you sell, some of the better stores or guess, even more fashion stores. You have REVOLVE as a much more fashion store than some of the others versus stores that are a little bit less fashion or it's a across the board. Your sell-through has been good, and there's not a lot of price resistance to the Madden brand when the product is right.

Ed Rosenfeld: Yes. We've been really pleased so far with the lack of price resistance that we've seen particularly in the Madden brand. I think as we've said, we have a lot of very strong fashion right now. And I think overall, you look at the overall company, you know, the real takeaway on the price increases is that when you have real fashion-forward products or new fashion, the consumer is willing to pay. Where you have to be much more careful with price increases is on the core and more basic product. But the good news is that's you know, that's how we how we did it. That's how we planned it.

You know, As you know, we were very surgical about it. We didn't take a you know, a peanut butter approach where we spread the price increases evenly everywhere. We went style by style. And so, I think so far we've been pleased with how the price increases have been you know, have been received by the consumer.

Marni Shapiro: Fantastic. Thank you. The product really looks outstanding. Some of the best products out there in the market. Best of luck for holiday, you guys.

Ed Rosenfeld: Thanks. Thanks so much.

Operator: Thank you so much. Our next question comes from the line of Corey Tarlowe with Jefferies. Your line is now open.

Corey Tarlowe: Ed, I was just wondering if you could talk to the AUR lift. In the business. So you're selling $200 boots today, versus your sneakers that were more like $70. Previously. So how is that affecting the business, and what's the impact on sales and comp How do you measure that? And how do these fashion trends speak to what AUR could be next year?

Ed Rosenfeld: Yeah. We are seeing a pretty significant increase in AUR. And it's really it's really twofold. It's it's one, it's based on the price increases that we've put through in response to tariffs. And number two, it's, as you point out, there's a mix benefit. Due to selling more boots and higher price categories. So in Q3, in our DTC, we were up about high singles. In AUR. In Q4, we're running more like mid-teens. Increases in AUR.

Corey Tarlowe: Really helpful. And then it does feel as if there's a bit of a tone shift. In your commentary around wholesale where kind of the first half of the year, I talked about order cancellations, and now you're talking about orders ramping back up. So I'm curious if is this the fact that the channels are doing better, or is it that you see Steve Madden gaining more market share? In these channels? How do you think about that?

Ed Rosenfeld: I think it's both. I think look. I my tone didn't get better from how I was talking when we had a 140% tariffs and everybody canceled every order, then we would it would be pretty depressing. But so look, some of that the external noise has you know, has abated a bit, and so we're I think things are normalizing. In the wake of all the tariff disruption. But in addition to that, we are also seeing improved underlying demand, improved sell-through. And that's you know, that's causing the wholesale customers to come back to us with more aggressive plans.

Corey Tarlowe: Got it. And then if I could just squeeze one more in. It seems like the product's resonating really nicely. Intuitively, what do you think that means for promotions and what's embedded in your outlook for that? Thanks so much.

Ed Rosenfeld: Yeah. I mean, the good news is, we have been able for instance, in our DTC channels, we have so far in Q4 reduced promotional days by a pretty meaningful amount compared to what we were doing last year. So we've been able to be less promotional because of the strength of the of the product and the trend. And you know, we'll do obviously, we need to remain competitive when we get into the fall. You know, part of the holiday season here when everybody's promotional, but we're gonna attempt to continue to be less promotional where we can.

Corey Tarlowe: Great. Thanks so much and best of luck.

Ed Rosenfeld: Thank you.

Operator: Thank you so much. Our next question comes from the line of Tom Nikic with Needham. Your line is now open.

Tom Nikic: Hey. Good morning, guys. Thanks for taking my question. I want to ask about the margin structure of the business. So obviously, 2025, between tariffs and the acquisition and know, maybe, you know, some first nine months. You know, there's quite a bit of tough first half of the year at the at the core brand or a tough margin erosion this year. How do we think about how much of that is recoverable and how much, may be structural. Thanks.

Ed Rosenfeld: Like to think all of it is recoverable over time. I think it's going to take a little bit of time. I don't expect us to get it all back in 2026, but certainly, you know, over time I believe I do believe that the tariffs are going to find their way into the retail prices, and we'll be able to get back to our pre-tariff margins in the core business. And then the Kurt Geiger business is obviously lower margin than the business, but we think that business has a path to getting to where you know, the Steve Madden levels or potentially even higher over time. So that's the goal.

Tom Nikic: Alright. Sounds good. Thanks very much, and best luck this holiday season.

Ed Rosenfeld: Thank you.

Operator: Thank you so much. Our next question comes from the line of James Ross with Williams Trading. Your line is now open.

James Ross: Hey, good morning, and thank you for the question. This is so two questions actually. The first being how will the mix of business, with the addition of Kurt Geiger impact gross margins in Q4? I know we kind of touched on it in the first question, but was hoping you could sort of dig into that a little deeper maybe. And the second being, can you provide some color on brand growth and opportunities internationally and what that looks like going into next year? Thank you.

Zine Mazouzi: Yes, go ahead. So as far as your first question, question related to Kurt Geiger and Doctrine gross margin in Q4, it would be similar to what we've seen in Q3, somewhere around 300 basis points.

Ed Rosenfeld: And I'm sorry. What was the second part of the question?

James Ross: Yeah. And the second part was, could you provide some color on brand growth and just generally the opportunities internationally and what that looks like going into next year? For the

Ed Rosenfeld: okay. So the is this about the legacy business or a career guide? Are you asking about Kurt Geiger or the legacy Yeah. Kurt Steve Benz?

James Ross: Yes. So Steve Madden and then also Geiger as well.

Ed Rosenfeld: Sure. Yeah. So Steve Madden, continue to have nice momentum in international markets. We're for 2025. We're looking at high singles revenue growth. And that's very similar across the three regions. So, very similar growth in our three key regions being EMEA, APAC, and The Americas ex US. So nice really across the board, and we'll look for continued growth into 2026. And then Kurt Geiger, as we've said, they're in the really the early stages of their growth outside The UK and The US. And we'll be looking for very, you know, strong double-digit growth internationally. Out of them for a for a handful of years here.

James Ross: Wonderful. Alright. Thank you so much. Best of luck.

Ed Rosenfeld: Thanks.

Operator: Thank you so much. Our next question comes from the line of Janine Stichter with BTIG. Your line is now open.

Janine Stichter: Hi. Good morning. Just want to follow-up on the margin recapture. If you could help us out. I think the tariffs here that hit gross margin a little over 200 basis points in Q2. Much was it in Q3? And then how to think about Q4? And maybe help us unpack that Kurt Geiger, between that and the core business. I think Kurt Geiger had been hit a bit more in of the year just because you hadn't been able to move as quickly.

Zine Mazouzi: Yeah. So as far as the tariff impact in Q3, given all the moving parts with the price increases, factory discounts, our renegotiated costs in, as well as FOB differential between all the countries. I think it's best to look at it from a growth and mitigated perspective. And Q3 was about 100 basis points more than what Q2 was. And I think you're asking about Q4 as well. I think it would be a little bit worse than that in Q4.

Janine Stichter: The Q4 is the 100 is mitigated, and it will be

Zine Mazouzi: So Q3 was about a 100 basis points worse than Q2. And we expect Q4 to be a little bit worse than Q3.

Ed Rosenfeld: But those are unmitigated, and so the mitigation gets bigger over time. So the net impact to gross margin will be considerably less in Q4 than it's been.

Janine Stichter: Understood. Okay. And then just maybe on the mitigation I just wanted to clarify on pricing. I think you took 10% increases earlier this year. Have you taken more, or do you plan to take more?

Ed Rosenfeld: That's where we are right now. We'll have to look at it as we as we go forward. But that obviously is still not enough to offset the full amount of the tariffs. So, over time, we'd like to see if we can take more, but we want to be prudent about it.

Janine Stichter: Perfect. Best of luck.

Operator: Thank you so much. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open.

Dana Telsey: Hi. Good morning, everyone. As you think about the wholesale business, what differed by type? Were there off-price, department stores, mass, What did you see? And what do you think of the outlook going forward? And then on the DTC side, was there a difference between full price and outlook performance? Thank you.

Ed Rosenfeld: Yeah. So in wholesale, would say we're seeing the strongest performance in the regular price channels, where we have had more pressure is in the value price channels like the off-price and the mass. In terms of DTC, we're seeing much better performance in full price channels. Outlet remains a drag. And I think we're being hurt by a couple things there. One is five of our biggest eight outlet stores are on the border with Mexico. And those stores are running down about 40%. And so that's a big headwind there. And then the other thing is that I think we were impacted more acutely there.

By some of the disruption from the supply chain in the wake of tariffs. So outlet has still been trending negative and full price stores have been much better.

Dana Telsey: Got it. And then just on the value side of the wholesale channel, are they just not taking orders? Are they waiting for newness? Are they waiting for more goods? Not accepting the price increase? Any way to articulate it?

Ed Rosenfeld: Well, they were the ones that pulled back most significantly. Again, it was during the period, and April and May when China tariffs were 145%. They are coming now and we're seeing those businesses normalize. But that was where we felt you know, a big part of the pullback the last couple of quarters.

Dana Telsey: Got it. And just lastly on marketing, as you think about Q4, anything we should be watching on the marketing side given your improved social that you've had in terms of marketing as we head into the holiday season? Thank you.

Ed Rosenfeld: No. We're just going to continue to keep doing the storytelling. I think that, you know, we see it's working. I think our marketing teams are hitting the bull's eye and we got it we're just going to keep investing and keep telling our and keep engaging with consumers.

Dana Telsey: Thanks, David. Thank you so much.

Operator: Our next question comes from the line of Paul Lejuez with Citi. Your line is now open.

Kelly Crago: Hi. It's Kelly again. Thanks for the follow-up. I just wanted to follow-up on an earlier question around the KG margin structure. In your disclosure that you said KG was about 9% EBIT margin business in F24. Curious where that's going to shake out this year with the tariffs. Then as we look to 2026, how much can you recover? Can you get back to the 9% next year? And just longer term, I mean, you spoke pretty positively about KG margins. Where ultimately do you think this business can land, and how do you get there? Is it through, you know, SG&A synergies, anything in the gross margin to speak about?

Just any color on sort of how we should think about the KG margins as we look forward. Thanks.

Ed Rosenfeld: Yeah. In terms of this year, for the partial period that we're gonna that we own them from May on, I think that they're gonna come in around 6%. In terms of next year, we'll talk in more detail about that on the next call, but certainly, we should see improvement from where we were today. From where we were this year. But I think we'll postpone any further discussion of that until that call. And then in terms of the last one with the drivers to get to a longer term Yeah. I think there's opportunity in both gross margin and SG&A, but I think the bigger opportunity is in SG&A.

There's some cost savings opportunities that they're going to get from the combination with us, which we're already all that work is already underway. But we also think there's a significant opportunity to just leverage operating expenses over time. As we grow that business.

Kelly Crago: And just curious where you maybe think that those margins could go longer term.

Ed Rosenfeld: Yes. Think what we said earlier was that certainly the intermediate target would be to get to where Steve Madden, the legacy business was historically. But we think there's opportunity beyond that.

Kelly Crago: Got it. Best of luck.

Ed Rosenfeld: Thanks.

Kelly Crago: Thanks, Kelly.

Operator: Alright. Thank you so much. I'm showing no further questions at this time. I would now like to turn it back to Ed Rosenfeld for closing remarks.

Ed Rosenfeld: Great. Well, thanks so much for joining us today, and we hope you have a wonderful day. We look forward to speaking with you on the next call.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.