SHOO Q3 Deep Dive: Tariffs Pressure Margins, Product Strength and Guidance Lift Expectations

Shoe and apparel company Steven Madden (NASDAQ:SHOO) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 6.9% year on year to $667.9 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $748.3 million at the midpoint, or 8.7% above analysts’ estimates. Its non-GAAP profit of $0.43 per share was 3.4% below analysts’ consensus estimates.

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StockStory’s Take

Steven Madden’s third quarter saw revenue growth, but the company missed Wall Street’s sales and non-GAAP profit expectations. The quarter was shaped by new tariffs on Chinese imports, which disrupted supply chains and led to order reductions from wholesale customers. CEO Edward Rosenfeld cited significant shipment delays and increased landed costs, which together put notable pressure on revenue and profit margins. Management focused on mitigating these headwinds through targeted pricing and sourcing efforts, while highlighting strong consumer demand for key product categories, particularly boots and dress shoes under the flagship Steve Madden brand.

Looking ahead, Steven Madden’s guidance for the next quarter is underpinned by expectations of normalized wholesale order patterns and ongoing momentum in direct-to-consumer channels. Management believes that continued investments in product design, marketing, and new store openings—particularly for the Kurt Geiger brand—will support growth. Rosenfeld emphasized strategic sourcing diversification and a disciplined approach to pricing as tools to offset tariff-related cost pressures, stating, “We are confident that we will begin to see improved financial performance in the fourth quarter and...drive sustainable revenue and earnings growth over the long term.”

Key Insights from Management’s Remarks

Management attributed third quarter challenges to tariff-induced disruptions and highlighted recent progress in product, brand, and channel execution.

• Tariffs reshape sourcing: The imposition of new tariffs on Chinese imports forced Steven Madden to shift production away from China midstream, causing shipment delays and increased landed costs. Management described these tariffs as the main driver of order reductions from wholesale customers and margin pressure during the quarter.
• Product strength drives demand: Despite headwinds, the Steve Madden brand saw significant consumer demand, particularly for boots and dress shoes. CEO Edward Rosenfeld credited a well-executed fall product assortment and effective marketing for improving both direct-to-consumer and wholesale sell-through rates, especially among Gen Z and Millennial customers.
• Kurt Geiger integration accelerates: The recently acquired Kurt Geiger brand delivered mid-teens comparable sales growth, with strong performance across the UK, Europe, and the US. Management cited ongoing integration efforts, including leveraging Steven Madden’s international network and realizing cost savings in logistics and freight, as key contributors to the brand’s momentum.
• E-commerce outpaces brick-and-mortar: Both Steve Madden and Kurt Geiger saw faster growth in e-commerce than in physical stores. Management noted that online sales trends have accelerated in recent months, supporting overall direct-to-consumer segment growth despite supply chain constraints.
• Category and channel nuances: Handbags remained under pressure due to excess inventory and shipment disruptions, but apparel sales performed well in key department stores and mass channels. Management observed that regular price channels outperformed value and outlet segments, with full-price stores showing better resilience to tariff and supply chain impacts.

Drivers of Future Performance

Steven Madden’s outlook centers on normalized wholesale demand, expanded direct-to-consumer momentum, and strategic cost mitigation in the face of tariffs.

• Wholesale and DTC recovery: Management expects wholesale order patterns to stabilize as supply chain disruptions ease and tariff impacts are increasingly offset by targeted price increases. Additionally, direct-to-consumer (DTC) growth is anticipated to continue, driven by strong product demand and ongoing digital marketing investments.
• Kurt Geiger expansion: The company is prioritizing new store openings and international expansion for Kurt Geiger, with plans to open additional U.S. locations and leverage synergies in global markets. Management sees sustained double-digit growth potential for Kurt Geiger outside its core UK base, which could further support revenue diversification.
• Margin restoration initiatives: Efforts to recover margin include further pricing actions, continued sourcing diversification to reduce reliance on any single country, and operational efficiencies. Management acknowledged that while margin recovery will take time, particularly as tariffs persist, the goal is to return both core and acquired businesses to pre-tariff margin levels over the medium term.

Catalysts in Upcoming Quarters

Our analysts will closely monitor (1) the pace of wholesale order normalization as supply chain and tariff disruptions abate, (2) the continued acceleration of direct-to-consumer and e-commerce sales, and (3) the progress of Kurt Geiger’s U.S. store expansion and international growth. Execution of margin recovery initiatives and ongoing product innovation will also be key indicators of sustainable performance.

Steven Madden currently trades at $37.32, up from $32.86 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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