Steven Madden (NASDAQ:SHOO) reported first-quarter financial results on Wednesday. The transcript from the company's first-quarter earnings call has been provided below.

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The full earnings call is available at https://edge.media-server.com/mmc/p/vf5worz8

Summary

Steven Madden reported a solid start to 2026 with healthy demand across its brands, driven by strategic marketing and product assortments.

The flagship Steve Madden brand saw increased momentum with new trends, while Kurt Geiger and Dolce Vita brands also showed strong performance.

Despite an earnings decline in Q1 due to softness in private label and Steve Madden handbags, the company expects a return to earnings growth in Q2 and raised its revenue guidance for 2026 from 9-11% to 10-12%.

Q1 consolidated revenue was $653.1 million, an 18% increase compared to Q1 2025, but excluding Kurt Geiger, it saw a 4.8% decrease.

The company is focusing on international expansion and new store openings, including a partnership with Reliance Brands to bring Kurt Geiger to India.

Inventory levels increased, but excluding Kurt Geiger, inventory decreased by 2.5%. Operating expenses rose due to the addition of Kurt Geiger and higher incentive compensation.

Management highlighted a strategic increase in marketing investments, particularly in digital and social channels, and is optimistic about product trends and category expansions.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the first quarter 2026 Steve Madden Limited earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press Star 11 on your telephone and you will then hear an automated message advising that your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today's conference is being recorded. We'd now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Danielle McCoy (VP of Corporate Development and Investor Relations)

Thanks Jill and good morning everyone. Thank you for joining our first quarter 2026 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 call, if at all. The financial results discussed on today's call are on an adjusted basis unless otherwise noted. A reconciliation to most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer and Zane Mazuzi, Chief Financial Officer and Executive Vice President of Operations. With that, I'll turn the call over

Ed Rosenfeld (Chairman and Chief Executive Officer)

to Ed. All right, well thanks Danielle and good morning everyone and thank you for joining us to review Steve Madden's first quarter 2026 results. We got off to a solid start to the year in Q1 with healthy underlying demand across our brands, driven by our team's disciplined execution of our strategy for long term growth, the foundation of which is deepening connections with consumers through compelling product assortments and effective marketing. Our flagship brand, Steve Madden, continued to gain momentum as the on trend assortments created by Steve and his design team resonated with consumers. We saw strength across classifications including casuals, dress shoes and boots, and we capitalized on on a variety of trends in style and materials including split toes, Velcro, hidden wedges, mesh and ballet inspired looks. Our marketing team supported these assortments with rich brand and product storytelling, including our hello Spring campaign featuring it girl Delilah Bell and a full funnel approach that drove strong new customer acquisition and cultural relevance. And the combination of trend right product and targeted marketing investments drove measurable brand heat. Online searches for Steve Madden increased 27% in the quarter and global direct-to-consumer (DTC) comp sales rose 6% or 10%. Excluding our stores in the Middle east for the year, we continue to expect mid to high single digit revenue growth in the Steve Madden brand. Kurt Geiger London also delivered another strong quarter in handbags. In addition to continued strength in the quarter, Kensington Collection, new totes and shoulder bags drove strong demand and in shoes, sandals were a standout including exceptional performance in MENA Eagle slides.. We also made progress on our key growth initiatives including new store openings in the United States and international expansion into new markets. We now have leases secured for four new full price stores and one premium outlet in the US in 2026 and we signed a new franchise and distribution agreement with Reliance Brands to bring Kurt Geiger to India starting in Q4. for the quarter, revenue for the Kurt Geiger brand increased 23% on a pro forma basis and based on the momentum we are seeing, we have increased our forecast and now expect mid teens pro forma revenue growth in the Kurt Geiger brand for the year. In Dolce Vita we delivered a compelling spring assortment with particular strength in jelly, raffia and woven styles across footwear and handbags that drove robust sell through with key wholesale customers including Nordstrom, Dillard's and Macy's. We also continued to gain traction with our key growth initiatives of expanding the handbag category and growing in international markets. For 2026 we continue to expect high single digit revenue growth in Dolce Vita. Now despite this, in the first quarter we saw as expected a decline in organic revenue driven by softness in private label and lower Steve Madden handbag revenue in the US Wholesale channel. That combined with SG&A pressure from the normalization of incentive compensation and increased warehouse expenses resulted in an decline in earnings for the quarter. But looking ahead, based on the strong underlying demand trends across our brand portfolio, we expect to return to earnings growth in the second quarter and deliver strong top and bottom line growth for the full year.

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

And looking out further, we are confident that our powerful brands, proven business model and talented team position us to deliver sustainable growth for years to come. And now I'll turn it over to Zane Mazuzi to review our first quarter 2026 financial results in more detail and provide our updated outlook for 2026. Thanks Ed and good morning everyone. In the first quarter consolidated revenue was 653.1 million, an 18% increase compared to the first quarter of 2025. Excluding Kurt Geiger, which we acquired in the second quarter of 2025, consolidated revenue decreased 4.8%. Wholesale revenue was 443.6 million, up 1% compared to the first quarter of 2025 and excluding Kurt Geiger, our wholesale revenue decreased 8.2%. Wholesale footwear revenue was 278.9 million, a 5.8% decrease or down 12% excluding Kurt Geiger, primarily driven by a steep decline in the private label business. Wholesale accessories and the power revenue was 1 64.8 million up 15.1% compared to the first quarter in the prior year or down 0.5% excluding curved Geiger as declines in Steve Madden handbags and private label were mostly offset by increases in other branded accessories and apparel. Now direct to consumer Segment revenue was $206 million, an 83.8% increase compared to the first quarter of 2025. Excluding Kurt Geiger, our DTC revenue increased 8% with growth in both brick and mortar and E Commerce channels. Steve Madden brand the US DTC comp sales increased 17% driven by an exceptional performance in full price channels. Outlet comps remained modestly negative but showed significant sequential improvement as we began to anniversary declines in our border stores. International comp sales decreased 5% but increased 1% excluding our stores in the Middle East. We ended the quarter with 387 company operated brick and mortar stores including 95 outlets as well as eight e commerce websites and 162 company operated concessions in international markets. Our licensing royalty income was 3.4 million in the quarter compared to 2.2 million in the first quarter of 2025. Consolidated gross margin was 46.3% in the quarter, a 540 basis point improvement compared to the prior year. Wholesale Gross margin was 39.2% compared to 35.7% in the first quarter of 2025 compared to due to higher average selling prices as well as mixed benefits from the addition of the Kurt Geiger business and a lower penetration of private label direct to consumer. Gross margin was 60.8% compared to 60.1% in the comparable period in 2025 as a result of the addition of the Kurt Geiger business and a modest increase in the organic business. Operating expenses were $256 million or 39.2% of revenue in the quarter compared to 170.5 million or 30.8% of revenue in the first quarter of 2025 primarily driven by the addition of Kurt Geiger as well as higher incentive compensation and warehouse expenses. Operating income for the quarter was 46.3 million, or 7.1% of revenue, compared to 56.1 million, or 10.1% of revenue in the prior year. The effective tax rate for the quarter was 25.3% compared to 24% in the fourth quarter in the first quarter of 2025. Finally, net income attributable to Steve Madden Limited for the quarter was 32.1 million, or $0.45 per diver in share, compared to 42.4 million, or $0.60 per diluted share in the prior year. Turning to the balance sheet, our financial foundation remains Strong. As of March 31, 2026, we had 286.5 million of debt and 77.2 million in cash and cash equivalents for a net debt of 209.3 million. Inventory was 379.4 million compared to $238.6 million in the prior year. Excluding Kurt Geiger, inventory decreased 2.5%. Our CapEx in the quarter was $5.9 million. We did not repurchase any shares in the open market and during the first quarter we spent 7.4 million on shares acquired through the net settlement of employee stock awards. The company's board of directors approved a quarterly cash dividend of 21 cents per share. The dividend will be payable on June 19, 2026 to stockholders of record as of the close of business on June 8, 2026. Turning to our fiscal 2026 guidance, we are raising our revenue outlook and now expect revenue to increase 10 to 12% up from our prior guidance of 9 to 11%. We are also introducing EPS guidance for the year and expect earnings per share to be in the range of $2 to $2.10. Now I would like to turn the call over to the operator for questions. Operator,

OPERATOR

thank you. At this time we will conduct the question and answer session. As a reminder to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by as we compile the Q and A roster. First question comes from the line of Paul Legue with Citi. Please go ahead.

Paul Legue

Hey, thanks guys. If you can talk about what's driving the higher revenue guidance for the year. I think you said it was Kurt Geiger, but any detail you can give in the core versus Kurt Geiger, in terms of what has changed in your full year outlook. And then can you talk about the conversations you're having with private label customers and if there's been any change in how they're thinking as the tariff picture evolves. And then also just curious what you build in for tariffs within your guidance.

Ed Rosenfeld (Chairman and Chief Executive Officer)

Sure. Okay. All right. So the first question was about the higher revenue guidance. And yes, we did raise Kurt Geiger based on the early momentum that we're seeing there. Kurt Geiger exceeded our. The Kurt Geiger brand exceeded our expectations in Q1. We've also modestly raised our expectations for Steve Madden and Dolce Vita based on the strong performance that we're seeing there in spring and the momentum in those brands. So, so a positive picture because we were able to increase our forecast for each of our three largest brands in terms of the private label conversations, I would say we're having a lot of conversations. I think they're productive, but the tariff picture remains uncertain. And so there's no major change to that situation right now. But it's, you know, something we're working hard on. We have taken our forecast up very modestly for the year based on some orders that we got for that for the tail end of the year. But, but obviously still looking at a pretty steep decline in 26 and, and really targeting 27 for, for a recovery there and then in terms of what we built into the guidance. So we have assumed the section, the 10% Section 122 tariffs remain in effect through about the end of July when those expire and then we've built in a 15% tariff thereafter.

Paul Legue

Thank you. Good luck. Thanks.

OPERATOR

Thank you. One moment for our next question. The next question comes from Anna Andreeva with Piper Sandler. Go ahead. Your line is open.

Anna Andreeva

Great. Thank you so much for taking our question and congratulations. Really nice to see the momentum. Curious on also what you're hearing from your partners specifically to the off-price channel. Is that channel now back to growth and how do you think about the contribution there? And it sounds like department store business is turning very quickly with the reorders. Are you guys able to fulfill that demand? Just any color on that would be great. And secondly, you mentioned the business back to earnings growth starting the second quarter. Just anything you can share how we should think about 2Q is the DTC business which was super strong in 1Q is that further accelerating from here? Thanks so much.

Ed Rosenfeld (Chairman and Chief Executive Officer)

Sure. Okay, so in terms of the off price channel. Yeah, those businesses were seeing some nice improvement there. Those, those conversations have been very productive recently and so we are seeing growth in that channel in 2026 versus 2025. Still not all the way back to 24 levels. As opposed to your second question was about department stores there we are seeing strong growth to your point. We're getting reorders. We are able to chase into goods for them and we do expect that first-tier business to exceed what we achieved in 2024. And then what was the third question do you expect to see DTC accelerating in future EPS? Oh, yeah. So, yeah. So we're not going to guide quarterly, but I will say that we continue to see strong trends in that, in that DTC business. Now the overall DTC growth of course won't be as strong because we'll be anniversarying Kirk Iger starting in early May. But the core business or the organic business should see similar trends to what we saw in Q1. No, that's great. Thank you so much. Guys. Can I just sneak in another one? Just as you think about the uses of cash with a tariff refund, would paying down debt would be your first priority or just any color you can give on that? Yeah, the first priority would be to accelerate the pay down of the debt and then in the back half of the year we'll start assessing potential repurchases.

Anna Andreeva

All right, thank you so much. Best of luck.

OPERATOR

One moment for our next call. The next question comes from the line of Marnie Shapiro with the Retail Tracker. Go ahead. Your line is open.

Marnie Shapiro

Hey guys, congratulations. The assortments have looked absolutely fantastic. I'm curious if you could just talk a little bit more about the sell throughs at the department stores. Are you seeing that across footwear and the apparel? And the apparel has looked really fantastic as far as I have seen. Could you talk a little bit about how big that business can be and what the margin implications are? Are the margins on the apparel equal or better to what you're seeing in footwear and how that could play out over time?

Ed Rosenfeld (Chairman and Chief Executive Officer)

Yeah. Yes, we've been very, we've been pleased with what we've seen from a sell through perspective, I would say in spring footwear has been stronger because the Steve Madden brand in particular has been, you know, quite hot in footwear apparel. We had a little bit of a soft start to the year. I don't think we transitioned as well as we, as we could, but once we got into the season, we've seen, we've been very pleased with what we've seen. The team's done a great job with, you know, obviously dresses has been our biggest category. We've got some very strong dresses, but we've also got some novelty denim that's been selling some blazers. So we continue to sort of expand, you know, broad, you know, broaden out the strength in that, in that business and very optimistic about what that can be longer term in terms of how big that business is. It's over. It's over a couple hundred million now for us in apparel. As of now it is lower margin than the shoe and bag business. But we've been in investment mode and we're still building and over time we think that should have comparable margins.

Marnie Shapiro

Great. And then if I could just ask one more follow up on the Steve Madden brand. It looks so good in the stores, it looks so good everywhere. And your placement has been excellent. You've had a couple of semi viral or viral items. Could you just talk about your investments behind social media and marketing and what that would look like for the rest of the year?

Ed Rosenfeld (Chairman and Chief Executive Officer)

Yeah. First of all, I really appreciate what you say about the product. We're really proud of how the team has executed there. And so I think it all starts with product and that's the biggest driver here. But we also feel that we really raised our game on the marketing front and we continue to increase the investment there. As you know, years ago we were sub few years ago we were sub 2% of revenue devoted to marketing and now this year will be 5.3, 5.4%, something like that. So pretty significant increase in investment. And we've also I think done a better job of balancing that investment because when we first increased it, it was really very heavily focused at the bottom of the funnel on performance channels. And we now have much more balanced spend throughout the funnel. We're much more balanced by channel and we're much more consistent about the way we tell the Steve Madden story across channels on an omnichannel basis. And so as you mentioned, obviously given our core customer and the state of the world today, digital and social are paramount and that's where we are focusing a lot of our spend. Great, thank you. I'm sorry, can I sneak in one more Dolce Vita? Is it having as good is the sell through as strong on the Dolce Vita brand at wholesale as it is on the Steve Madden brand? Yeah. Dolce Vita is having a very strong spring. In fact, at their biggest customer they're even outpacing Steve Madden in terms of sell through.

Marnie Shapiro

Fantastic. Thanks guys.

OPERATOR

One moment for our next question. The next question comes from the line of Dana Telsey with Telsey Advisory Group. Go ahead. Your Line is open. Hi, good morning everyone and nice to see the progress with rising energy prices. Is there any impact on costs and how you're planning or the contracts all taken care of for it or how do you think of that impact on rising energy prices? And then the cadence of the quarter, was there any difference in demand on the exit of the quarter? And we've now seen just lastly on product trends, boots become like a 52 week a year trend. Any updates on product trends? Are there sneakers, fashion, sandals, boots to discuss? Thank you.

Dana Telsey

Sure. Yeah, I'll take the latter two questions and then turn it back to zine to talk about what we're seeing on freight. So in terms of the cadence of the quarter, it was, you know, there was, it bounced around a little bit based on weather and Easter shift and promotion time, etc. But basically I would say that it was pretty strong trends throughout the quarter and there's nothing super meaningful to call out there in terms of the product trends. You know, I think the big thing is, you know, we've seen a decrease in penetration in sandals and sneakers and we've seen super strong performance in casuals and really strong increases in dress shoes as well and also in boots, in boots and booties. And as you correctly pointed out, those continue to be important even in spring. We did a really nice job for instance on our DTC with boots for festival season. So Zean, you want to talk about freight?

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

Sure. So on the freight side, obviously the war impact is visible and we started seeing what they call ebs. These are emergency bunker surcharges that are being imposed by the maritime companies. So in our guide we built in about 30 basis points of pressure from ocean as well as the increase we're seeing on air freight as well. So we started seeing air freight as probably as early as April. And then as far as the ocean side, the emergency bunker surcharges, those started in May, on May 1st. And there's another round potentially that would be coming in July as well. So all in all it's about a 30 basis point impact from a cost perspective. As far as raw materials, we're not seeing that yet. But if this continues for an extended period of times, we, we expect that that will have an impact in the latter part of the year. Thank you. One moment for our next question. The next question comes from the line of Sam Poser with Williams Trading. Go ahead, your line is open. Thank you for taking my questions. A couple things, when we think about the gross margin more holistically for the, for the Balance of the year. How much? In the press release you discussed the. You backed out 55 million of the refunds out of the gross margin. How much of the refunds effective for the goods sold in Q1 were in it. And then going forward, I guess the question is you're not going to see the same. You're not planning to see what kind of increase in gross margin are we planning to see for the full year? Take taking into account the lower tariffs than what was true, lower than the APA tariffs, but then also the increase plus that 30bps from freight. I mean, how should we think about the gross margin? And then I have another question.

OPERATOR

Yeah, sure.

Sam Poser

So in the first quarter, obviously there was a relatively modest negative impact from tariffs because of the reversal of IPA

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

and then the institution of the section 122 as we go forward. Obviously we'll see on a gross basis a bigger impact than we saw in Q1. But if you're thinking about gross margin versus the prior year, we still should be seeing nice increases versus the prior year each quarter. Although it will narrow a little bit in terms of the delta. You know, part of that is that we anniversary Kirk Iger in Q2, which has been, you know, which has been a mixed benefit to gross margin. But even in the organic basis. Even in the organic basis, we do expect to see year over year gross margin improvement through the balance of the year.

Sam Poser

Thank you. And then could you. I know it's going to come out in the queue, but can you give us the adjusted gross margin and SGA for footwear, Wholesale footwear, handbag, wholesale and direct to consumer, please? What do you mean adjusted? That does. Well, you want the wholesale footwear and gross margin? Yeah, okay, sure.

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

I mean, so we can get to build it out to the total. Yeah, yeah. Wholesale footwear Gross margin was 38.6. Wholesale accessories was 40. And DTC, I think you have it, but it was 60.8. And then. And then what about SG&A? I mean, or give us the adjusted operating income for each one of those sections, however you want to do it. I build my model this way and it's important that I break it up and I'm sorry, I'm driving you crazy. EBIT dollars for wholesale footwear, 52.7 accessories and apparel, 28.8 DTC loss of 11.4. And the loss in DTC was primarily due because it's a small quarter. You have the fixed cost for. Kurt Geiger with those fixed costs staying in. I assume that is correct. That's right. We always, I mean even the organic business, we're always loss making in Q1 in DTC. And the same goes for Kurt Geiger.

Sam Poser

And you originally said that Kurt Geiger would do about 600 million. That's up just given the first quarter. It's just up a bit from there. Is that how we should think about it?

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

Yeah. Low six hundreds.

Sam Poser

All right, thanks very much. Appreciate it.

OPERATOR

One moment for our next question. The next question comes from the line of Jeanine Stitcher with btig. Go ahead. Your line is open. Hi, good morning, I'm Kurt Geigert with the mid teens growth of the brand.

Jeanine Stitcher

Just wanted to clarify, does that include any new distribution? And if not, how are you thinking about that? And then Steve Madden handbags. Can you elaborate a little bit more what's going on there? Would you still expect it to turn positive in the second quarter? Thank you. Yeah. In terms of the Kurt Giger brand mid teens growth, we are adding some wholesale distribution in the back half. I think that the most important being that we are planning to. We have reached agreement with Macy's to enter Macy's starting in October. We'll be in a beautiful concession in Herald Square as well as 15 other doors with handbag shops and also shoes. So we're excited about that. But you know, there's also very strong momentum in the DTC business. Digital. The new stores continue to perform well. As I mentioned, we're opening some additional stores. Excuse me. The US stores continue to perform very well and we're opening some additional U.S. stores. So a lot of good things happening there. What was the second one? Steve? Man. Yes, Steve Madden Handbags. Yes.

Ed Rosenfeld (Chairman and Chief Executive Officer)

As we have indicated, we expect to return to growth starting in the current quarter. So we're pleased to have that headwind behind us.

Jeanine Stitcher

And then maybe just one more on the core Steve Madden business.

Ed Rosenfeld (Chairman and Chief Executive Officer)

I think you said organic gross margins for DTC were up slightly. Maybe just talk about what you're seeing from a promotional standpoint there. It seems like you've to pull back a little bit on the promotional lever. Yeah, we have.

Jeanine Stitcher

We've been pleased because of the strength of the product and

Aubrey Tianiello

You know, we have been able to reduce overall promotion days and that's. We really haven't seen any significant impact to demand. So that's been very positive. Great, thanks so much. One moment for our next question. Last question comes from the line of Aubrey Tianiello with BNP Paribas.

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

Your line is open. Hey, good morning. Thanks for taking the questions. Wanted to Ask on SGA and how we should be thinking about the cadence of SGA growth into the next quarter and then into the back half of the year when you lap the Kurt Geiger acquisition. So including Kurt Geiger In Q1, SGNA was up 50.2%. We expect that to be probably around I would say 25% increase in Q2 and then it should drop to low teens in Q3 and high singles in Q4. Perfect, thank you. And then maybe just to follow up on the Middle east and how the conflict impacts the business from a direct standpoint in terms of revenues. You mentioned the impact to store comp in the prepared remarks. Be curious just what's included in the guidance for 2026 from a top line perspective in the Middle East. Yeah, it's about it. So we have about a fifth north of $50 million or we had north of $50 million business there, about 63 stores. I don't have the overall top line impact that we've built in there but look, the business in the GCC for instance is still trending down close to 40% this month. And so we built in about $4 million profit hit. I know in that region. Yeah. Zane's telling me it's about nine to $10 million that we've taken out for the impact there. For revenue.

Aubrey Tianiello

For revenue. Excuse me.

Zane Mazuzi (Chief Financial Officer and Executive Vice President of Operations)

Okay, got it. Thank you. And then just last one, wanted to ask about Kurt Geiger from a margin perspective. You mentioned in the past having a Runway to getting to double digit EBIT margins over time. Anything you can share on how EBIT margin is progressing for Kurt Geiger this year especially in light of the higher revenue guide. Yeah. So we're expecting about 100 basis points of improvement in 26 versus 25. It still doesn't get us back to pre tariff levels. So we need to continue to drive that up in the coming years. And we still continue to believe there's no reason this business shouldn't be in the double digits. And certainly the branded portion, if we exclude the concessions, you know, we think has potentially, you know, certainly in the teens, if not the mid teens.

Aubrey Tianiello

Perfect. Thank you very much.

OPERATOR

And I am showing now showing no further questions. And I would like to turn it back to Ed Rosenfeld for closing remarks.

Ed Rosenfeld (Chairman and Chief Executive Officer)

Great. Well thanks so much for joining us today. We hope you have a great day. We look forward to speaking with you on the next call.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.