Steven Madden Earnings Call: Growth With Margin Strain

Steven Madden ((SHOO)) has held its Q1 earnings call. Read on for the main highlights of the call.

Steven Madden’s latest earnings call struck a cautiously optimistic tone, blending solid top-line momentum with visible profit pressure. Management highlighted strong revenue growth, powered by the Kurt Geiger acquisition and a vibrant direct-to-consumer business, while acknowledging higher costs, softer organic sales and geopolitical and tariff risks that are weighing on short-term earnings.

Consolidated Revenue Jumps on Kurt Geiger Boost

Consolidated revenue climbed to $653.1 million, up 18% from a year ago, underscoring the impact of the Kurt Geiger acquisition. The deal has become a central growth engine for the group, helping offset weaker trends in certain legacy categories and providing scale benefits across the portfolio.

Direct-to-Consumer Channel Delivers Strong Growth

Direct-to-consumer revenue surged 83.8% to $206.0 million, with Steven Madden’s U.S. DTC comparable sales up a robust 17%. Even excluding Kurt Geiger, DTC grew 8%, demonstrating broad-based strength across both physical stores and e-commerce platforms and reinforcing the strategic pivot toward higher-margin owned channels.

Brand Momentum Supported by Heavier Marketing Spend

Management reported strong product momentum in casuals, dress shoes and boots, aided by a 27% increase in online searches for the Steven Madden brand. Global DTC comps rose 6% overall, or 10% excluding the Middle East, as the company lifted marketing spend to about 5.3% of revenue to drive full-funnel customer acquisition and brand visibility.

Kurt Geiger Outperformance Drives Upgraded Company Outlook

Kurt Geiger posted 23% pro forma revenue growth in the quarter, ahead of internal expectations and validating the acquisition thesis. That outperformance led management to raise Kurt Geiger’s full-year outlook to mid-teens pro forma growth and to lift Steven Madden’s consolidated revenue growth target for FY26 to 10–12%.

Gross Margin Expansion Signals Better Pricing Power

Consolidated gross margin improved sharply to 46.3%, up 540 basis points year-on-year, reflecting favorable mix and pricing discipline. Wholesale gross margin climbed to 39.2% from 35.7%, while DTC gross margin edged up to 60.8% from 60.1%, giving the company more cushion against rising freight and tariff costs.

Brand-Level Growth Plans Across the Portfolio

Management reiterated a mid- to high-single-digit revenue growth target for the core Steven Madden brand, with Dolce Vita expected to grow at a high single-digit rate. Kurt Geiger is slated for further expansion through new U.S. store leases and a franchise partnership with Reliance Brands, aiming to enter the Indian market in the fourth quarter.

EPS Guidance Debut and Capital Allocation Moves

The company introduced FY26 EPS guidance of $2.00–$2.10, signaling confidence in a return to earnings growth despite current margin pressure. Alongside this, the board approved a quarterly dividend of $0.21 per share and indicated that any tariff refund proceeds will first be used to pay down debt before potential share repurchases later in the year.

Improving Wholesale Signals Despite Mixed Category Trends

Wholesale accessories and apparel revenue grew 15.1% year over year, and was nearly flat when stripping out Kurt Geiger, showing resilience in a choppy wholesale environment. Management also cited better reorders from department stores, improving trends in off-price channels and rising licensing royalty income, which increased to $3.4 million from $2.2 million.

Organic Revenue Softens Without Kurt Geiger

Excluding Kurt Geiger, consolidated revenue declined 4.8% in the quarter, highlighting underlying softness in parts of the legacy business. Weakness in private label and lower U.S. wholesale handbag revenue were key drags, suggesting that some traditional categories remain under pressure even as newer growth drivers ramp up.

Profitability and EPS Slide in the First Quarter

Operating income fell to $46.3 million, or 7.1% of revenue, down from $56.1 million and a 10.1% margin a year ago, reflecting rising costs and integration expenses. Net income attributable to the company dropped to $32.1 million, translating into diluted EPS of $0.45 versus $0.60 in the prior-year period.

SG&A Costs Weigh Heavily but Expected to Ease

Operating expenses surged to $256.0 million, or 39.2% of revenue, versus $170.5 million, or 30.8%, in the prior year, driven largely by Kurt Geiger, higher incentives and warehouse costs. Management expects SG&A growth to remain elevated through the second quarter before moderating to the low-teens in the third quarter and high-single-digit levels in the fourth.

Wholesale Footwear and Private Label Under Pressure

Wholesale footwear revenue slipped 5.8% to $278.9 million and was down 12% excluding Kurt Geiger, as private label suffered a steep decline. The softness highlights structural challenges for the private label segment, even as the company leans more heavily into its own brands and direct-to-consumer channels for growth.

Inventory and Leverage Require Close Monitoring

Inventory rose to $379.4 million from $238.6 million a year ago, reflecting the addition of Kurt Geiger but also higher stock levels overall. Excluding Kurt Geiger, inventory was down 2.5%, yet net debt stood at $209.3 million, suggesting that balance sheet discipline will remain an important focus as the company invests for growth.

Middle East Turbulence Hits Regional Performance

The company reported that Middle East store traffic and comps were materially impacted by regional conflict, with Gulf Cooperation Council markets down roughly 40% in the cited month. Management reduced full-year revenue guidance by about $9–10 million to reflect this disruption, underscoring the impact of geopolitical risk on international operations.

Tariff and Freight Headwinds Add Margin Risk

Management’s outlook factors in higher tariffs and elevated freight costs, including emergency bunker surcharges for ocean and air shipments that are expected to trim margins by about 30 basis points. Longer-term cost inflation in raw materials and transportation remains a risk, prompting the company to keep pricing, sourcing and cost controls under close review.

DTC Seasonal Loss and Pause in Share Buybacks

The direct-to-consumer segment posted an $11.4 million operating loss in the seasonally weak first quarter, a figure exacerbated by Kurt Geiger-related costs. The company also refrained from open-market share repurchases during the quarter, prioritizing investment in growth initiatives and balance sheet strength over near-term buyback activity.

Guidance Points to Return to Earnings Growth

Management now projects FY2026 revenue growth of 10–12%, up from a prior 9–11% range, and expects to return to earnings growth in the second quarter with solid full-year progress on both sales and profits. The outlook includes mid- to high-single-digit growth for Steven Madden, mid-teens pro forma growth for Kurt Geiger, high-single-digit growth for Dolce Vita and an expected 100-basis-point EBIT margin improvement for Kurt Geiger next year.

Steven Madden’s earnings call painted a picture of a company leaning on acquisitions and DTC channels to fuel growth while navigating cost inflation, softer legacy categories and geopolitical noise. For investors, the raised revenue outlook, fresh EPS guidance and expanding margins offer reasons for optimism, but execution on cost control and organic growth will be crucial in the quarters ahead.