Steven Madden Ltd Q2 2026 Earnings Call

Welcome to. The second quarter 2026 Steven Madden Limited Earnings Call and webcast. All participants will be in. Listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star. Then one on a touch tone phone. To withdraw your question, please press star. Then two. 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. 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 and Switch summer campaign together.

The combination of compelling product and strong marketing 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 US. 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 two full price stores in premium malls in the quarter, Tysons Quarter and Dadeland, bringing us to a total of seven full price stores in the US. The new stores are off to a good start, and the existing stores are performing well, driving strong for 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 US, we acquired the business in Spain and Portugal from our distributor in Q2 and will 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 Jelly 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 positioned 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 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 6th, 2025, consolidated revenue increased 11.2%. Wholesale. Revenue was 407.5 million, up 13% compared to the second quarter of 2025. 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. And our direct to consumer segment revenue was 255.4 million, a 30.6% increase compared to the second quarter of 2025, excluding. 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 US 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 eight 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. 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 a 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 Iipa 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 30th, 2026, we had $124.8 million in debt and $94.7 million in cash, 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 24th, 2026, to stockholders of record as of the close of business on September 11th, 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 for the fourth quarter, revenue and earnings exceeded third quarter levels, we expect a more typical cadence this year. 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.

We will now begin the question and answer session to. Ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then. Two at this time, we will pause momentarily to assemble our roster. The first question comes from Anna Andreeva with Piper Sandler. Please go ahead.

Hey guys. Great. Thank you so much for taking the question. 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 Anniversary Sale is going across the portfolio? As we've been seeing some sell outs? Thanks.

Great. Yeah, yeah. In terms of the. The top line sales. Guide, I think it., you. Know, we,, in an organic basis, we're looking for,, continued., strong performance. I think that if you're looking at a slowdown on a consolidated basis, that's because we anniversary Kurt Geiger, or distant anniversary in ,, in May. And so obviously the, the,, 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,, to what we saw in, excuse me, in Q2., and the Nordstrom anniversary has been a really positive story for us. We're having,, really a phenomenal event., as every, I think every, 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,, that 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 strong or the very tough comparisons we're seeing big increases in,, in both the overall volume and sell through percentage.

So very pleased with,, with the Nordstrom anniversary performance.

Great. Thanks for the color. Super helpful.

Thank you.

Next question is from Paul Lejuez with Citigroup. Please go ahead.

Hey thanks guys. 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 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. Thanks.

Okay.. Sure. So in terms of the, the,, second. Quarter and then the back half with respect to the raise in, in revenue and earnings. So second quarter., on a revenue 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 ,, our internal expectations,, on the gross margin line in Q2. And that's,, that was the primary driver of, of a beat versus our internal forecast., in Q2., so,, one comment, I'll make there though, is that we were modeling that if you're, if you're looking at the street consensus numbers,., you know, we were modeling the quarterly ,. Breakdown. Differently from the street. And so we were ahead of our internal forecast was ahead of the street for Q2. So while we did have a beat versus Q2. I think it was more like $0.07. We came in ahead of our of our expectation ., and as you. See, we're raising the ,, the full year by five. Keep in mind that we have,. Incorporated an additional $0.06 of pressure from freight., as the,, you know, the impact from the Iran conflict has gone on longer than we contemplated in the, in the prior guidance.

The. Okay. So the. next yeah, next part was DTC versus, wholesale .. So for the,. For the full, for the full year, I'm just going to give you the full year numbers., so would. You, would you, I guess you'd probably like it without Kurt Geiger just to make it cleaner ., so high single digits,, for DTC, excluding Kurt Geiger ., you know, with Kurt Geiger, we're in the low to mid 20s.. And then wholesale,, excluding. Kurt Geiger. That's,, we're looking at low single digits., and then with Kurt Geiger ,, mid-single digits.

And Paul, just to add some color on.

The.

I'm sorry. I was going to add some color on the freight side. As Ed mentioned, the conflict has gone on longer than contemplated ., we actually successfully managed our ocean freight and the reduced kind of the impact that would come from those ebbs or emergency bunker surcharges for oil rising. And but what we're seeing is higher air and air cost as we chase best sellers. And also as we chase products in international market due to the supply chain or the ocean supply chain being disrupted in international markets, we're also using more air to chase products. Hence why we added six pennies to the back half.

And then just one follow up. Did anything change in how you think about the private label business?

Not materially. I would say it got, I think our expectation for the year got modestly better, but it's still obviously a pressure point. We're looking at that business to be down mid to high teens., for the year. and so just as additional color, you know, I mentioned that the, that the wholesale business excluding excluding Geiger ,, is forecasted to be up low singles, but obviously 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.

Thanks, guys. Good luck.

Thank you.

The next question is from Janine Stichter with BTIG. Please go ahead.

Hi.

Good morning. Can you elaborate a bit on what you're seeing on the branded side for the wholesale business? Curious if you're it sounds like you're now chasing 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. Thank you.

Yeah. Look, we feel very good about that business., seeing. Very strong performance. It was up the branded business in wholesale in Q2 was up 20% year over year.. And,, we continue to be very pleased with the sell thrus., we're obviously getting reorders and we've been chasing into,, to strong sellers. And,, it's a, it's a positive story.

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

Well, keep in mind,, we were also we were still down in that business in Q1., so you're right, you know, I guess we're not assuming 20% for the, for the full year, but we started a little bit in the, in the hole and we're, we're catching up.. You know, I would say there's a, you know, we've obviously got a reorder assumption in for, for Q4., you know, is there upside to that potentially, but, you know, we're, we're just, we get, we got to get into the fall season and see how it goes before we,, before we build, you know, a lot of that activity into the forecast.

All right. Thanks so much.

Thank you. The next.

The next question is from Marni Shapiro with the retail tracker. Please go ahead.

Hey guys. Congratulations., I just wanted to check one thing on The Sixth Sense 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 businesses? 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 in our guides. But we have not,. We're absorbing that cost in the.

Guidance.

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

Yeah., we're seeing a big increase, in fact. So, so just 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, now again, we had easy compares., and, you know, and it's not going to remain at that level, but, but still Steve Madden bags for the year, is on track to be up double digits. So we feel good about the, we're back on track.

There.

That's amazing. Can I just sneak in one more. There's so many more styles now that are what I would call kind of seasonless like boots are selling all year at the moment. Suede is so trendy, so suede is selling all year. So does that give you guys a little bit more of a base of solid product that could live a little longer on the shelves? It doesn't have to get marked down. End of season or like, how does that change your thinking, I guess, in how markdowns would happen? Because it feels to me like you could let some of this live longer, but I don't know.

Yeah, I think that's right. I mean, I think that we've got,, we've got a number of products in the assortment here that, that, that can sell all year round. And,, and, you know, particularly if you look at like this this spring, you know, the, the category that declined the most was the most seasonal category of sandals., and we saw increases in, in categories,, that, you know, that, that we can sell more all year round. So, so we like that,, that being said, you know, we're still in the business of, of, of trend and, and the trend cycles move faster than ever today. So,, you know, we're still, we're not, you know. Suddenly become a company that has a lot of styles that run for years and years and.

Years.

Fantastic. Thanks. I'll leave it for somebody else. Best of luck for back to school and fall.

Thanks, Marni.

The next question is from Aubrey Tianello with PNB Paribas. Please go ahead. Hey.

Hi. Good morning. This is Lisa Yang on for Aubrey. Congrats on next quarter., so my first question is going to be on gross margin. I want to 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 three and four? Q I think for fall, when you look at the balance of the year, you have to remember that the KG mix impact is pretty much going away in fall as we lap the acquisition, which was on in May of last year. And we also start to lap our pricing initiatives., which went into effect last fall. So now we start to lap those. And there is less of a mixed benefit from,, private label. And as we mentioned earlier, we're factoring in a some. Pressure on the cost due to the conflict in the Middle East and, on freight and also