STEVEN MADDEN, LTD. Q3 FY2026 earnings call

• Steve Madden Brand: Delivered strong growth with global DTC comp sales rising 7% (US comps up 16%). Success driven by casual footwear, booties, heels, and apparel categories including denim. Marketing efforts included the 'Ask Steve' campaign and a Paddington Bear collaboration.
• Kurt Geiger: Global DTC comp sales grew 6%, moderating from earlier high-growth trends. Full-year revenue guidance adjusted to low double-digit growth. Expanded distribution with new stores in SoHo, Desert Hills, and Macy's Herald Square.
• Dolce Vita: Achieved record third-quarter results with robust wholesale and DTC growth. Key product drivers included ballets, loafers, and handbags. Full-year revenue forecast raised to low double-digit growth.
• Other Brands: Betsy Johnson performed exceptionally well with a Paris Hilton collaboration generating nearly 800 million media impressions; on track for low teens revenue growth. Anne Klein, Carvela, and Madden Girl also showed strength.
• Operational Efficiency: Consolidated gross margin improved to 44.6% (from 43.4%) due to wholesale channel improvements. Operating expenses as a percentage of revenue decreased to 34.3% (from 36.4%) due to leverage on higher revenue.
• Inventory Management: Total inventory reduced by 12.8% to $415.3 million, largely driven by a 26% reduction in the Kurt Geiger business.

The company reported consolidated revenue of $772.6 million, a 15.7% increase year-over-year. Wholesale revenue contributed $528.7 million (up 19.4%), accounting for approximately 68.4% of total revenue, while Direct-to-Consumer (DTC) revenue was $239.2 million (up 8.0%), representing roughly 31.0% of the total. Kurt Geiger generated $142.9 million in revenue during the quarter.

• Revenue: Raised full-year 2026 revenue growth expectation to 12%-13%, up from the previous guidance of 11%-13%.
• Earnings Per Share: Raised diluted EPS guidance to $2.15-$2.20, compared to the prior range of $2.05-$2.15.
• Brand Specifics: Kurt Geiger full-year revenue now expected to grow at a low double-digit rate (down from mid-teens). Dolce Vita full-year revenue expected to grow at a low double-digit rate (raised from prior estimates).

• Tariffs and Freight Costs: Embedded assumptions for Q4 tariffs at approximately 12.5% (down from 15%) and expect a 20 basis point negative impact from outbound freight costs. Uncertainty remains regarding the future tariff regime.
• Private Label Business: The mass channel private label business continues to struggle, with expectations revised slightly upward but still down mid-teens for the year. Management acknowledges they have not yet stabilized this segment.
• Geopolitical Impact: International comp sales were negatively impacted by the conflict in the Middle East, specifically affecting the GCC business.
• Seasonal Trends: Tall-shaft boots underperformed relative to last year due to trend shifts rather than weather, highlighting the volatility of fashion trends.

Q: Analyst asked about core Madden stockouts, weather impacts, and the specific revenue contribution and performance drivers behind the moderated Kurt Geiger guidance. / A: Management clarified that revenue was in line with internal expectations, with minor variances due to shipment timing shifts caused by typhoons. Regarding Kurt Geiger, growth normalized from an exceptional Q1, settling into solid low-double-digit annual growth. They did not identify specific products failing but noted a return to more typical seasonal trends after early-year spikes.

Q: Analyst inquired about Q4 implied sales guidance, specifically asking if wholesale reorders are strong enough to offset expected declines, and sought details on seasonal liquidation dynamics and tall-shaft boot performance. / A: Management confirmed that excluding Kurt Geiger, the core business is expected to decline modestly in Q4 due to the shift of wholesale shipments from Q3 to Q4 last year. While retailers are chasing popular items, the timing headwind is significant. Tall-shaft boots underperformed due to trend shifts, not weather, requiring deeper markdowns on laggard spring sandals to clear inventory for fall.

Q: Analyst requested clarification on tariff and freight cost assumptions for Q4 and FY27, as well as reasons for lower-than-expected SG&A growth in Q3. / A: Tariff assumptions for Q4 were lowered to ~12.5% from 15%. Outbound freight is expected to negatively impact margins by 20 basis points. SG&A as a % of revenue benefited from deleveraging on higher sales volume and better operational control in warehouses and stores, contrasting with Q2 where Kurt Geiger's full presence inflated expenses.

Q: Analyst asked for a breakdown of Kurt Geiger revenue by channel and performance of concessions, as well as updates on Madden Girl and Men's brands. / A: Kurt Geiger revenue was $142.9 million, with $101.8 million from DTC. Concessions are flat, while brand-led growth is faster. Madden Girl and Men's brands are performing strongly; Men's benefits from a shift away from sneakers toward loafers and dress shoes, with improved quality and average unit retail prices driving growth.

Q: Analyst questioned the outlook for the struggling private label business, asking how far it has fallen from its peak and whether it will stabilize or continue declining. / A: Management expects the private label business to be down north of $110-$115 million compared to 2024 levels. While they have slightly raised their FY26 decline estimate to mid-teens (from mid-to-high teens), this is largely due to order timing shifts rather than trend improvement. The goal for next year is to flatten the decline and stop the bleeding before attempting growth.