SHOO Q1 Earnings Call: Tariffs Drive Strategy Shift, Kurt Geiger Acquisition Adds Growth Potential

Yahoo

11-06-2025

Shoe and apparel company Steven Madden (NASDAQ:SHOO) missed Wall Street's revenue expectations in Q1 CY2025, with sales flat year on year at $553.5 million. Its non-GAAP profit of $0.60 per share was 31.7% above analysts' consensus estimates.
Is now the time to buy SHOO? Find out in our full research report (it's free).
Revenue: $553.5 million vs analyst estimates of $559.1 million (flat year on year, 1% miss)
Adjusted EPS: $0.60 vs analyst estimates of $0.46 (31.7% beat)
Adjusted EBITDA: $61.33 million vs analyst estimates of $49.57 million (11.1% margin, 23.7% beat)
Operating Margin: 9.7%, in line with the same quarter last year
Locations: 314 at quarter end, up from 253 in the same quarter last year
Market Capitalization: $1.8 billion
Steven Madden's first quarter performance was shaped by persistent headwinds in the footwear and accessories industry and the company's rapid response to shifting market dynamics. CEO Ed Rosenfeld highlighted that while sales trends were sluggish early in the quarter, demand improved markedly in March as seasonal product assortments resonated with consumers. The company credited its product and marketing teams for supporting demand through targeted campaigns, such as the "House of Steve" initiative. Rosenfeld also acknowledged heightened uncertainty from new U.S. tariffs on imports, noting, 'Our team moved swiftly to adapt to the changing landscape with a focus on mitigating near-term impacts while positioning the company for long-term growth.'
Looking ahead, management is focused on mitigating the impact of tariffs by accelerating supply chain shifts away from China, implementing selective price increases, and seeking operational efficiencies. Rosenfeld emphasized that while the company faces near-term challenges, it is leveraging its ability to pivot production and maintain supplier relationships to protect market share. The acquisition of Kurt Geiger is seen as a strategic addition, with Rosenfeld stating, 'We believe the agility of our business model, combined with our fortress balance sheet, gives us a competitive advantage in dynamic environments like this one.' However, the company withdrew its annual financial guidance due to ongoing uncertainty, underscoring the need for close monitoring of consumer demand and tariff developments.
Management attributed the quarter's performance to disciplined execution in product assortment, rapid supply chain adjustments, and early action in response to tariff impacts.
Seasonal product success: The launch of spring assortments was well received by consumers, especially as weather improved in March, helping reverse sluggish sales seen earlier in the quarter. Increased marketing investment, including the 'House of Steve' campaign, supported brand engagement.
Accelerated supply chain shift: In response to new tariffs, Steven Madden rapidly reduced its reliance on China for U.S. imports, moving much of its fall 2025 production to countries such as Vietnam, Cambodia, Mexico, and Brazil. Management noted that, by spring 2026, less than 10% of sourcing for U.S. imports (excluding Kurt Geiger) is expected to come from China.
Price increases and demand monitoring: The company has begun raising prices selectively across products and brands, with average increases around 10%. Management is closely monitoring demand elasticity to ensure competitiveness and will adjust pricing strategies as needed.
Inventory and logistics adjustments: Inventory levels rose, driven by longer lead times from supply chain diversification and efforts to accelerate shipments ahead of tariff implementation. Management stated this was a proactive measure to manage disruption and maintain product availability.
Kurt Geiger acquisition: The purchase of Kurt Geiger, a London-based accessories brand, was completed. The brand's momentum, especially in U.S. digital channels and international expansion, is expected to support long-term growth, though management acknowledged that 80% of its sourcing is currently from China, requiring a similar transition strategy.
Management expects future performance to be influenced by tariff-related cost pressures, supply chain transitions, and the integration of Kurt Geiger.
Tariff impact and mitigation: The company anticipates further gross margin pressure as tariffs on imports take full effect, particularly as it cycles through higher-cost inventory. Management is pursuing supplier negotiations, price increases, and operational efficiencies to offset these headwinds.
Kurt Geiger integration: Leveraging Kurt Geiger's digital and physical retail expansion in the U.S., as well as international growth opportunities, is a strategic priority. Management aims to align sourcing practices with Steven Madden's transition away from China to reduce future tariff exposure.
Consumer demand and promotional activity: There is uncertainty regarding consumer response to higher prices and later product deliveries caused by longer lead times. Management highlighted that direct-to-consumer performance was mixed in April and indicated a cautious outlook on consumer confidence, requiring ongoing assessment of trends and promotional needs.
In future quarters, the StockStory team will track (1) the pace at which Steven Madden reduces China-based sourcing across both legacy and Kurt Geiger brands, (2) the effect of price increases and shifting supply chains on gross margin and sales trends, and (3) execution on U.S. and international expansion plans, especially for Kurt Geiger. Progress on integrating Kurt Geiger's operations and adapting to ongoing tariff developments will also be key signposts.
Steven Madden currently trades at a forward P/E ratio of 13.5×. At this valuation, is it a buy or sell post earnings? See for yourself in our full research report (it's free).
Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.