STEVEN MADDEN, LTD.(SHOO)Q2 2026 法說會逐字稿

Welcome to the Second Quarter 2026 Steven Madden Limited Earnings Call and Webcast. Operator instructions were provided. Please note this event is being recorded. I would now like to turn the conference over to Danielle McCoy, Vice President of Corporate Development and Investor Relations. Please go ahead.

Thanks, Debbie, and good morning, everyone. Thank you for joining our second 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 the most directly comparable GAAP financial measure or other associated disclosures are contained in our earnings release. Joining me on the call today are Ed Rosenfeld, Chairman and Chief Executive Officer; and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I'll turn the call over to Ed. Ed?

Okay. Thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steve Madden's second quarter 2026 results. We delivered robust top and bottom line growth in the second quarter, reflecting the strength of our brands and our team's disciplined execution of our long-term strategy. Total revenue grew 19% in the quarter, or 11% excluding Kurt Geiger, and diluted EPS more than doubled from the second quarter last year. Our flagship brand, Steve Madden, was the highlight, continuing to gain momentum as consumers responded enthusiastically to the trend-right assortments created by Steve and his design team. In women's footwear, we saw strong performance with dress shoes at various heel heights and outsized growth in the casual category. We capitalized on a variety of trends in style and materials, including split toes, jellies, hidden wedges, rhinestone mesh, ballet-inspired looks, thongs and needle heels. Men's footwear also performed well across a range of categories with particular strength in loafers. And in handbags, we returned to strong growth with totes, hobos, and crossbody styles that incorporated trending materials like straw, jelly, and denim. Our marketing team supported these assortments with integrated brand and product storytelling, including a deeper partnership with model Delilah Belle, who fronted our Bait & Switch summer campaign. Together, the combination of compelling product and strong market execution fueled a meaningful increase in brand heat. Global online searches for Steve Madden rose 71% in the quarter. Based on the strong momentum we are seeing, we have increased our forecast for Steve Madden brand revenue for the year and now expect a high single-digit increase compared to 2025. We also made meaningful progress in the quarter on our key growth initiatives for the Kurt Geiger London brand. In the U.S., building out Kurt Geiger store base is an important part of our strategy to increase brand awareness, showcase the full brand experience and drive profitable growth. We opened 2 full-price stores in premium malls in the quarter, Tysons Corner and Dadeland, bringing us to a total of 7 full-price stores in the U.S. The new stores are off to a good start, and the existing stores are performing well, driving strong 4-wall profitability and delivering a 12% comp store sales gain in the second quarter. Six of the seven stores offer Kurt Geiger's unique one-of-a-kind personalization service, which enables customers to design their own Kensington bag and walk out with it in minutes. In the stores where it's available, the one-of-a-kind offering drove 17% of handbag sales, and we see this as a key differentiator for the brand that we will lean into going forward. Outside the U.S., we acquired a business in Spain and Portugal from our distributor in Q2, and we'll now operate that business in-house, and we are in active discussions with a number of potential distribution and joint venture partners for Kurt Geiger around the world. For the year, we continue to expect mid-teens pro forma revenue growth in Kurt Geiger. In Dolce Vita, we had an outstanding second quarter with strong growth across wholesale and DTC channels, driven by a compelling product assortment highlighted by jellies, ballet flats, Mary Janes, mid-heel dress shoes and thongs. We also continue to gain momentum in handbags and make progress in international markets, including Canada, Mexico and the U.K. Based on the momentum we are seeing, we have increased our forecast for Dolce Vita revenue for the year and now expect high single-digit to low double-digit growth. Overall, our lead brands are deepening their connections with consumers and gaining relevance in the marketplace, and each is poised for meaningful growth ahead. Based on the strong performance in the second quarter, we are raising our consolidated revenue and earnings outlook for 2026. And looking out further, we believe our powerful brands, proven business model, talented team and sound strategy position us to deliver sustainable revenue and earnings growth over the long term. And now I'll turn it over to Zine to review our second quarter financial results in more detail and provide our updated outlook for 2026.

Thanks, Ed, and good morning, everyone. In the second quarter, consolidated revenue was $665.9 million, a 19.1% increase compared to the second quarter of 2025. Excluding Kurt Geiger, which we acquired on May 6, 2025, consolidated revenue increased 11.2%. Wholesale revenue was $407.5 million, up 13% compared to the second quarter of 2025. Excluding Kurt Geiger, our wholesale revenue increased 11.5%. Wholesale footwear revenue was $240 million, a 9% increase or up 7.8%, excluding Kurt Geiger, driven by strong growth in the branded business, partially offset by a decline in private label. Wholesale accessories and apparel revenue was $167.5 million, up 19.2% compared to the second quarter in the prior year or up 17.5%, excluding Kurt Geiger, also driven by strong growth in the branded business, partially offset by a decline in private label. In our direct-to-consumer segment, revenue was $255.4 million, a 30.6% increase compared to the second quarter of 2025. Excluding Kurt Geiger, our DTC revenue increased 11.1% with double-digit growth in both brick-and-mortar and e-commerce channels. Steve Madden brand global comp sales rose 9% in the quarter, including a 17% increase in the U.S. and a 1% increase in international markets, which were impacted by the conflict in the Middle East. Excluding our business in the GCC, international comp sales increased by 4%. We ended the quarter with 382 company-operated brick-and-mortar stores, including 92 outlets as well as 8 e-commerce websites and 164 company-operated concessions in international markets. Our licensing royalty income was $3 million in the quarter compared to $2.9 million in the second quarter of 2025. Consolidated gross margin was 46.5% in the quarter, up from 41.9% in the second quarter of 2025, driven by significant increases in both wholesale and DTC channels. Wholesale gross margin was 35.2%, up from 30.9% in the second quarter of 2025 due to higher average selling prices, a smaller negative impact from tariffs and a lower penetration of private label. Direct-to-consumer gross margin was 64%, up from 61.3% in the prior year due to higher average selling prices, a reduction in promotional activity and a small negative impact from tariffs. Operating expenses as a percentage of revenue were 39.8% in the quarter compared to 37.9% in the second quarter of 2025, primarily reflecting the inclusion of the full quarter of Kurt Geiger as well as higher incentive compensation. Operating income for the quarter was $44.5 million or 6.7% of revenue compared to $22.6 million or 4% of revenue in the prior year. The effective tax rate for the quarter was 26.3% compared to 25.6% in the second quarter of 2025. Finally, net income attributable to Steve Madden Limited for the quarter was $31.7 million or $0.44 per diluted share compared to $13.9 million or $0.20 per diluted share in the second quarter of 2025. Turning to the balance sheet. Our financial foundation remains strong. During the quarter, we received $92.1 million in refunds related to the reversal of IEEPA tariffs, which included $3.1 million in interest. We only have approximately $1 million in potential refunds still outstanding. We used the refunds to pay down debt. And as of June 30, 2026, we had $124.8 million in debt and $94.7 million in cash and cash equivalents for a net debt of $30.1 million. Inventory at the end of the second quarter was $377.2 million, down 13.7% compared to $437 million in the prior year, driven by a 30% reduction in the Kurt Geiger business. Our CapEx in the quarter was $8.5 million. We did not repurchase any shares in the open market during the second quarter, and we spent approximately $1 million on shares acquired through the net settlement of employee stock awards. The company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on September 24, 2026, to stockholders of record as of the close of business on September 11, 2026. Turning to our fiscal 2026 guidance. We are raising our revenue and diluted earnings per share outlook. We now expect revenue to increase 11% to 13%, up from our prior guidance of 10% to 12% and diluted earnings per share to be in the range of $2.05 to $2.15, up from our prior guidance of $2 to $2.10. Unlike last year, when tariff disruption resulted in an unusual back half where the fourth quarter revenue and earnings exceeded third quarter levels, we expect a more typical cadence this year. Specifically, we expect Q3 to contribute more than Q4 to back half revenue and earnings. Now, I would like to turn the call over to the operator for questions. Debbie?

Operator provided instructions. The first question comes from Anna Andreeva with Piper Sandler.

This is Noah on for Anna. Just wanted to follow up on the annual sales guide. It implies more modest expectations in the second half. Can you elaborate just on that given the momentum we're seeing across the portfolio? Any color on what you're seeing in direct-to-consumer quarter-to-date and how you're approaching back-to-school? And just as a follow-up, can you comment on how Nordstrom's anniversary sale is going across the portfolio as we've been seeing some sell-outs?

Great. In terms of the top-line sales guide, on an organic basis, we're looking for continued strong performance. If you're looking at a slowdown on a consolidated basis, that's because we are anniversarying Kurt Geiger, so the inorganic growth contribution goes away. In terms of DTC, the momentum really continues into the quarter-to-date period, and we're seeing trends similar to what we saw in Q2. And then Nordstrom anniversary has been a really positive story for us. We're having a phenomenal event. Every division in the company that participates in that sale is seeing increased sell-through versus the prior year. But the real standout has been the Steve Madden women's footwear business. If you recall, we had a very strong event last year. That's really when we started to see the inflection in that business and a significant improvement in sell-through. But even on top of the very tough comparisons, we're seeing big increases in both overall volume and sell-through percentage. So very pleased with the Nordstrom anniversary performance.

The next question is from Paul Lejuez with Citigroup Inc.

Curious if you can talk about how much of the full year raise was from the second quarter beat versus something that was changed in the second half. Maybe if you can talk about what has changed in your second half assumptions, if anything? And also, I would love to hear any more detail about how you're thinking on DTC versus wholesale in the second half and what you build into guidance for footwear versus apparel and accessories on the wholesale side?

Okay. Sure. So in terms of the second quarter and then the back half with respect to the raise in revenue and earnings. Second quarter, from a revenue standpoint, came in pretty close to our internal expectations. So the revenue raise is really related more to what we're seeing going forward. However, we did exceed expectations on the gross margin line in Q2, and that was the primary driver of a beat versus our internal forecast in Q2. One comment I'll make there is that we were modeling the quarterly breakdown differently from consensus. So while we did have a beat in Q2 — I think it was more like $0.07 — we came in ahead of our expectation. And as you see, we're raising the full year by $0.05. Keep in mind that we have incorporated an additional $0.06 of pressure from freight as the impact from the Iran conflict has gone on longer than we contemplated in the prior guidance.

Got it. Then just DTC versus...

Okay. So for the full year, I'll give you the full year numbers, which I'll present excluding Kurt Geiger to make it cleaner. So high single digits for DTC, excluding Kurt Geiger. With Kurt Geiger, we're in the low-to-mid 20s. Then wholesale, excluding Kurt Geiger, we're looking at low single digits. With Kurt Geiger, mid-single digits.

And Paul, I'll just add some color on the freight side. As Ed mentioned, the conflict has gone on longer than contemplated. We successfully managed our ocean freight and reduced the impact that would come from emergency bunker surcharges as oil rose. What we're seeing now is higher air freight cost as we chase best sellers and product for international markets due to disruptions in the ocean supply chain. We're also using more air to chase product for international markets. Hence, why we added the $0.06 to the back half.

Got it. And then just one follow-up. Did anything change in how you're thinking about the private label business?

Not materially. I would say our expectation for the year got modestly better, but it's still a pressure point. We're looking at that business to be down mid- to high teens for the year. So as additional color, I mentioned that the wholesale business, excluding Kurt Geiger, is forecasted to be up low singles, but that's being dragged down by that decline in private label. The branded business, we're looking at a high single-digit growth expectation for the year.

The next question is from Janine Stichter with BTIG.

Can you elaborate a bit on what you're seeing on the branded side of the wholesale business? Curious if you're getting reorders in the quarter, and then what the conversations with your wholesale partners have been like for the back half, if there's any change there?

Yes. We feel very good about that business, seeing very strong performance. The branded business in wholesale in Q2 was up 20% year-over-year. We continue to be very pleased with the sell-throughs. We're getting reorders, and we've been chasing into strong sellers. It's a positive story.

And for your full year forecast, it does assume some deceleration. Does that continue to assume reorders in the holiday period? Or is that kind of assuming just the basic business?

Keep in mind, we were still down in that business in Q1, so we're not assuming 20% for the full year — we started a little bit in the hole and we're catching up. I would say there's a reorder assumption in for Q4. Is there upside to that? Potentially, but we need to get into the fall season and see how it goes before we build a lot of that activity into the forecast.

The next question is from Marni Shapiro with The Retail Tracker.

Congratulations. I just wanted to check one thing on the $0.06 related to freight. I'm assuming that includes freight from the factories and then distributions to stores. What about shipping costs to customers for your direct-to-consumer business? Have you raised hurdles or changed prices? Or are you just absorbing that excess cost?

We're seeing pressure in that as well, and that's also built into our guide, but we have not changed consumer shipping charges — we're absorbing that cost in the guide.

Okay. So no impact to the consumer. And then could you just talk about the nice rebound in the bag business, that's exciting. Are you seeing increased orders from your wholesale partners in the bag business now? Or is it mostly your own and direct-to-consumer?

Yes. We're seeing a big increase. For context, Steve Madden bags in the quarter overall across all channels was up about 30%. It was up more than that in wholesale. Now again, we had easy comparisons and it's not going to remain at that level forever, but Steve Madden bags for the year are on track to be up double digits. So we feel good about that — we're back on track there.

That's amazing. And can I just sneak in one more? There's so many more styles now that are kind of seasonless, like boots are selling all year. At the moment, suede is so trendy, so suede is selling all year. Does that give you a little bit more of a base of solid product that could live a little longer on the shelves so it doesn't have to get marked down at the end of the season? How does that change your thinking on how markdowns would happen?

I think that's right. We have a number of products in the assortment that can sell all year round. Particularly this spring, the category that declined the most was the most seasonal category of sandals, and we saw increases in categories that we can sell more all year. We like that. That being said, we're still in the business of trend and trend cycles move faster than ever today. We're not going to suddenly become a company that has styles that run for years and years; trends still change quickly.

The next question is from Aubrey Tianello with PNB Paribas.

This is Leah Yang on for Aubrey. Congrats on a nice quarter. So my first question is going to be on gross margin. I want to ask about gross margin for the rest of the year, especially now that you're lapping the acquisition of Kurt Geiger a couple of months ago. How should we think about the progression of gross margin in 3Q and 4Q?

For the balance of the year, remember the Kurt Geiger mix impact is largely gone in fall as we lap the acquisition, which was in May of last year. We also start to lap our pricing initiatives, which went into effect last fall. So now we start to lap those. There is less of a mix benefit from private label. As we mentioned earlier, we're factoring in some pressure on cost due to the conflict in the Middle East and on freight. We're also seeing cost pressures coming from our suppliers since the conflict has gone on longer than expected, and it's becoming a lot harder to push those costs to suppliers. So we're absorbing some cost in our margin as well.

He gave you a lot of the negative factors. I want to wrap that up by saying we still expect to see year-over-year improvement in gross margin each quarter; it's just not going to be as significant as it was in the first half.

Got it. And then moving down to SG&A. I want to ask about SG&A growth for the rest of the year. Should we still be modeling low-teens growth in 3Q and high singles in 4Q? Is there any change to that previous guide you provided last quarter? And then can you talk about some of the focus areas for the SG&A investment you're making this year?

I think it's best to think about it as what we built in our guide is a 38.3% SG&A for the year. When you factor in our comments about a normalized sales flow between Q3 and Q4, you'll see a lower percentage of SG&A to sales in Q3 versus Q4. From an SG&A perspective, we'll continue to control what we can. The only change from the last time in our last guidance is we increased our investment in brand marketing.

The next question is from Dana Telsey with Telsey Advisory Group.

Nice to see the progress. As you mentioned, part of the uptick in gross margin was the higher ASPs. What are you seeing in wholesale and DTC ASPs and how are you thinking about it going forward? And then any update on tariffs and how you're planning for the back half? And lastly, just on the retail stores, Ed, any difference between full price and outlet store performance?

As we moved into Q2, we started layering on the price increases in the wake of tariffs last year. In DTC, they started to hit in Q2 and then more of those roll through the balance of the year. We didn't really see significant impact to wholesale until the back half. In Q1 we were up AUR 17% in DTC, and that slowed to up high singles as we started to lap some of the increases from a year ago. I think that will still moderate again in Q3. Wholesale was still up mid-teens in Q2 because we had not yet lapped increases from the year before, but that will also moderate as we go into the back half. On the stores, the full-price stores continue to outperform outlet, but we've seen a nice recovery in outlet. In the U.S., outlet was down 1% in Q1 and rebounded to up 12% in Q2. Full-price stores in the U.S. were up 16% and U.S. e-commerce was up 20%, so healthy performance across channels.

From a tariff perspective, for Q3 we're basically in line with the announced new Section 301-type tariffs related to forced labor and other investigations. The specific tariff that impacts us is the 10% to 12.5% related to forced labor that went into effect on July 24th with a short grace period. We're reflecting Q3 as such. For Q4, we're still assuming 15% built into our numbers, which is a bit higher than currently announced tariffs. We also know there are two more investigations pending — one on structural excess capacity and the other on IP infringement, which targets Vietnam. The excess capacity investigation targets about 16 countries and several of those are countries we source from, which is why we have the 15% assumption.

Got it. And just one last follow-up. On the wholesale channel, how is performance differing by channel — department stores, discounters, off-price? What are you seeing in terms of differences, and what are you expecting going forward from private label?

The branded business is quite strong across the board. It's strongest in the first-tier channels — department stores, pure-play e-commerce retailers and boutiques where we sell our latest fashion. But we're doing pretty well across all channels. Private label remains a tougher part of the market right now in the mass channel, and we're working to address that.

This concludes our question-and-answer session. I would like to turn the conference back over to Ed Rosenfeld for any closing remarks.

Great. Well, thanks so much for joining us today. We hope you enjoy the rest of your summer, and we look forward to speaking with you on the third quarter call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.