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Zine Mazouzi

Thanks, Ed. And good morning, everyone. In the fourth quarter, our consolidated revenue was $582.3 million, a 12% increase compared to the fourth quarter of 2023. Our wholesale revenue was $402.9 million, up 13.6% compared to the fourth quarter of 2023. Wholesale footwear revenue was $227.4 million, a 1% increase from the comparable period in 2023.
Also, accessories and apparel revenue was $175.4 million, 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. Our wholesale business in the quarter also benefited from approximately $13 million of shipments to the mass channel that were expected to ship in January 2025 and were moved up to the end of Q4 2024.
In our direct-to-consumer segment, revenue was $176 million, an 8.4% increase compared to the fourth quarter of 2023, with increases in both-the-brick and mortar and e-commerce businesses. Top sales rose 4.5% in the quarter. We ended the year with 291 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 license and royalty income was $3.5 million in the quarter compared to $2.7 million in the fourth quarter of 2023.
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 2023, 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 spend during the promotional periods compared to the prior year.
Operating expenses were $182.9 million, or 31.4% of revenue in the quarter, compared to $163.9 million, or 31.5% of revenue in the fourth quarter of 2023. Operating income for the quarter was $52.6 million, or 9% of revenue compared to $53 million 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 2023, driven by lower discrete benefits related to stock-based compensation. Finally, net income attributable to Steve Madden Limited for the quarter was $39.3 million or $0.55 per diluted share compared to $45 million or $0.61 per diluted share in the fourth quarter of 2023.
Now I would like to touch briefly on full-year results. Total revenue for 2024 increased 15.2% to $2.3 billion compared to $2 billion in 2023. Net income attributable to Steven Madden Limited was $192.4 million or $2.67 per diluted share for the year ended December 31, 2024, compared to $182.7 million or $2.45 per diluted share for the year ended December 31, 2023.
Moving to the balance sheet, our financial foundation remains strong. As of December 31, 2024, we had $203.4 million of cash, cash equivalents, and short-term investments, and no debt. Inventory was $257.6 million, up 12.5% to the prior year. Our CapEx in the fourth quarter was $9.3 million and for the year was $25.9 million.
During the fourth-quarter and full-year 2024, the company spent $2.6 million and $98.4 million, respectively, on repurchases of its common stock, including 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 March 21, 2025, to stockholders of record as of the close of business on March 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 $2.30 to $2.40. 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 we expect diluted EPS to be in the range of $2.20 to $2.30.
In the first quarter, we expect diluted EPS to decline approximately 30% to 35% versus the first quarter of 2024 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.
Now I would like to turn the call over to the operator for questions. Kevin?

Question and Answer Session

Operator

(Operator Instructions) Paul Lejuez, Citi.

Paul Lejuez

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 looped in, 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

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 is, number one, diversifying production out of China. 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 November of this year. We're placing goods. We are targeting low 40s, and we think we're marching towards that goal.
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 the third piece is we will be selectively raising prices. 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 the EPS that we've disclosed but not prepared to make any commitments around gross margin or specific tariff impact today. 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 -- sorry, go ahead.

Paul Lejuez

About the Kurt Geiger question?

Edward Rosenfeld

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

Paul Lejuez

I'll just to go back to the gross margin, Ed. Any color just in terms of the first half, second-half pressure, your ability to execute on some of those mitigation efforts? Are you seeing that come through as an offset in the first half, or is that something that we won't see until the second half?

Edward Rosenfeld

Look, 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

Got it, thanks. Good luck. Thank you.

Operator

Anna Andreeva, Piper.

Anna Andreeva

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? 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

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.
I'll say that in my conversations with other folks, I think at this point, while we are loath to blame the weather, we are hearing from a lot of other folks in the 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'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 weeks that have shown a pretty significant drop in consumer sentiment, so we'll have to monitor that carefully. Not any major difference between January and February in terms of the trend.

Anna Andreeva

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? 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

Sure. So in terms of why now, look, 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 a better term, accessible luxury, led by handbags. It was obviously a very strong shoe business as well. 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 US, this is a business that was under $10 million in the US in 2019 and did over $170 million 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, so it's complimentary in that respect.
And it advances the strategic initiatives that we've been talking about for the last several years, which is 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. 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 US. On that 35% that is in the US, you are right, they do have a significant exposure to China. 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. 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 $0.10 that we've built in for this year. Again, that's for the partial year, May 1 through the end of the year.

Anna Andreeva

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

Edward Rosenfeld

Thank you.

Operator

Janine Stichter, BTIG.

Janine Stichter

Hi, good morning. So on the low single-digit growth 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 the Steve Madden branded business, mass, and off-price?

Edward Rosenfeld

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

Great. And then within 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 acquisition?

Edward Rosenfeld

Yes, I think that's right. I think that -- we 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. Part of that is just -- a good chunk of that is just a move. I think Zine 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

Great. Thanks so much.

Operator

Marni Shapiro, The Retail Tracker.

Marni Shapiro

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, 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

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

That makes sense. And then could you just -- 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. 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

First of all, thank you for the comments about Steve Madden apparel. We're really excited about the progress that we're making there and feel 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. 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. And 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

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

Edward Rosenfeld

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 turn 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, 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

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

Edward Rosenfeld

Thanks so much.

Operator

Laura Champine, Loop Capital.

Laura Champine

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&A this year, or is this a big enough transaction that you feel like this is one and done for this year?

Edward Rosenfeld

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

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

The branded business was down about 3% in Q4.

Laura Champine

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

Edward Rosenfeld

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

Got it. Thank you.

Operator

Sam Poser, Williams Trading.

Sam Poser

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

Edward Rosenfeld

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

Sam Poser

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

Edward Rosenfeld

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 million. Unfortunately, there's also a negative exchange rate impact this year from translation, which is actually more than $25 million. So all that and more is being offset by a stronger dollar.

Sam Poser

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

Sure. Yes, so if you look at Kurt Geiger's revenue by geography, it's about, as we mentioned, 35% in the US, 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 US, a 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 Kurt 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 have already been partnering with Kurt Geiger for years and they already have Steve Madden in their in their concessions. They also operate two stores for us in London, but we'll obviously continue 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

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

Operator

Aubrey Tianello, BNB Paribas.

Aubrey Tianello

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

Edward Rosenfeld

Sure. Yes, we are forecasting double-digit growth for Kurt Geiger this year. And frankly, I think that there's runway 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 of about 7.5%. 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

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

Yes, look, we've been operating with this net cash position of approximately $200 million 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. And at that point, we would then look to most likely resume share of purchases and go from there.

Aubrey Tianello

All right, thank you.

Operator

Dana Telsey, Telsey Advisory Group.

Dana Telsey

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 where 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? How are you thinking about it? Thank you.

Edward Rosenfeld

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. But we do need to get some price increases pushed through here to mitigate some of the impact of tariffs.
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 raising those prices. And then there will be other items that will not come up at all. And that's one of the -- 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 therefore, we can raise prices.
In terms of Almost Famous, it 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. 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. Dana, could you just repeat the question about marketing?

Dana Telsey

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

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're calling House of Steve that's going to launch next week. And in support of that, there is a significant increase in marketing investment in Q1. Once we get into Q2, you will not -- we'll essentially be more in line with what we've seen in the prior year for the balance of the years.

Dana Telsey

Thank you.

Operator

Corey Tarlowe, Jefferies.

Corey Tarlowe

Yes, 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. Thanks so much.

Zine Mazouzi

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 you'll 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 time. On average, globally, our transit times are around six days longer, and that's for both China and Cambodia as an example.
But if you look at it in the US, it's probably around five days longer to get goods here, and international businesses, it could peak to 30 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

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 had some great suede boots, brown suede in particular, some 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. 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

Got it. That's very helpful. And then just to follow up on an earlier question to comments you made, Ed, about 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

Yes, I mean, that's an ongoing process. We've done a lot. 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. We've got a very meaningful business in EMEA now that continues to see very strong growth. We've also got a big business in what we call the Americas ex-US: Canada, Mexico, Latin America, et cetera. 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

Sam Poser, Williams Trading.

Sam Poser

I get another chance, okay. So thank you, guys, again. With the shift that's moving from China to other areas as you move product out, Zine, you said it was taking six days longer total, five days longer to the US. 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, inventory increases in the future?

Zine Mazouzi

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 sways and everything that we always know about. So that was the main reason behind the five to six days that I mentioned earlier.
But as we move forward in our diversification, I think as we said earlier, either on calls or in the meetings that we had, we're looking at -- basically, it takes about a week to 10 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 dates 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. (multiple speakers) Go ahead.

Edward Rosenfeld

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. As we 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 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 thrown into that plan because of the potential tariffs that are scheduled to start next week. We'll monitor that situation. Hopefully, that will get resolved and we can focus on Mexico again.

Sam Poser

Okay. And then, with Kurt Geiger, I mean, what is their -- how does, in footwear, how does their timeframe work? And is that something that, using your resources, you could speed up as well?

Edward Rosenfeld

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

Sam Poser

Thanks very much. Good luck.

Operator

Paul Lejuez, Citi.

Kelly Crago

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

Edward Rosenfeld

Sure, yes, we have included an impact from Mexico as well. That's about mid-single digits as a percentage of our overall sourcing. 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. 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

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

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 concludes today's presentation. You may now disconnect and have a wonderful day.