Steven Madden CEO Discusses Tariff Pressures and Dress Shoe Momentum

Steven Madden CEO Edward Rosenfeld discussed wholesale issues and tariff impacts on Q2 results, citing canceled orders, reduced open-to-buys, and lost sales. Despite efforts to mitigate the impacts, organic gross margins declined. However, the company diversified sourcing, negotiated discounts, and added price increases to keep costs down. Rosenfeld noted positive consumer response to new fashion offerings, particularly in dress shoes and summer boots, and expects the boot category to continue beyond summer.

Steven Madden Ltd. (NASDAQ: SHOO) reported its second-quarter (Q2) results, highlighting the impact of tariffs on its wholesale business and efforts to mitigate these pressures. The company faced challenges such as canceled orders, reduced open-to-buys, and lost sales, leading to a decline in organic gross margins [1]. Despite these issues, the company has been proactive in diversifying its sourcing, negotiating discounts with suppliers, and implementing price increases to manage costs.

CEO Edward Rosenfeld noted that the company has moved some production back to China for fall 2025, where it expects to source 30% of its U.S. imports, down from 71% in 2024 [1]. This decision was driven by the need to ensure on-time delivery, product quality, and reasonable pricing in alternative countries. Additionally, the company has been selectively raising prices to wholesale customers and consumers, with an average increase of 10% across select merchandise. This strategy has been well-received by consumers, particularly in the dress shoe and summer boot categories [1].

The wholesale revenue shortfall in the organic business was largely attributed to off-price and mass channels, which experienced a pause in orders before China tariffs were reduced from 145% [2]. Rosenfeld expects continued pressure in these channels in the near term but anticipates improvement as retailers resume accepting goods and placing forward orders. The company has also been capitalizing on the appearance of Steve Madden on the fashion podcast "The Cutting Room Floor" to drive awareness among key Gen Z and Millennial consumers [1].

The acquisition of Kurt Geiger, announced in February and completed in May, is expected to drive significant growth for Madden in the years ahead [2]. Rosenfeld expressed confidence in Geiger's potential, noting that the brand has low brand awareness in the U.S. and that opening retail stores will be a key strategy to communicate the brand lifestyle. The company ended the quarter with 392 company-operated brick-and-mortar retail stores, including 98 outlets, seven e-commerce websites, and 130 concessions in overseas markets [2].

Despite the challenges, Steven Madden maintains strong fundamentals, with a current ratio of 2.25 and moderate debt levels. The company's stock price has seen a decline of 36% over the past six months but is currently undervalued, according to InvestingPro analysis. BTIG, an investment firm, lowered its price target on Steven Madden to $34.00, maintaining a Buy rating [3].

References:
[1] https://wwd.com/footwear-news/shoe-industry-news/steve-madden-q2-wholesale-shipments-dress-shoes-boots-1238018997/
[2] https://wwd.com/footwear-news/shoe-industry-news/steve-madden-q2-earnings-tariff-impact-wholesale-shoe-sales-1238016334/
[3] https://www.investing.com/news/analyst-ratings/steven-madden-stock-price-target-lowered-to-34-at-btig-on-tariff-disruptions-93CH-4160985