Business Overview and History
Steven Madden, Ltd. was founded in 1990 by its namesake, Steven Madden, who started the company by designing and marketing fashion-forward footwear. The company has established a reputation for its design creativity and ability to offer quality, trend-right products at accessible price points. Over the years, Steven Madden has expanded beyond just footwear into accessories and apparel as well.
In the early years, the company distributed its products primarily through the wholesale channel, selling to department stores, mass merchants, off-price retailers, and other retail outlets. As the brand gained popularity, Steven Madden began opening its own direct-to-consumer retail stores and e-commerce websites to better connect with consumers.
The company has faced some challenges over the years, including navigating changes in the retail industry as department stores consolidated and more shopping shifted online. Steven Madden has had to adapt its business model accordingly, investing in its e-commerce capabilities and expanding its presence in the direct-to-consumer channel.
In 2023, the company made a strategic acquisition, buying the assets of Turn On Products Inc. dba Almost Famous, a designer and marketer of women's junior apparel. This expanded Steven Madden's presence in the accessories and apparel categories beyond just footwear. The company has also formed several joint ventures over the years to grow its international distribution, including in markets like Israel, South Africa, China, and Latin America.
Throughout its history, Steven Madden has maintained a focus on designing and delivering trend-right, quality products to its consumers. The company's agile business model and commitment to innovation have allowed it to navigate industry changes and challenges over the past three decades.
Business Segments
The company operates through four reportable segments: Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to-Consumer, and Licensing.
The Wholesale Footwear segment designs, sources, and markets the company's brands, selling products to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, as well as through international joint ventures and distributors. In the first nine months of 2024, revenue from this segment accounted for $832.00 million, or 48.9% of total revenue, an increase of 1.1% compared to the same period in the prior year. Gross profit for the segment was $298.19 million, or 35.8% of Wholesale Footwear revenue, compared to $298.86 million, or 36.3% in the same period of 2023. The decrease in gross profit percentage was primarily due to higher penetration of the company's private label business.
The Wholesale Accessories/Apparel segment follows a similar model, designing, sourcing, and marketing accessories and apparel products to a variety of wholesale customers. In the first nine months of 2024, revenue from this segment accounted for $487.25 million, or 28.7% of total revenue, an increase of 69.8% compared to the same period in the prior year. This growth was driven by the incremental revenue from the acquisition of Almost Famous, as well as strength in the Steve Madden handbag and apparel businesses. Gross profit for the segment was $158.56 million, or 32.5% of Wholesale Accessories/Apparel revenue, compared to $96.59 million, or 33.7% in the same period of 2023. The decrease in gross profit percentage was due to the impact of the Almost Famous acquisition.
The Direct-to-Consumer segment consists of Steve Madden and Dolce Vita full-price retail stores, Steve Madden outlet stores, Steve Madden concessions in international markets, and the company's directly-operated digital e-commerce websites. As of September 30, 2024, the company operated 287 brick-and-mortar stores, five e-commerce websites, and 67 concessions in international markets. In the first nine months of 2024, revenue from this segment accounted for $374.19 million, or 22.0% of total revenue, an increase of 8.7% compared to the same period in the prior year. Gross profit in the segment was $237.58 million, or 63.5% of Direct-to-Consumer revenue, compared to $214.69 million, or 62.4% in the same period of 2023. The increase in gross profit percentage was primarily due to a reduction in promotional activity.
The Licensing segment is engaged in the licensing of the Steve Madden and Betsey Johnson trademarks for use in the sale of select apparel, accessory, and home categories, as well as various other non-core products. In the first nine months of 2024, royalty income generated by this segment accounted for $7.16 million, or 0.4% of total revenue, compared to $7.45 million, or 0.5% of total revenue, in the same period of 2023.
Financial Performance and Ratios
For the fiscal year 2024, Steven Madden reported total revenue of $2.28 billion, a 15.2% increase compared to the prior year. However, the company's net income attributable to Steven Madden, Ltd. was $192.4 million, or $2.67 per diluted share, compared to $182.7 million, or $2.45 per diluted share, in the previous year.
The company's gross profit margin for the full year 2024 was 41.0%, compared to 42.0% in the prior year. The decrease in gross margin was primarily driven by a greater mix of private label businesses and the impact of the Almost Famous acquisition.
Steven Madden's operating margin for the fiscal year 2024 was 10.3%, compared to 11.8% in the prior year. The company's effective tax rate for the year was 23.7%, compared to 22.6% in the previous year.
In the most recent quarter, Steven Madden reported revenue of $582,318,000, representing a year-over-year growth of 12.0%. The company noted that the wholesale business benefited from some shipments that were expected in January 2025 being moved up to Q4 2024. Net income for the quarter was $34,801,000. Operating cash flow (OCF) for the quarter was $103,851,000, while free cash flow (FCF) was $94,582,000.
Liquidity
As of December 31, 2024, Steven Madden had $203.4 million in cash, cash equivalents, and short-term investments, and no debt. The company's inventory balance was $257.6 million, up 12.5% from the prior year.
Steven Madden's return on assets (ROA) for the fiscal year 2024 was 12.0%, and its return on equity (ROE) was 20.4%. The company's current ratio stood at 2.16, and its quick ratio was 1.54, indicating a strong liquidity position.
As of the most recent quarter, the company's debt-to-equity ratio was 0.05, demonstrating a conservative capital structure. Cash and short-term investments stood at $150,480,000. Steven Madden has a $150,000,000 secured revolving credit facility, which was undrawn as of the most recent quarter. The current ratio was 2.16, and the quick ratio was 1.54, further underlining the company's strong liquidity position.
Navigating Macroeconomic Headwinds
Despite its strong financial performance in 2024, Steven Madden faces significant near-term headwinds, particularly the impact of new tariffs on goods imported into the United States and its efforts to diversify production out of China.
The company expects its earnings to be negatively impacted by these factors, as well as pressure on its handbag business due to inventory backups in the wholesale channel, resulting in constrained open-to-buys and more cautious ordering from key wholesale customers.
To mitigate the impact of tariffs, Steven Madden is actively diversifying its production, with the percentage of goods imported from China already down from 71% to 58% since the previous quarter. The company is also negotiating price concessions with its factories and selectively raising prices on certain products.
While the near-term outlook is cautious, Steven Madden's management remains confident in the company's ability to navigate these challenges, citing its agile business model and the upcoming acquisition of the Kurt Geiger brand as a significant new growth driver.
Acquisition of Kurt Geiger
In February 2025, Steven Madden announced the acquisition of the Kurt Geiger brand, a leading luxury footwear and fashion accessory company, for approximately £289 million ($360 million) in cash. The transaction is expected to close in the second quarter of 2025.
Kurt Geiger is a highly complementary addition to Steven Madden's portfolio, with its unique brand image, distinctive design aesthetic, and compelling value proposition. The acquisition aligns with Steven Madden's strategic initiatives of expanding in international markets, accessories categories, and direct-to-consumer channels.
For the twelve months ended February 1, 2025, Kurt Geiger had revenue of £400 million and an EBITDA margin of over 11%. The company's executive management team, including CEO Neil Clifford, has agreed to stay on and continue to lead Kurt Geiger under Steven Madden's ownership.
Future Outlook and Guidance
For 2025, Steven Madden expects revenue to increase 17% to 19% compared to 2024. The company anticipates diluted EPS to be in the range of $2.30 to $2.40. Excluding the Kurt Geiger acquisition, the company expects revenue to increase low single digits on a percentage basis, and diluted EPS to be in the range of $2.20 to $2.30.
In the first quarter of 2025, Steven Madden expects diluted EPS to decline approximately 30% to 35% versus Q1 2024, as Q1 represents their toughest comparison to the prior year.
These projections reflect the company's confidence in its strategic initiatives and ability to navigate near-term challenges while positioning itself for long-term growth.
Conclusion
Steven Madden has demonstrated its resilience in the face of industry challenges, leveraging its agile business model and innovative product offerings to drive consistent financial performance. While the company faces near-term headwinds, its strategic initiatives, including the acquisition of Kurt Geiger, position it for long-term sustainable growth and value creation. The company's strong liquidity position and conservative capital structure provide a solid foundation for navigating macroeconomic uncertainties and pursuing growth opportunities in the dynamic fashion and footwear industry.