Steven Madden, Ltd. (SHOO) Earnings

Management highlights

- Brand Performance * Flagship Steve Madden brand delivered strong momentum, driven by on-trend product assortments across women's footwear (strong dress shoes, outsized casual category growth), men's footwear (strength in loafers), and handbags (returned to strong growth). Global online searches for Steve Madden rose 71% in the quarter, and global comp sales rose 9% (17% in the U.S., 1% internationally, 4% excluding GCC markets impacted by the Middle East conflict). * Kurt Geiger London added significant inorganic growth following its 2025 acquisition. Two new full-price U.S. stores were opened in premium malls, bringing the U.S. total to 7 stores; U.S. comp store sales gained 12%, and existing stores deliver strong four-wall profitability. The in-store personalization service for Kensington bags drives 17% of handbag sales at locations offering it, and will be leveraged as a key brand differentiator. The company acquired the Spain and Portugal distributor business in Q2 to operate the region in-house, and is in active discussions for global distribution and joint venture partnerships. * Dolce Vita delivered an outstanding quarter with strong growth across both wholesale and DTC channels, driven by popular on-trend assortments. Handbag growth continues, and momentum is building in international markets including Canada, Mexico, and the UK. - Operational Highlights * Consolidated gross margin expanded 460 bps YoY to 46.5%, with expansion in both wholesale and DTC channels, driven by higher average selling prices, reduced tariff impact, lower private label penetration, and reduced promotional activity. * Operating income hit $44.5 million (6.7% of revenue) compared to $22.6 million (4% of revenue) YoY; diluted EPS more than doubled to $0.44 from $0.20 YoY. * Inventory was reduced 13.7% YoY to $377.2 million, with a 30% inventory reduction in the Kurt Geiger business. The company received $92.1 million in IEAA tariff refunds during the quarter, which were used to pay down debt, resulting in net debt of $30.1 million as of quarter end. * A quarterly cash dividend of 21 cents per share was approved, payable September 24, 2026.

Guidance

- Full year 2026 consolidated revenue growth guidance was raised to 11-13%, up from the prior guidance of 10-12%. Full year diluted EPS guidance was raised to $2.05-$2.15, up from the prior guidance of $2.00-$2.10. - Steve Madden brand full year revenue is now expected to achieve high single-digit growth compared to 2025, an increase from the prior forecast. - Dolce Vita full year revenue is now expected to achieve high single-digit to low double-digit growth compared to 2025, an increase from the prior forecast. - Kurt Geiger London full year pro forma revenue growth guidance is maintained at mid-teens. - Excluding Kurt Geiger, full year DTC revenue is expected to grow high single-digits, while wholesale revenue is expected to grow low single-digits. Private label wholesale is expected to decline mid-to-high teens for the full year, while branded wholesale is expected to grow high single-digits. - The second half 2026 revenue and earnings cadence is expected to be more typical than 2025, with Q3 expected to contribute more than Q4 to back half results. The slower consolidated growth relative to H1 2026 is driven by the lapping of the Kurt Geiger acquisition, which removes the inorganic growth contribution. - Gross margin is expected to continue improving year-over-year in each of the remaining quarters of 2026, though the rate of improvement will be smaller than in the first half.

Segment performance

Total consolidated revenue for Q2 2026 was $665.9 million, a 19.1% increase year-over-year (11.2% excluding the acquired Kurt Geiger London brand). - Wholesale Segment: Revenue was $407.5 million, up 13% YoY (11.5% excluding Kurt Geiger), accounting for 61.2% of total consolidated revenue. Wholesale footwear revenue was $240 million (up 9% YoY, 7.8% excluding Kurt Geiger), while wholesale accessories and apparel revenue was $167.5 million (up 19.2% YoY, 17.5% excluding Kurt Geiger). Wholesale gross margin was 35.2%, up 430 bps YoY. - Direct-to-Consumer (DTC) Segment: Revenue was $255.4 million, up 30.6% YoY (11.1% excluding Kurt Geiger), accounting for 38.3% of total consolidated revenue. Double-digit growth was seen in both brick-and-mortar and e-commerce channels. DTC gross margin was 64%, up 270 bps YoY. - Licensing: Royalty income was $3 million, up slightly from $2.9 million YoY, accounting for less than 0.5% of total revenue.

Risks & headwinds

- Ongoing conflict in the Middle East has disrupted international ocean supply chains, leading to higher than expected air freight costs to restock best-selling products in international markets, which has added 6 cents of pressure to full year EPS guidance. - New tariffs (including a 10-12.5% tariff effective July 2026 related to forced labor regulations) are in effect, and pending additional tariff investigations targeting major sourcing countries create further cost uncertainty; full year guidance assumes a 15% average tariff rate to account for this uncertainty. - Supplier cost pressures have increased as the Middle East conflict has extended longer than initially expected, and the company is absorbing a portion of these additional costs which impacts margin. - Private label wholesale remains a consistent pressure point, expected to decline mid-to-high teens for the full year, dragging down overall wholesale growth. - Fashion trend cycles are shortening faster than ever, requiring continued frequent assortment updates and inventory management.

Analyst Q&A

• Q: Why does full-year guidance imply slower H2 growth despite current strong portfolio momentum? What is DTC momentum quarter-to-date, and how is the Nordstrom Anniversary Sale performing?

  A: The slower H2 consolidated growth is entirely due to lapping the Kurt Geiger acquisition from May 2025, which removes the inorganic growth contribution. DTC momentum from Q2 has continued into the current quarter, with trends matching Q2 strength. The Nordstrom Anniversary Sale has performed very well, with all divisions seeing higher sell-through than last year; the standout is the Steve Madden women's footwear business, which delivered large volume and sell-through gains even over 2025's strong performance.

• Q: How much of the full year guidance raise comes from a Q2 beat versus improved H2 expectations? What is the split of growth between DTC and wholesale, and have private label expectations changed?

  A: Q2 revenue came in near internal expectations, so the guidance raise is driven by stronger forward momentum, while the Q2 gross margin beat relative to internal forecasts also contributed. Additional 6 cents of EPS pressure from higher-than-expected freight costs due to extended Middle East supply chain disruption was incorporated into the new guidance. Private label expectations improved modestly but remain a pressure point, still projected to decline mid-to-high teens for the full year; branded wholesale is expected to grow high single-digits.

• Q: What is the performance of branded wholesale, and are you seeing ongoing reorders and strong partner demand for the back half?

  A: Branded wholesale grew 20% year-over-year in Q2, with very strong sell-through and ongoing reorder activity for top products. Full year growth is expected to decelerate from Q2's 20% rate in part because the business was down year-over-year in Q1 2026, leaving it starting the year behind plan; guidance includes baseline reorder assumptions for the holiday quarter, with upside potential if demand continues to outperform.

• Q: How will gross margin progress in H2 after lapping the Kurt Geiger acquisition and last year's pricing increases? How is SG&A planned for the rest of the year?

  A: After lapping the Kurt Geiger acquisition, the acquisition's margin benefit will fade, and the company will also lap last fall's pricing initiatives; additional margin pressure from extended Middle East conflict and higher supplier costs is factored into guidance. Gross margin will still improve year-over-year in both Q3 and Q4, just at a slower rate than H1. Full year SG&A is guided to 38.3% of revenue, with the only change from prior guidance being an increase in brand marketing investment.