Steven Madden's Q1 2025: Navigating Contradictions in China Sourcing, Gross Margins, and International Growth

Handling orders and production from China, gross margin impact and tariffs, China sourcing strategy and tariffs, gross margin expectations, and international revenue growth and market share are the key contradictions discussed in Steven Madden's latest 2025Q1 earnings call.



Tariff Impact and Strategic Response:
- Steve Madden Limited faced significant headwinds due to new tariffs, particularly impacting goods imported into the U.S. from China.
- The company swiftly adapted by leveraging strong supplier relationships to negotiate discounts and accelerate the shift of production to alternative countries, aiming to mitigate near-term impacts while positioning for long-term growth.

Branded vs. Private Label Sales Trends:
- In Q1 2025, the branded business for Steve Madden Limited performed better, with footwear, accessories, and apparel sales increasing, while private label sales declined modestly.
- This trend was driven by successful marketing campaigns and strong consumer demand for on-trend spring assortments.

Inventory and Supply Chain Disruptions:
- Inventory increased by over 18% due to longer lead times from supply chain disruptions, particularly the Suez Canal incident, and accelerated production shifts in response to tariffs.
- The company's strong cash position of $147.2 million and fortress balance sheet were emphasized as key strengths to navigate the current environment.

Kurt Geiger Acquisition:
- The acquisition of Kurt Geiger was completed, contributing GBP 400 million in revenue for the year ended February 1, 2025.
- The acquisition aligns with Steve Madden's strategic initiatives of expanding in international markets, accessories categories, and direct-to-consumer channels, positioning the company for future growth.