Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Steven Madden Ltd (SHOO, Financial) exceeded earnings expectations for the first quarter of 2025.
- The company saw a strong improvement in sales in March due to favorable weather and effective spring fashion assortments.
- Steven Madden Ltd (SHOO) successfully negotiated discounts with suppliers in China to mitigate the impact of new tariffs.
- The acquisition of Kurt Geiger is expected to enhance the company's growth profile, with Kurt Geiger showing strong momentum in multiple categories.
- The company has a strong financial foundation with $147.2 million in cash and no debt as of March 31, 2025.
Negative Points
- Steven Madden Ltd (SHOO) faces significant headwinds due to new tariffs on goods imported into the United States.
- The company experienced a decline in direct-to-consumer revenue, with brick-and-mortar sales decreasing.
- Operating expenses increased to 30.8% of revenue, up from 29.7% in the first quarter of 2024.
- The company withdrew its 2025 financial guidance due to uncertainty related to tariffs.
- Net income decreased to $42.4 million, or $0.60 per diluted share, compared to $47 million, or $0.65 per diluted share, in the first quarter of 2024.
Q & A Highlights
Q: Can you elaborate on your strategy for moving production out of China and the impact on margins?
A: Edward Rosenfeld, CEO, explained that they are taking in products that are far along in production from China but have negotiated price concessions to mitigate damage. Production that could be moved has been shifted to countries like Cambodia, Vietnam, Mexico, and Brazil. While this shift may delay deliveries, it helps reduce reliance on China. The margins from these countries are slightly lower due to higher FOB prices and increased demand, but they are managing through these challenges.
Q: How are you handling the impact of tariffs on your business, and what are your expectations for gross margins?
A: Edward Rosenfeld noted that they have started raising prices to offset tariff impacts and are monitoring demand elasticity. The gross margin in Q1 was slightly better than expected due to strong March sales and inventory management. However, tariffs have already impacted margins by 20 basis points in Q1, with a more significant impact expected in Q2.
Q: What are the growth strategies for Kurt Geiger following its acquisition?
A: Edward Rosenfeld highlighted that Kurt Geiger has shown strong growth in the US, particularly in digital sales and store rollouts. They plan to expand wholesale distribution and leverage Steve Madden's international network to grow the brand globally. The focus will also be on diversifying sourcing to reduce reliance on China.
Q: How are you addressing potential consumer demand changes due to price increases?
A: Edward Rosenfeld stated that while consumer demand has been stable, they are closely monitoring the situation. They have implemented price increases selectively, averaging around 10%, and are prepared to adjust based on demand elasticity. The company is aware of potential consumer confidence impacts but remains optimistic about demand.
Q: What is the outlook for private label versus branded business and international growth?
A: Edward Rosenfeld mentioned that branded business outperformed private label in Q1, and international markets showed stronger performance than domestic ones. The company is focused on growing its international business, which is less affected by US tariffs, and sees opportunities to gain market share as competitors struggle with similar challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
