Steven Madden Q4 2024 Earnings Report

Steven Madden EPS Results

• Actual EPS: $0.55
• Consensus EPS: $0.53
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Steven Madden Revenue Results

• Actual Revenue: $582.32 million
• Expected Revenue: $550.37 million
• Beat/Miss: Beat by +$31.95 million
• YoY Revenue Growth: N/A

Steven Madden Announcement Details

• Quarter: Q4 2024
• Date: 2/26/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 26, 2025
• Conference Call Time: 8:30AM ET

Steven Madden (NASDAQ:SHOO) designs, sources, and markets fashion-forward branded and private label footwear, accessories, and apparel in the United States and internationally. It operates through Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to- Consumer, and Licensing segments. The Wholesale Footwear segment designs, sources, and markets various products, including dress shoes, boots, booties, fashion sneakers, sandals, and casual shoes under the Steve Madden, Dolce Vita, Betsey Johnson, Blondo, GREATS, and Anne Klein brands. The Wholesale Accessories/Apparel segment offers handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting, and other accessories under the Steve Madden, Anne Klein, Betsey Johnson, and Dolce Vita brands. The Direct-to-Consumer segment operates Steve Madden and Dolce Vita full-price retail stores, Steve Madden outlet stores and concessions, and digital e-commerce websites. The Licensing segment engages in the licensing of the Steve Madden and Betsey Johnson trademarks for the sale of select apparel, accessory, home categories, and other non-core products. In addition, the company distributes its products in the wholesale channel through department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs. Further, it markets its products and services through digital brand marketing, social media and influencer marketing, experiential events, in-store and online promotions, and public relations. The company was incorporated in 1990 and is headquartered in Long Island City, New York.

Steven Madden Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Fourth Quarter twenty twenty four Steve Madden Limited Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised today's conference is being recorded.

[Operator]

I would now like to hand the conference over to your speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

[Danielle McCoy, Director of Corporate Development and Investor Relations at Steven Madden]

Thanks, Kevin, and good morning, everyone. Thank you for joining our fourth quarter and full year twenty twenty four 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.

[Danielle McCoy, Director of Corporate Development and Investor Relations at Steven Madden]

We disclaim any obligation to update these forward looking statements, which may not be updated until our next quarterly earnings conference 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 and other associated disclosures are contained in our earnings release. Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer and

[Danielle McCoy, Director of Corporate Development and Investor Relations at Steven Madden]

Zane

[Danielle McCoy, Director of Corporate Development and Investor Relations at Steven Madden]

Wazoozy, Chief Financial Officer. With that, I'll turn the call over to Ed. Ed?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

All right. Well, thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steve Madden's fourth quarter and full year twenty twenty four results. We are pleased to have delivered earnings results at the high end of our guidance range for the fourth quarter of twenty twenty four, capping off a strong year in which we grew revenue 15% and diluted EPS 9% compared to 2023. These results demonstrate the power of our brands and the strength of our business model, as well as our team's disciplined execution of our strategy. So let me walk you through the highlights.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

First and foremost, our top priority is always to win with product. In 2024, our teams utilized our proven model, which combines talented design teams, a test and react strategy and an industry leading speed to market capability to create trend right product assortments across our various brands and product categories that resonated with consumers. We then supported this great product with increased investment in our full funnel marketing strategy, highlighted by our global marketing campaign for the Steve Madden brand in fall that we called Never Miss a Beat, a love letter to our hometown of New York City featuring the iconic D. L. I.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

D. L. I. D. L.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

I. D. S. Song Grooves in the Heart. Together, this combination of outstanding product and effective marketing enabled us to deepen our connection with our consumers and drive results across our four key business drivers.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

The first of those key business drivers is expanding our business in international markets. In 2024, our international revenue grew 12% versus the prior year. Revenue in the EMEA region increased 18%, including a solid gain in Europe despite a challenging retail environment, strong expansion in The Middle East and explosive growth in South Africa. In The Americas ex U. S, revenue grew 9% including mid single digit percentage gains in Canada and Mexico as well as the contribution from our new joint venture in Latin America, which is off to a strong start.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

We also continue to transition from the distributor model to an ownership model in key markets. In addition to the aforementioned joint venture for certain countries in Latin America, which we formed in the second quarter of twenty twenty four, We also converted our distributor business in Southeastern Europe, including Serbia and Croatia to a joint venture with our partner Fashion Company in Q2 twenty twenty four. Then in the fourth quarter, we formed a JV for Singapore with leading regional player Balaram Group. And in January, we converted our partnership with Balaram in Malaysia to a majority owned JV structure. We currently operate 14 stores in e commerce through the joint ventures with Balaram.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And also in January, we formed a new JV in Australia, where we currently operate eight stores in e commerce and have wholesale distribution in retailers including David Jones and Meijer's. Our second key business driver is expanding in categories outside of footwear like accessories and apparel. In 2024, our overall accessories and apparel revenue increased 53% compared to 2023 or 25% excluding Almost Famous. Our Steve Madden handbag business was outstanding, crossing the $300,000,000 mark in revenue for the first time and increasing 31% compared to the prior year. Since 2019, Steve Madden handbag revenue has increased 23 per year on a compounded annual basis.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Speed Madden Apparel also continued to gain traction with revenue up 23% versus 2023. And the Almost Famous division exceeded expectations in its first full year under our ownership, contributing $179,000,000 in revenue with an operating margin of nearly 11%. Our third key driver is growing our business in direct to consumer channels. DTC revenue in 2024 was $550,000,000 a 9% increase versus 2023 or 5% growth on a comp basis. Steve Madden DTC revenue increased 6% while Dolce Vita DTC revenue grew 36%.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And our last key driver is strengthening our core U. S. Wholesale footwear business. While many of our key wholesale customers continue to excuse me, to take a cautious approach to orders as they prioritize inventory control, we were pleased to return to revenue growth in this business in 2024 with a 2% increase compared to 2023. So overall 2024 was a strong year for Steve Madden with robust top and bottom line growth driven by tangible progress on our key strategic initiatives.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

We also demonstrated our ongoing commitment to returning capital to our shareholders with nearly $160,000,000 in combined dividends and share repurchases. As we look ahead, however, we are cautious on our outlook for 2025 as we face meaningful near term headwinds. Most notably, our earnings will be negatively impacted by new tariffs on goods imported into The United States and by our efforts to aggressively diversify production out of China. We also expect our handbag business, which has been a leading growth driver for us in recent years to face pressure this year, as handbag inventories in certain parts of the wholesale channel have backed up, resulting in constrained open device and more cautious ordering from key wholesale customers. That said, we have a proven ability to navigate difficult market conditions with our agile business model.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And we are also looking forward to adding a powerful new growth engine to the company with the acquisition of Kurt Geiger, which we announced on February 13 and expect to close in the second quarter of twenty twenty five. The Kurt Geiger London brand has exhibited exceptional growth over the last several years as its unique brand image, distinctive design aesthetic and compelling value proposition have driven success across multiple categories led by handbags. It's differentiated and elevated positioning and its alignment with our strategic initiatives of expanding in international markets, accessories categories and direct to consumer channels make it a highly attractive and complementary addition to our portfolio. In addition to Kurt Geiger London, Kurt Geiger's brand portfolio includes KG Kurt Geiger and Carbella. And the company also operates footwear concessions within luxury and premium department stores in The United Kingdom, including Harrods and Selfridges, where it sells both its own and third party brands.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

For the twelve months ended 02/01/2025, Kurt Geiger had revenue of GBP 400,000,000. The purchase price in the transaction reflects an enterprise value of GBP £289,000,000 2 80 9 million pounds with two seventy five million pounds in cash due at closing and the balance payable to management over a five year period upon achievement of certain financial targets. Importantly, all members of the executive management team have agreed to stay on and continue to lead Kurt Geiger under our ownership, including CEO, Neil Clifford, who has led Kurt Geiger for over twenty years. So in sum, we are pleased to have delivered strong revenue and earnings growth as well as meaningful progress on our key strategic initiatives in 2024. And while we clearly face some headwinds in 2025, we are confident that the combination of our strong brands and proven business model supplemented by a significant new growth driver in Kurt Geiger will enable us to drive sustainable revenue and earnings growth over the long term.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Now, I'll turn it over to Zeen to review our fourth quarter and full year 2024 financial results in more detail and provide our initial outlook for 2025.

[Zine Mazouzi, CFO at Steven Madden]

Thanks, Ed, and good morning, everyone. In the fourth quarter, our consolidated revenue was $582,300,000 a 12% increase compared to the fourth quarter of twenty twenty three. Our wholesale revenue was $402,900,000 up 13.6% compared to the fourth quarter of twenty twenty three. Wholesale footwear revenue was $227,400,000 a 1% increase from the comparable period in 2023. Also accessories and apparel revenue was $175,400,000 up 35.4% to the fourth quarter in the prior year driven by strong growth across the board with double digit percentage gains in accessories and apparel categories, domestic and international markets and branded and private label businesses.

[Zine Mazouzi, CFO at Steven Madden]

Our wholesale business in the quarter also benefited from approximately $13,000,000 of shipments to the mass channel that were expected to ship in January 2025 and will move up to the end of Q4 twenty twenty four. In our Direct to Consumer segment, revenue was $176,000,000 an 8.4% increase compared to the fourth quarter of twenty twenty three with increases in both the brick and mortar and e commerce businesses. Job sales rose 4.5 in the quarter. We ended the year with two ninety one company operated brick and mortar retail stores, including 68 outlets, as well as five e commerce websites and 42 company operated concessions in international markets. Our licensing royalty income was $3,500,000 in the quarter compared to $2,700,000 in the fourth quarter of twenty twenty three.

[Zine Mazouzi, CFO at Steven Madden]

Consolidated gross margin was 40.4% in the quarter compared to 41.7% in the comparable period of 2023. Wholesale gross margin was 30.5 compared to 31.7% in the fourth quarter of twenty twenty three, primarily driven by a greater mix of private label businesses. Direct to consumer gross margin was 62% compared to 62.7% in the comparable period in 2023, driven by an increase in promotional activity. While we did not run more or deeper promotions, we saw a higher concentration of consumer spends during the promotional periods compared to the prior year. Operating expenses were $182,900,000 or 31.4 percent of revenue in the quarter compared to $163,900,000 or 31.5% of revenue in the fourth quarter of twenty twenty three.

[Zine Mazouzi, CFO at Steven Madden]

Operating income for the quarter was $52,600,000 dollars or 9% of revenue compared to $53,000,000 or 10.2% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 21.4% compared to 14.3% in the fourth quarter of twenty twenty three, driven by lower discrete benefits related to stock based compensation. Finally, net income attributable to Steve Madden Limited for the quarter was $39,300,000 or $0.55 per diluted share compared to $45,000,000 or $0.61 per diluted share in the fourth quarter of twenty twenty three. Now I would like to touch briefly on full year results. Total revenue for 2024 increased 15.2% to $2,300,000,000 compared to $2,000,000,000 in 2023.

[Zine Mazouzi, CFO at Steven Madden]

Net income attributable to Steve Madden Limited was $192,400,000 dollars or $2.67 per diluted share for the year ended 12/31/2024 compared to $182,700,000 or $2.45 per diluted share for the year ended 12/31/2023. Moving to the balance sheet, our financial foundation remains strong. As of 12/31/2024, we had $203,400,000 of cash, cash equivalents and short term investments and no debt. Inventory was $257,600,000 up 12.5% to the prior year. Our CapEx in the fourth quarter was $9,300,000 and for the year was $25,900,000 During the fourth quarter and full year 2024, the company spent $2,600,000 and $98,400,000 respectively on repurchases of its common stock, including shares acquired through the net settlement of employee stock awards.

[Zine Mazouzi, CFO at Steven Madden]

The company's Board of Directors approved a quarterly cash dividend of 0.21 per share. The dividend will be payable on 03/21/2025 to stockholders of record as of the close of business on 03/10/2025. Turning to our outlook, we expect revenue for 2025 to increase 17% to 19% compared to 2024 and we expect diluted EPS to be in the range of $2.3 to $2.4 This outlook assumes the Kurt Geiger acquisition closed on May 1 and includes Kurt Geiger from that date. Excluding Kurt Geiger, we expect revenue to increase low single digits on a percentage basis and we expect diluted EPS to be in the range of $20.2 to $20.3 In the first quarter, we expect diluted EPS to decline approximately 30% to 35 versus the first quarter of twenty twenty four as Q1 represents our toughest comparison to last year. We are also significantly increasing our year over year marketing investment in Q1 and our DTC business has been under pressure quarter to date.

[Zine Mazouzi, CFO at Steven Madden]

Now, I would like to turn the call over to the operator for questions. Kevin?

[Operator]

Thank you. Our first question comes from Paul Lejuez with Citi. Your line is open.

[Paul Lejuez, Managing Director at Citi]

Hey, thanks guys. Can you maybe talk about how you're thinking about gross margin pressure throughout the year just given the tariff impact and what your plans are to mitigate as you move throughout the year? And then also on the Kurt Geiger investment, curious if you are baking in any needed investment into that business as you kind of get it, within, if there's any drag that we should be thinking about that occurs this year from needed investment versus what you'll see going forward? Thanks.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes. Thanks, Paul. So in terms of the first question, yes, obviously, we are dealing with pressure from tariffs this year. The plan to mitigate is really essentially the playbook that we've outlined previously. It's number one, diversifying production out of China.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And we are making significant progress with respect to that part of the strategy already. You'll recall that on the last call, we said at that time that on the goods that we imported to The United States that about 71% of those were coming from China. Sitting here today, based on what we've already brought in so far this year and what's on order, that number is already down to 58%, so almost a 20% reduction since the last call and we expect to continue to make further progress throughout the year. You'll recall that our goal was to be down to the low 40s in terms of goods that we're placing a year from the election. So essentially in November of this year, we're placing goods, we are targeting low 40s and we think we're marching towards that goal.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

The other pieces of the mitigation plan are, of course, going back to the factories and looking for price concessions and those discussions are ongoing. And then third piece is, we will be selectively raising prices. And it's not going to be an across the board price increase, but we will be surgical about it and where we think that we can get a little bit more for the goods, we will do that starting in fall. In terms of specific gross margin guidance, I think essentially given all the uncertainty here and the fluidity, we're not going to provide specific gross margin guidance today. We're signing up for the revenue and EPS that we've disclosed, but not prepared to make any commitments around gross margin or specific tariff impact today.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

But obviously, as we go throughout the year and get more clarity here, we will provide you more color at that time.

[Operator]

Thank you. One moment for

[Paul Lejuez, Managing Director at Citi]

our questions.

[Operator]

Sorry, go ahead.

[Paul Lejuez, Managing Director at Citi]

I'll just take the Kurt Geiger announcement.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sorry, I'm sorry. I apologize. I forgot to respond to the second part. Yes. So on Kurt Geiger, no, I don't think there's any meaningful investment required upfront.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

We certainly see a lot of opportunity to grow that business and we'll be investing, but there's no operating margin drag in the first year or two for big investments.

[Paul Lejuez, Managing Director at Citi]

And just go back to gross margin, Ed, any color just in terms of the first half, second half pressure, just your ability to execute on some of those mitigation efforts? Like are you seeing that come through as an offset in the first half? Or is that something that we won't see for the second half?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Again, first of all, we don't provide quarterly guidance in the first place and this is a situation that's even more uncertain. So I'm hesitant to try to give too much color around the quarterly cadence there. Obviously, the longer the farther out we are, the more the mitigation efforts have an impact. But in the near term, we're also engaging in certain discussions with our factories and seeing what we can do to give us a little bit of help in the near term as well.

[Paul Lejuez, Managing Director at Citi]

Got it. Thanks. Good luck. Thank you.

[Operator]

One moment for our next question. Our next question comes from Anna Andreeva with Piper. Your line is open.

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Great. Thank you so much and good morning. A couple from us. First, you mentioned DTC is under some pressure quarter to date. Can you just parse out what are you seeing in January versus February?

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Any improvement in Feb? And do you think this is mostly macro and the tariff conversation, but is weather hurting you guys as well? And then we have a follow-up.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes. We have seen a slow start to the year. I would say in particular, we've seen a slow start to the selling of spring products, including sandals and overall weak traffic to stores. And I think this is not something that is just a Steve Madden phenomenon. We talked to a lot of folks in the industry and we're hearing something consistent from a lot of the other retailers that we speak with.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

I'll say that in our my conversations with other folks, I think at this point, while we are loathed to blame the weather, we are hearing from a lot of other folks in this industry that they're attributing a lot of this slow start to the year to weather. It's obviously been very cold across the country. But look, I think we have to we're going to have to monitor that because there are some other signs that we need to be watching. Obviously, I think we've all seen the consumer confidence figures over the last couple of weeks that have shown a pretty significant drop in consumer sentiment. So we'll have to monitor that carefully.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Not any major difference between January and February in terms of the trend.

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Okay. That's super helpful. And secondly on KG and congrats on the acquisition. Can you talk about why you think now is the right time to make this acquisition? How do you guys think about offsetting the tariffs exposure there?

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

I think over 80% of their production is in China. And you mentioned their revenue contribution from the business. How should we think about EPS contribution for this year?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sure. So in terms of why now, look, this is this opportunity became available and fundamentally, we want to make this acquisition because we think the Kurt Geiger London brand can be a very big and very profitable brand. As I mentioned in the prepared remarks, it's a brand with a really unique and differentiated brand image and design aesthetic. And that combined with a really strong price value proposition, is really resonating with consumers. It plays at a really attractive part of the market, what we would call for lack of better term accessible luxury, led by handbags, with obviously a very strong shoe business as well.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And it's a brand that's generated outstanding growth and sustained brand heat over the last several years. So this is a brand that was up over 25% last year, over 35% per year on a compounded annual basis since 2019. If you look just at The U. S, it's the business that was under $10,000,000 in The U. S.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

In 2019 and did over $170,000,000 last year. But despite all that exceptional growth in recent years, I think what's exciting about it is that it's still really in the very early innings of its growth journey. It's still lots of runway and untapped growth potential ahead of it. It also, I think it's just a really good fit with our company. It's a brand that has a very different image, very different aesthetic, very different positioning, very different price point from the other brands in our portfolio.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

So it's complementary in that respect. And it advances the strategic initiatives that we've been talking about in the last several years, which is because it increases our penetration in international, in accessories and in DTC. So I think it's a pretty perfect fit for us and we're really excited about it. And frankly, we think we got it at an attractive value for such a high quality and high growth asset. In terms of the tariff exposure, it's a good question.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

I do want to point out that different from us, only 35 of their overall business is done in The United States. So while they do have tariff exposure, it's considerably less just because by virtue of the fact that the majority of the business is done outside The U. S. On that 35% that is in The U. S, you are right, they do have a significant exposure to China.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

It's about 85% of their sourcing coming from China today. And that's something we think that we'll be able to help them with and we'll be working with them. There's a we have a plan in place to diversify them. And I think that based on their product mix, being majority handbags, as well as their higher price points, I do think there's a clear path to diversifying over a relatively short period of time. In terms of the EPS impact, it's about 0.1 that we've built in for this year.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Again, that's for the partial year May 1 through the end of the year.

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

All right. Well, thank you so much, Ed, and congrats again.

[Paul Lejuez, Managing Director at Citi]

Thank you.

[Operator]

One moment for our next question. Our next question comes from Janie Stitcher with BTIG. Your line is open.

[Janine Stichter, Managing Director at BTIG]

Hi, good morning. So on

[Janine Stichter, Managing Director at BTIG]

the low single digit growth

[Janine Stichter, Managing Director at BTIG]

that you're planning for the year organically, can you just unpack how you're thinking about wholesale versus DTC? And then maybe within wholesale, how you're thinking about the different segments, whether it's on the CMAD and branded business, mass and off price?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sure. Yes. So within that low singles on a consolidated basis, excluding KG, we're looking at down low single digits in wholesale and up high single digits in DTC. And if we unpack wholesale a little bit, that's up low singles in wholesale footwear and down mid single digits in wholesale accessories and apparel. In terms of branded versus private label, we actually think branded will grow will have better growth than private label in 2025 different from what we saw last year.

[Janine Stichter, Managing Director at BTIG]

Great. And then just in

[Janine Stichter, Managing Director at BTIG]

the wholesale accessories and apparel down mid single digits, I assume that would mean handbags down more significantly. How are you thinking about the apparel growth this year now that you've started to lap the Almost Famous acquisition?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes, I think that's right. I think that we've talked about the pressure on the Steve Madden handbag business and we are looking at that being down double digits at this point. In terms of apparel, we're bullish on the Steve Madden apparel business and think we'll continue to see nice growth there. We do have a private label apparel business as well. And there we do expect to see some pressure.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Part of that is just a good chunk of that is just a move. I think Zeen called out in his prepared remarks that there was a fairly significant move of goods that typically would go out in January into December. And so that's causing a little bit of pressure there.

[Janine Stichter, Managing Director at BTIG]

Great. Thanks so much.

[Operator]

One moment for our next question. Our next question comes from Marni Shapiro with the Retail Tracker. Your line is open.

[Marni Shapiro, Chief Marketing Officer at The Retail Tracker]

Hey guys. Can I just actually follow-up on that last comment? The pressure from the shift into December from January, once you're past that, is are there any other shifts or anything we should be aware of or is it just a general kind of pressure on the private label apparel side?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

I think that's a big piece of it, but I do expect to see a little pressure on that side as well. We are seeing some of those mass customers get a little bit more conservative with their orders.

[Marni Shapiro, Chief Marketing Officer at The Retail Tracker]

That makes sense. And then could you just talk by the way, the Steve Madden branded apparel at retail looks fantastic, beautiful sets at the stores and growing. It's nice to see. Could you talk a little bit about the slowdown you're seeing in the bags? I think you said it was a little bit too much inventory in the pipeline and in shoes.

[Marni Shapiro, Chief Marketing Officer at The Retail Tracker]

Are you seeing it at every level at mass all the way up to Dolce Vita's customers? Or is it more specifically at the mass level?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes. First of all, thank you for the comments about Steve Madden and Farrell. We're really excited about about the progress that we're making there and so really good about that. In terms of handbags, where we're seeing that most acutely is in that Steve Madden handbag business and that tier of distribution. And that is obviously the bulk of our business.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

That's the business that's been driving so much growth for us and has been such a strong tailwind for us in recent years.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

so it does put some pressure on the overall numbers in handbags when that one slows down because that's the bulk of it.

[Marni Shapiro, Chief Marketing Officer at The Retail Tracker]

And can I sneak in one more just following up on the tariff conversation? I guess how much of your spring product were you able to bring in before because obviously you've been shipping spring product over the last month or so. It's going to continue to come in. Those goods came in before the tariffs went back in. So when is sort of I don't want to call it peak tariff, but when does the product that came in pre tariff start to wane and you start to really feel the impact?

[Marni Shapiro, Chief Marketing Officer at The Retail Tracker]

Is that Q2 or Q3? Or is it any guidance around that?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes. I mean, the only thing I'll say is that in contrast to some of the other companies that you may follow, because we turned our inventory so quickly, we still turn our inventories faster than just about anybody else in the industry, we will feel this earlier than others. And particularly in our wholesale channel, we return our inventories close to 10 times a year, which means that if the tariffs went into effect in early February, we're going to start to feel it even at the end of first quarter on certain goods.

[Marni Shapiro, Chief Marketing Officer at The Retail Tracker]

Got it. That makes sense. Best of luck. The product looks fantastic, guys.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Thanks so much.

[Operator]

One moment for our next question. Our next question comes from Laura Champine with Loop Capital. Your line is open.

[Laura Champine, Director of Research at Loop Capital Markets LLC]

Thanks for taking my question. I concur that the valuation on Kurt Geiger was attractive. Is that widespread? Are you seeing that kind of across the board? And if so, would you be open to other M and A this year?

[Laura Champine, Director of Research at Loop Capital Markets LLC]

Or is this a big enough transaction that you feel like this is one and done for this year?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

This is a really important transaction for us. We think this is a super impactful opportunity going forward. So I think that our focus this year is going to be on integrating this and setting this up for success. I'll never say never, but we'll be certainly oriented towards focusing on Kurt Geiger for the time being.

[Laura Champine, Director of Research at Loop Capital Markets LLC]

Understood. And then on the wholesale footwear business, you mentioned that gross margin was pressured because of higher penetration of private label. Would wholesale footwear have grown in Q4 without growth from the mass channel?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

No, the branded business was down about 3% in Q4.

[Laura Champine, Director of Research at Loop Capital Markets LLC]

Okay. And is that similar to do you have an expectation for improvement in 2025?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes, I do. I think it will get better. I think we should be able to turn positive in Q1, but up low singles. And that's really how we're thinking about it for 2025.

[Laura Champine, Director of Research at Loop Capital Markets LLC]

Got it. Thank you.

[Operator]

One moment for our next question. Our next question comes from Sam Poser with Williams Trading. Your line is open.

[Sam poser, Equity Analyst at Williams Trading LLC]

Thank you very much. Good morning. I've got a handful. Hopefully, we can get this at least half of them. Just some housekeeping on what you're anticipating the interest expense to be for the year, Zane, as we look out to the back half?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Well, We're not going to guide to every line on the income statement, Sam. But what I would I guess what I would tell you is the we are incurring debt to do the new transaction. We've built that in again, we've assumed that that transaction closes May 1, that the new term loan there will be at sulfur plus 200 to start. So hopefully that gives you enough to do your modeling.

[Sam poser, Equity Analyst at Williams Trading LLC]

You know me well enough to know that it's not accurate, but okay. Anyway, with the changes in moving the JVs to subsidiaries and or distributors to JVs and so on, how much revenue like how does that work on sort of on how much does that lift the revenue, all other things being equal in those places where you've done it or planning to do it?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes, that does give us a revenue bump. I would say the incremental revenue from those changes this year is probably going to approach $25,000,000 Unfortunately, there's also a negative exchange rate impact this year from translation, which is actually more than $25,000,000 So all that and more has been offset by a stronger dollar.

[Sam poser, Equity Analyst at Williams Trading LLC]

Okay. And then when you look at with the Kurt Geiger business, I mean, do you what other synergies do you initially foresee to let's say help the international growth of Kurt Geiger and just what percent of the Kurt Geiger business in Europe is UK? And how might having Kurt Geiger plus their concessions help maybe grow some of the other businesses that you have, I guess, primarily in The UK?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sure. Yes. So if you look at Kurt Geiger's revenue by geography, it's about as we mentioned 35% in The U. S, a little over 50% in The UK and the balance is in the rest of the world of which Europe is obviously important. If we look at it, excluding those concessions, just at the branded business, it's about 50% in The U.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

S, little over 30% in The UK and then the balance in the rest of the world. So we do think that that is one area of pretty significant synergy opportunity is utilizing our Steve Madden network to expand Kirk Geiger into some new international markets and capitalizing on the relationships and the infrastructure that we have in some of these markets. And that's going to be really a top priority for us once we close the transaction to start to work on those synergy opportunities. In terms of the concessions that they have, look, we already we have already been partnering with Kurt Geiger for years and they already have Steve Madden in their concessions. They also operate two stores for us in London, but we'll obviously look to expand that relationship and roll out more stores in The UK under Kurt Geiger's operation and that's another piece of exciting synergy here.

[Sam poser, Equity Analyst at Williams Trading LLC]

All right. Well, I may come back on. Thank you.

[Operator]

One moment for our next question. Our next question comes from Avi Tonala with BNP Paribas. Your line is open.

[Aubrey Tianello, Analyst at BNP Paribas]

Hey, good morning. Thanks for taking the questions. On Kurt Geiger, could you give more color on how we should think about the longer term growth and margin profile there? I think it grew double digits last year. Is that the right rate to think about long term?

[Aubrey Tianello, Analyst at BNP Paribas]

And then how do the margins compare to your existing business? And what are the opportunities to expand there?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sure.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes, we are forecasting double digit growth for Kurt Geiger this year. And frankly, I think that there's runway for that to for this business to grow double digits for a number of years here. In terms of the margin profile, last year they had EBITDA margins of a little over 11%. Now for this year, we've taken a small haircut to that just because of tariff impact. And then when you take out depreciation and our current estimate for amortization of intangibles, which has not been finalized, we're looking at an operating margin this year about 7.5%.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

But certainly long term, there's clear opportunity for this to be a double digit operating margin business. I don't think I want to provide a timeline on how quickly we'll get there on today's call. But once we get the transaction closed and work with the team there, we'll come back to you with more specifics on how we'll get there.

[Aubrey Tianello, Analyst at BNP Paribas]

That's great. And then maybe just in terms of balance sheet leverage. Is the plan to get back to a net cash position and what's the timeframe to kind of get to whatever your target is?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes, look, we've been operating with this net cash position of approximately 200,000,000 in net cash. I don't think we need to be there. We will have a small net debt position at closing. We're talking about half a turn of net debt to EBITDA though, so pretty modest. And I think the plan would be to try to get back to net debt of zero, sort of a neutral position.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And at that point, we would then look to most likely resume share repurchases and go from there.

[Aubrey Tianello, Analyst at BNP Paribas]

All right.

[Aubrey Tianello, Analyst at BNP Paribas]

Thank you.

[Operator]

One moment for our next question. Our next question comes from Dana Telsey with Telsey Advisory Group. Your line is open.

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

Hi, good morning everyone. Ed, as you think about tariffs and as we go through the year and you mentioned price increases, how do you think about the price increases either by category compared to what you did last time, or I think it was almost $10 an item or a pair? And then almost Famous, how did they do this year or this quarter and what's the outlook? And then marketing investment you said was increasing by how much and what are you doing differently? Is the social media effective?

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

How are you thinking about it? Thank you.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes. So in terms of price increases, look, I do think we have to be careful here. Obviously, we have a consumer who has been exhausted by price increases over the last several years. And so what I don't think we can do is just raise prices across the board or take the exact same styles and just raise them $10 bucks. So but we do need to get some price increases pushed through here to mitigate some of the impact of tariffs.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And so what we're really focused on is again being surgical, looking for where we have newness, where we have a very where we're delivering a really strong price value proposition and rating those prices and then there will be other items that will not come up at all. And that's one of the things that we really have focused on as we're looking at the fall line is really elevating the materials and the detailing, so that there is increased perception of value in the product and we can raise product and therefore we can raise prices. In terms of Almost Famous, they had a very strong Q4, very strong year overall in 2024. As we mentioned, they did benefit from a move in of some shipments that otherwise normally would have gone out in January that went out in Q4. So that will impact them in 2025.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

But overall, I feel very good about the branded business there and how they're doing with Madden Girl and Madden NYC. I am more cautious on the private label piece in 2025. And then the last question was about marketing in Q1. Dana, could you just repeat the question about marketing?

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

Yes. On marketing, how much is investment going up in 2025? And anything special that you're doing in any quarter that we should be mindful of?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sure. Yes, I think you will see marketing increase in 2025. I think as a percentage of revenue, again excluding Kurt Geiger, it should be relatively in line. However, Q1, there is a significant increase in marketing investment in Q1 because we had that very successful fall campaign that we think drove really great results and we wanted to follow that up with something similar and we think even better for spring. So we've got a really exciting new campaign that we call we're calling House of Steve that's going to launch next week.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And in support of that, there is a significant increase in market investment in Q1. Once we get into Q2, you will not you will essentially be more in line with what we've seen in the prior year for the balance of the year.

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

Thank you.

[Operator]

One moment for our next question. Our next question comes from Cory Tarlow with Jefferies. Your line is open.

[Corey Tarlowe, SVP - Equity Research at Jefferies Group LLC]

Great. Thanks. I was wondering if you could talk a little about your inventory. It was up double digits relatively in line with sales, but just curious if you could talk about the health of that inventory, the newness that you're flowing in, what's working? And then also if you could touch on the performance of boots as the weather's gotten colder?

[Corey Tarlowe, SVP - Equity Research at Jefferies Group LLC]

Thanks so much.

[Zine Mazouzi, CFO at Steven Madden]

Okay. So I'll take the first part of the question as it relates to the 12.5% increase. If you look at our inventory at the end of Q4, obviously, we feel very good about the composition of it. And the increase is primarily due to the fact that we're accounting for inventory for a longer period of time due to transit times. On average, globally, our transit times are around six days longer and that's for both China and Cambodia as an example.

[Zine Mazouzi, CFO at Steven Madden]

But if you look at it in The U. S, it's probably around five days longer to get goods here and international businesses, it could peak to thirty days when you look at The Middle East as an example. So if you take those six days of inventory out of the balance at the end of the year and you look at it from an apple to apple perspective versus last year, we're up low single digits and that's consistent with how we're expecting next year to be.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Great. And then in terms of boots, yes, we had a very good boot season and we felt that particularly with our tall shaft boots that we really outperformed in the market because we had the right styles. We did great suede boots, brown suede in particular, good stretch boots, a lot of good things working in that category. And as we've come into first quarter, of course, with the cold weather in the first part of the year, we've continued to sell quite a lot of boots. But obviously right now, our focus is on getting that consumer to transition into the spring styles.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Now the one thing I will say is, boots are still going to remain important in spring because we do have a very strong festival package that we're very excited about. And as we've been talking about boots is more of a year round category for us these days, but obviously not as big this time of year as what we saw in Q4.

[Corey Tarlowe, SVP - Equity Research at Jefferies Group LLC]

Got it. That's very helpful. And then just to follow-up on an earlier question, to comments you made, Ed, about your the international changes that you've made. How much more work do you think there is to be done in terms of some of the shifts in business structures that you've made in international markets? And where else do you think there's further opportunity to optimize the structure of these agreements internationally?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes, I mean that's an ongoing process. We've done a lot there. We still have some distributor markets that I think over time could make sense to transition to the joint venture model. And I could also see some of these joint ventures becoming wholly owned subsidiaries over time. From a regional standpoint, I think the biggest opportunity though is in APAC, where we're doing we've got a very meaningful business in EMEA now that continues to see very strong growth.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

We've also got a big business in the we call The Americas ex U. S, Canada, Mexico, Latin America, etcetera. But APAC is still a relatively small region for us. And so that's going to be a big focus for us over the next couple of years is making that more meaningful.

[Operator]

Thank you. One moment for our next question. Our next question comes from Sam Poser with Williams Trading. Your line is open.

[Sam poser, Equity Analyst at Williams Trading LLC]

I got another chance. Okay. So thank you guys again. With the shift that's moving from China to other areas as you move product out, Zeen, you said it was a six day it was taking six days longer, total five days longer to The U. S.

[Sam poser, Equity Analyst at Williams Trading LLC]

How does that as you move more product to Vietnam, I guess, primarily, but other places as well and with sort of the unknown going on with Mexico, I guess we'll find out next week. How do you how is that going to change your speed to market? And again, I guess the visual look at the inventories in future quarters, see inventory increases in the future?

[Zine Mazouzi, CFO at Steven Madden]

So just to clarify, the five to six business days is not just diversification. That's also the pressure on the supply chain that we're seeing for two reasons. One, Chinese New Year being earlier and also the front loading that a lot of folks were doing was clogging up the supply chain. And after that, basically, the canal of sways and everything that we always know about. So that was the main reason behind the five to six days that I mentioned earlier.

[Zine Mazouzi, CFO at Steven Madden]

But as we move forward in our diversification, I think as we said earlier and either on calls or in the meetings that we had, we're looking at basically it takes about a week to ten days longer to get from these other countries versus China. And that's what we would expect to see. And as I said, our inventory is in line and the only thing that seems to impact it is just the transit days at this point in time and we expect it to continue as we move forward. And it will also be impacted by the penetration of DTC to total.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Just to follow-up

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

on that, Sam, go ahead.

[Zine Mazouzi, CFO at Steven Madden]

Go ahead.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

I was just going to say, obviously, speed to market is absolutely critical to the way we operate and we're not going to accept any meaningful reduction in how fast we can be. So we have to operate under those guidelines. And so we have to plan around that.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

As Zeen mentioned, when we move to some of these other countries in Asia, we do have slightly longer lead times, but we can plan around that. We can leave certain things in China where we need to move faster. Obviously, you mentioned Mexico. Mexico has been a priority for us to move products, particularly in the Steve Madden brand because there we can actually be faster due to the obviously much shorter transit times. Now there's been a little bit of a monkey wrench going into that plan because of the potential tariffs that are scheduled to start next week.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

But we'll monitor that situation. Hopefully that will get resolved and we can focus on Mexico again.

[Sam poser, Equity Analyst at Williams Trading LLC]

And then with Kurt Geiger, I mean, what is their how does the inputware, how does their timeframe work? And is that something that using your resources you could speed up as well?

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Yes. Look, we'll have to get into that with them. I imagine their lead times are a little bit longer. It's also a different it's a different kind of a business. And I think that by the nature of their product assortments, their price points, their positioning, they don't necessarily need to have the same test and react speed to market model that we do.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

But where there are areas for us to collaborate and utilize our sourcing capability to help them, we will certainly do that.

[Sam poser, Equity Analyst at Williams Trading LLC]

Thanks very much. Good luck.

[Operator]

One moment for our next question. Our next question comes from Paul Lejuez with Citi. Your line is open.

[Kelly Crago, Analyst at Citigroup]

Hi. This is Kelly on for Paul. Just a follow-up on your previous comment. What are you embedding in terms of your tariff assumptions this year? Are you assuming just China tariffs or are you including Mexico tariffs as well?

[Kelly Crago, Analyst at Citigroup]

And just maybe I missed this, but did you say how much of your first income is from Mexico currently? Thanks.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Sure. Yes, we have included an impact from Mexico as well. That's about mid single digits as a percentage of our overall sourcing. And but we also have assumed that if those tariffs are in effect that we would then move products back out of Mexico in fall. So the primary impact that we've built in would be over the next few months things that are already in work or on the way.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

And then there's also an impact in the country of Mexico because they have also implemented anti dumping additional duties on goods from China and that's embedded in the guidance as well.

[Kelly Crago, Analyst at Citigroup]

All right. Thank you.

[Operator]

And I'm not showing any further questions at this time. I'd like to turn the call back over to Ed for any closing remarks.

[Edward Rosenfeld, Chairman & CEO at Steven Madden]

Great. Well, thanks so much for joining us on the call today. Have a great day and we look forward to speaking with you on the next call.

[Operator]

Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Participants

Executives

• Danielle McCoy, Director of Corporate Development and Investor Relations
• Zine Mazouzi, CFO

Analysts

• Edward Rosenfeld, Chairman & CEO at Steven Madden
• Paul Lejuez, Managing Director at Citi
• Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies
• Janine Stichter, Managing Director at BTIG
• Marni Shapiro, Chief Marketing Officer at The Retail Tracker
• Laura Champine, Director of Research at Loop Capital Markets LLC
• Sam poser, Equity Analyst at Williams Trading LLC
• Aubrey Tianello, Analyst at BNP Paribas
• Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group
• Corey Tarlowe, SVP - Equity Research at Jefferies Group LLC
• Kelly Crago, Analyst at Citigroup