Title

Presentation

Steven Madden, Ltd. beats earnings expectations. Reported EPS is $0.45, expectations were $0.42.

Operator: Good day, and thank you for standing by. Welcome to the First Quarter 2026 Steven Madden Limited Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Danielle McCoy: Thanks, Jill, and good morning, everyone. Thank you for joining our first 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.

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 Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I’ll turn the call over to Ed. Ed?

Edward Rosenfeld: All right. Well, thanks, Danielle, and good morning, everyone, and thank you for joining us to review Steven Madden’s first quarter 2026 results. We got off to a solid start to the year in Q1 with healthy underlying demand across our brands, driven by our team’s disciplined execution of our strategy for long-term growth, the foundation of which is deepening connections with consumers through compelling product assortments and effective marketing. Our flagship brand, Steven Madden, continued to gain momentum as the on-trend assortments created by Steven and his design team resonated with consumers. We saw strength across classifications, including casuals, dress shoes and boots, and we capitalized on a variety of trends in style and materials, including split toes, Velcro, hidden wedges, mesh and ballet-inspired looks.

Our marketing team supported these assortments with rich brand and product storytelling, including our Hello Spring campaign, featuring it girl Delilah Belle and a full funnel approach that drove strong new customer acquisition and cultural relevance. And the combination of trend-right product and targeted marketing investments drove measurable brand heat. Online searches for Steven Madden increased 27% in the quarter, and global DTC comp sales rose 6% or 10%, excluding our stores in the Middle East. For the year, we continue to expect mid- to high single-digit revenue growth in the Steven Madden brand. Kurt Geiger London also delivered another strong quarter. In handbags, in addition to continued strength in the Kensington collection, new totes and shoulder bags drove strong demand.

And in shoes, sandals were a standout, including exceptional performance in Meena Eagle slides. We also made progress on our key growth initiatives, including new store openings in the United States and international expansion into new markets. We now have leases secured for 4 new full-price stores and 1 premium outlet in the U.S. in 2026. And we signed a new franchise and distribution agreement with Reliance Brands to bring Kurt Geiger to India beginning in Q4. For the quarter, revenue for the Kurt Geiger brand increased 23% on a pro forma basis. And based on the momentum we are seeing, we have increased our forecast and now expect mid-teens pro forma revenue growth in the Kurt Geiger brand for the year. In Dolce Vita, we delivered a compelling spring assortment with particular strength in jelly, raffia and woven styles across footwear and handbags that drove robust sell-through with key wholesale customers, including Nordstrom, Dillard’s and Macy’s.

We also continue to gain traction with our key growth initiatives of expanding the handbag category and growing in international markets. For 2026, we continue to expect high single-digit revenue growth in Dolce Vita. Now despite all this, in the first quarter, we saw, as expected, a decline in organic revenue driven by softness in private label and lower Steven Madden handbag revenue in the U.S. wholesale channel. That, combined with SG&A pressure from the normalization of incentive compensation and increased warehouse expenses resulted in an earnings decline for the quarter. But looking ahead, based on the strong underlying demand trends across our brand portfolio, we expect to return to earnings growth in the second quarter and deliver strong top and bottom line growth for the full year.

And looking out further, we are confident that our powerful brands, proven business model and talented team position us to deliver sustainable growth for years to come. And now I’ll turn it over to Zine to review our first quarter 2026 financial results in more detail and provide our updated outlook for 2026.

Zine Mazouzi: Thanks, Ed, and good morning, everyone. In the first quarter, consolidated revenue was $653.1 million, an 18% increase compared to the first quarter of 2025. Excluding Kurt Geiger, which we acquired in the second quarter of 2025, consolidated revenue decreased 4.8% Wholesale revenue was $443.6 million, up 1% compared to the first quarter of 2025. And excluding Kurt Geiger, our wholesale revenue decreased 8.2%. Wholesale footwear revenue was $278.9 million, a 5.8% decrease or down 12%, excluding Kurt Geiger, primarily driven by a steep decline in the private label business. Wholesale accessories and apparel revenue was $164.8 million, up 15.1% compared to the first quarter in the prior year or down 0.5%, excluding Kurt Geiger, as declines in Steven Madden handbags and private label were mostly offset by increases in other branded accessories and apparel.

In our direct-to-consumer segment, revenue was $206 million, an 83.8% increase compared to the first quarter of 2025. Excluding Kurt Geiger, our DTC revenue increased 8% with growth in both brick-and-mortar and e-commerce channels. Steven Madden brand the U.S. DTC comp sales increased 17%, driven by an exceptional performance in full-price channels. Outlet comps remained modestly negative, but showed significant sequential improvement as we began to anniversary declines in our border stores. International comp sales decreased 5%, but increased 1%, excluding our stores in the Middle East. We ended the quarter with 387 company-operated brick-and-mortar stores, including 95 outlets as well as 8 e-commerce websites and 162 company-operated concessions in international markets.

Our licensing royalty income was $3.4 million in the quarter compared to $2.2 million in the first quarter of 2025. Consolidated gross margin was 46.3% in the quarter, a 540 basis point improvement compared to the prior year. Wholesale gross margin was 39.2% compared to 35.7% in the first quarter of 2025 due to higher average selling prices as well as mix benefits from the addition of the Kurt Geiger business and a lower penetration of private label. Direct-to-consumer gross margin was 60.8% compared to 60.1% in the comparable period in 2025 as a result of the addition of the Kurt Geiger business and a modest increase in the organic business. Operating expenses were $256 million or 39.2% of revenue in the quarter compared to $170.5 million or 30.8% of revenue in the first quarter of 2025, primarily driven by the addition of Kurt Geiger as well as higher incentive compensation and warehouse expenses.

Operating income for the quarter was $46.3 million or 7.1% of revenue compared to $56.1 million or 10.1% of revenue in the prior year. The effective tax rate for the quarter was 25.3% compared to 24% in the fourth quarter — in the first quarter of 2025. Finally, net income attributable to Steven Madden Limited for the quarter was $32.1 million or $0.45 per diluted share compared to $42.4 million or $0.60 per diluted share in the prior year. Turning to the balance sheet. Our financial foundation remains strong. As of March 31, 2026, we had $286.5 million of debt and $77.2 million in cash and cash equivalents for a net debt of $209.3 million. Inventory was $379.4 million compared to $238.6 million in the prior year. Excluding Kurt Geiger, inventory decreased 2.5%.

Our CapEx in the quarter was $5.9 million. We did not repurchase any shares in the open market. And during the first quarter, we spent $7.4 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 June 19, 2026, to stockholders of record as of the close of business on June 8, 2026. Turning to our fiscal 2026 guidance. We are raising our revenue outlook and now expect revenue to increase 10% to 12%, up from our prior guidance of 9% to 11%. We are also introducing EPS guidance for the year and expect earnings per share to be in the range of $2 to $2.10. Now I’d like to turn the call over to the operator for questions.

Operator?

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Operator: [Operator Instructions] First question comes from the line of Paul Lejuez with Citi.

Paul Lejuez: Curious if you can talk about what’s driving the higher revenue guidance for the year. I think you said it was Kurt Geiger, but any detail you can give in the core versus Kurt Geiger in terms of what has changed in your full year outlook? And then can you talk about the conversations you’re having with private label customers and if there’s been any change in how they’re thinking as the tariff picture evolves? And then also just curious what you built in for tariffs within your guidance.

Edward Rosenfeld: Sure. Okay. All right. So the first question was about the higher revenue guidance. And yes, we did raise Kurt Geiger based on the early momentum that we’re seeing there. Kurt Geiger exceeded our — the Kurt Geiger brand exceeded our expectations in Q1. We’ve also modestly raised our expectations for Steven Madden and Dolce Vita based on the strong performance that we’re seeing there in spring and the momentum in those brands. So a positive picture because we did — we were able to increase our forecast for each of our 3 largest brands. In terms of the private label conversations, I would say we’re having a lot of conversations. I think they’re productive, but the tariff picture remains uncertain. And so there’s no major change to that situation right now, but it’s something we’re working hard on.

We have taken our forecast up very modestly for the year based on some orders that we got for the tail end of the year, but we obviously still looking at a pretty steep decline in ’26 and really targeting ’27 for a recovery there. And then in terms of what we’ve built into the guidance, so we have assumed the section — the 10% Section 122 tariffs remain in effect through about the end of July when those expire. And then we’ve built in a 15% tariff thereafter.

Operator: The next question comes from the line of Anna Andreeva with Piper Sandler.

Anna Andreeva: Congrats. Really nice to see the momentum. Curious on also what you’re hearing from your partners, specifically to the off-price channel. Is that channel now back to growth? And how do you think about the contribution there? And it sounds like department store business is turning very quickly with the reorders. Are you guys able to fulfill that demand? Just any color on that would be great. And secondly, you mentioned the business back to earnings growth starting the second quarter. Just anything you can share how we should think about 2Q? Is the DTC business, which was super strong in 1Q, is that further accelerating from here?

Edward Rosenfeld: Sure. Okay. So in terms of the off-price channel, yes, those businesses, we’re seeing some nice improvement there. Those conversations have been very productive recently. And so we are seeing growth in that channel in 2026 versus 2025. Still not all the way back to ’24 levels as opposed to — your second question was about department stores. There, we are seeing strong growth. To your point, we’re getting reorders. We are able to chase into goods for them. And we do expect that first tier business to exceed what we achieved in 2024. And then what was the third one?

Zine Mazouzi: Do you expect DTC to accelerate in Q2?

Edward Rosenfeld: Yes. So yes, so we’re not going to guide quarterly, but I will say that we continue to see strong trends in that DTC business. Now the overall DTC growth, of course, won’t be as strong because we’ll be anniversarying Kurt Geiger starting in early May, but the core business or the organic business should see similar trends to what we saw in Q1.

Anna Andreeva: No, that’s great. Can I just sneak in another one? Just as you think about the uses of cash with the tariff refund, would paying down debt would be your first priority? Or just any color you can give on that?

Zine Mazouzi: Yes. The first priority would be to accelerate the paydown of the debt. And then in the back half of the year, we’ll start assessing potential repurchases.

Operator: The next question comes from the line of Marni Shapiro with The Retail Tracker.

Marni Shapiro: Congratulations. The assortments have looked absolutely fantastic. I’m curious if you could just talk a little bit more about the sell-throughs at the department stores. Are you seeing that across footwear and the apparel? And the apparel has looked really fantastic as far as I have seen. Could you talk a little bit about, I guess, how big that business can be and what the margin implications are? Are the margins on the apparel equal or better to what you’re seeing in footwear and how that could play out over time?

Edward Rosenfeld: Yes. So we’ve been pleased with what we’ve seen from a sell-through perspective. I would say in spring, footwear has been stronger because the Steven Madden brand, in particular, has been quite hot in footwear. Apparel, we had a little bit of a soft start to the year. I don’t think we transitioned as well as we could. But once we got into the season, we’ve seen — we’ve been very pleased with what we’ve seen. The team has done a great job with — obviously, dresses has been our biggest category. We’ve got some very strong dresses, but we’ve also got some novelty denim that’s been selling some blazers. So we continue to sort of expand, broaden out the strength in that business and very optimistic about what that can be longer term.

In terms of how big that business is, it’s over a couple of hundred million now for us in apparel. As of now, it is lower margin than the shoe and bag business. But we’ve been in investment mode, and we’re still building. And over time, we think that should have comparable margins.

Marni Shapiro: Great. And then if I could just ask one more follow-up on the Steven Madden brand. You’ve — I mean, it looks so good in the stores. It looks so good everywhere and your placement has been excellent. You’ve had a couple of semiviral, viral items. Could you just talk about your investments behind social media and marketing and what that would look like for the rest of the year?

Edward Rosenfeld: Yes. No, first of all, I really appreciate what you say about the product. We’re really proud of how the team has executed there. And so I think it all starts with product, and that’s the biggest driver here, but we also feel that we’ve really raised our game on the marketing front. And we continue to increase the investment there. As you know, years ago, we were — a few years ago, we were sub-2% of revenue devoted to marketing. And now this year we’ll be 5.3%, 5.4%, something like that. So a pretty significant increase in investment. And we’ve also, I think, done a better job of balancing that investment because when we first increased it, it was really very heavily focused at the bottom of the funnel on performance channels, and we now have much more balanced spend throughout the funnel.

We’re much more balanced by channel. And we’re much more consistent about the way we tell the Steven Madden story across channels on an omnichannel basis. And so as you mentioned, obviously, given our core customer and the state of the world today, digital and social are paramount, and that’s where we are focusing a lot of our spend.

Marni Shapiro: Great. I’m sorry, can I sneak in one more? Dolce Vita, is it having as good — like is the sell-through as strong on the Dolce Vita brand at wholesale as it is on the Steven Madden brand?

Edward Rosenfeld: Yes, Dolce Vita is having a very strong spring. In fact, at their biggest customer, they’re even outpacing Steven Madden in terms of sell-through.

Operator: The next question comes from the line of Dana Telsey with Telsey Advisory Group.

Dana Telsey: Nice to see the progress. With rising energy prices, is there any impact on cost and how you’re planning or the contracts all taken care of for it? Or how do you think of that impact on rising energy prices? And then the cadence of the quarter, was there any difference in demand on the exit of the quarter? And we’ve now seen just lastly on product trends, boots become like a 52-week a year trend. Any updates on product trends or the sneakers, fashion, sandals, boots to discuss?

Edward Rosenfeld: Sure. Yes, I’ll take the latter 2 questions and then turn it back to Zine to talk about what we’re seeing on freight. So in terms of the cadence of the quarter, there was — it bounced around a little bit based on weather and Easter shift and promotion time, et cetera. But basically, I would say that it was pretty strong trends throughout the quarter, and there’s nothing super meaningful to call out there. In terms of the product trends, I think the big thing is we’ve seen a decrease in penetration in sandals and sneakers, and we’ve seen super strong performance in casuals and really strong increases in dress shoes as well and also in boots — and boots and booties. And as you correctly pointed out, those continue to be important even in spring. We did a really nice job, for instance, on our DTC in our DTC with boots for festival season. So Zine, do you want to talk about freight?

Zine Mazouzi: Sure. So on the freight side, obviously, the war impact is visible, and we started seeing what they call EBS. These are emergency bunker surcharges that are being imposed by the maritime companies. So in our guide, we built in about 30 basis points of pressure from ocean as well as the increase we’re seeing on air freight as well. So we started seeing air freight as probably as early as April. And then as far as the ocean side, the emergency bunker surcharges, those started in May, on May 1, and there’s another round potentially that would be coming in July as well. So all in all, it’s about a 30 basis point impact. From a cost perspective as far as raw materials, we’re not seeing that yet. But if this continues for an extended period of time, we expect that, that will have an impact in the latter part of the year.

Operator: The next question comes from the line of Sam Poser with Williams Trading.

Samuel Poser: A couple of things. When we think about the gross margin more holistically for the balance of the year, how much — in the press release, you discussed — you backed out $55 million of the refunds out of the gross margin. How much of the refunds effective for the goods sold in Q1 were in it? And then going forward, I guess the question is, you’re not going to see the same — you’re not planning to see — what kind of increase in gross margin are we planning to see for the full year, taking into account the lower tariffs than what was true — lower than the IEEPA tariffs, but then also the increase plus that 30 bps from freight. I mean how should we think about the gross margin? And then I have another question.

Edward Rosenfeld: Yes, sure. So in the first quarter, obviously, there was a relatively modest negative impact from tariffs because of the reversal of IEEPA and then the institution of the Section 122. As we go forward, obviously, we’ll see on a gross basis, a bigger impact than we saw in Q1. But if you’re thinking about gross margin versus the prior year, we still should be seeing nice increases versus the prior year each quarter, although it will narrow a little bit in terms of the Delta. Part of that is that we anniversary Kurt Geiger in Q2, which has been a mix benefit to gross margin. But even in the organic basis, we do expect to see year-over-year gross margin improvement through the balance of the year.

Samuel Poser: And then could you — I know it’s going to come out in the queue, but can you give us the adjusted gross margin and SG&A for footwear, wholesale, footwear, handbag wholesale and direct-to-consumer, please?

Edward Rosenfeld: What do you mean adjusted?

Samuel Poser: Wholesale footwear gross margin. So we can get to — so build it out to the total, yes.

Edward Rosenfeld: Yes. Wholesale footwear gross margin was 38.6%. Wholesale accessories was 40% and DTC, I think you have it, but it was $60.8 million.

Samuel Poser: And then what about SG&A? I mean — or give us the adjusted operating income for each one of those sections, however you want to do it? I mean I built my model this way. And it’s important to break it up, but I’m sorry, I’m driving crazy.

Edward Rosenfeld: EBIT dollars for wholesale footwear, $52.7 million, accessories and apparel, $28.8 million. DTC loss of $11.4…

Samuel Poser: And the loss in DTC was primarily due because it’s a small quarter. You have the fixed cost for Kurt Geiger with those fixed costs staying in. I assume that is correct.

Edward Rosenfeld: That’s right. We always — I mean, even in the organic business, we’re always loss-making in Q1 in DTC, and the same goes for Kurt Geiger.

Samuel Poser: And you originally said that Kurt Geiger would do about $600 million. That’s up just — given the first quarter, it’s just up a bit from there. Is that how we should think about it?

Edward Rosenfeld: Yes, low 600s.

Operator: The next question comes from the line of Janine Stichter with BTIG.

Janine Hoffman Stichter: On Kurt Geiger, with the mid-teens growth of the brand, I just want to clarify, does that include any new distribution? And if not, how are you thinking about that? And then Steven Madden handbags, can you elaborate a little bit more what’s going on there? Would you still expect it to turn positive in the second quarter?

Edward Rosenfeld: Yes. Yes, in terms of the Kurt Geiger brand mid-teens growth, we are adding some wholesale distribution in the back half. I think the most important being that we are planning to — we have reached agreement with Macy’s to enter Macy’s starting in October, we’ll be in a beautiful concession in Herald Square as well as 15 other doors with handbag shops and also shoes. So we’re excited about that. But there’s also very strong momentum in the DTC business, digital. The new stores continue to perform well. As I mentioned, we’re opening some additional stores — excuse me, the U.S. stores continue to perform very well, and we’re opening some additional U.S. stores. So a lot of good things happening there. And what was the second one, Steven?

Danielle McCoy: Steven Madden…

Edward Rosenfeld: Yes, Steven Madden handbags, yes. As we have indicated, we expect to return to growth starting in the current quarter. So we’re pleased to have that headwind behind us.

Janine Hoffman Stichter: Great. And then maybe just one more on the core Steven Madden business. I think you said organic gross margins for DTC were up slightly. Maybe just talk about what you’re seeing from a promotional standpoint there. It seems like you’ve been able to pull back a little bit on the promotional lever.

Edward Rosenfeld: Yes, we have. We’ve been pleased because of the strength of the product and the demand, we have been able to reduce overall promotion days. And that’s — we really haven’t seen any significant impact to demand. So that’s been very positive.

Operator: The last question comes from the line of Aubrey Tianello with BNP Paribas.

Aubrey Tianello: I wanted to ask on SG&A and how we should be thinking about the cadence of SG&A growth into the next quarter and then into the back half of the year when you lap the Kurt Geiger acquisition.

Zine Mazouzi: Yes. So including Kurt Geiger in Q1, SG&A was up 50.2%. We expect that to be probably around, I would say, 25% increase in Q2, and then it should drop to low teens in Q3 and high singles in Q4.

Aubrey Tianello: Perfect. And then maybe just a follow-up on the Middle East and how the conflict impacts the business from a direct standpoint in terms of revenues. You mentioned the impact to store comp in the prepared remarks. I’d be curious just what’s included in the guidance for 2026 from a top line perspective from the Middle East.

Edward Rosenfeld: Yes. It’s about — so we have about north of $50 million — or we had north of $50 million business there, about 63 stores. I don’t have the overall top line impact that we’ve built in there. But look, the business in the GCC, for instance, is still trending down close to 40% this month. And so we built in about $4 million profit hit, I know, in that region. Yes, Zine is telling me it’s about $9 million to $10 million that we’ve taken out for the impact there.

Zine Mazouzi: For revenue…

Edward Rosenfeld: For revenue, excuse me.

Aubrey Tianello: Okay. Got it. And then just last one. I wanted to ask about Kurt Geiger from a margin perspective. You mentioned in the past having a runway to getting to double-digit EBIT margins over time. Anything you can share on how EBIT margin is progressing for Kurt Geiger this year, especially in light of the higher revenue guide?

Edward Rosenfeld: Yes. So we’re expecting about 100 basis points of improvement in ’26 versus ’25. It still doesn’t get us back to pre-tariff levels. So we need to continue to drive that up in the coming years. And we still continue to believe there’s no reason this business shouldn’t be in the double digits. And certainly, the branded portion, if we exclude the concessions, we think has potential to be certainly in the teens, if not the mid-teens.

Operator: And I’m now showing no further questions, and I would like to turn it back to Ed Rosenfeld for closing remarks.

Edward Rosenfeld: Great. Well, thanks so much for joining us today. We hope you have a great day, and we look forward to speaking with you on the next call.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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