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Steve Madden CEO Ed Rosenfeld Talks Tariff Plans
Vicki M. Young
6 min read
While 2024 was a strong year for Steve Madden Ltd., it faces some near-term headwinds in 2025 due to potential tariffs on Chinese imports.
Company chairman and CEO Edward Rosenfeld told investors in a conference call Wednesday that 2024 was a “strong year” for the company, which saw “robust” top- and bottom-line growth driven by progress on its key strategic initiatives. The top priority is “always to win with product,” he said, and that, combined with effective marketing, enabled the brand to deepen its connection with its customer base. The four key drivers are an expansion of its international business, which includes transitioning from a distributor model to an ownership model in key markets; an expansion in categories outside of footwear, such as apparel and accessories; growing the business in direct-to-consumer channels, and strengthening its core U.S. wholesale footwear business.
And while the company made progress on those initiatives in 2024—for example, apparel and accessories revenue rose 53 percent last year, with the Steve Madden handbag business up 31 percent —Rosenfeld voiced a cautious outlook for 2025.
“As we look ahead, however, we are cautious on our outlook for 2025 as we face meaningful near-term headwinds. Most notably, earnings will be negatively impacted by new tariffs on goods imported into the United States and by our efforts to aggressively diversify production out of China,” he said.
The company began making plans for a new sourcing strategy after U.S. President Donald J. Trump won a second term last November. Two-thirds of the company’s business is from imports, and 70 percent are sourced from China. The goal is cut the percentage of goods produced in China by 40 to 45 percent. Since the third-quarter conference call, imports from China are down to 58 percent. The company is also in talks with factories on price concessions, and it’s considering price increases starting in the fall.
But Rosenfeld also emphasized that any increases will be selective and not across the board.
“I 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,” the CEO said. “But we do need to get some prices increases pushed through here to mitigate some of the impact of tariffs.”
He said the focus will be looking at where the product incorporates newness and whether there’s a strong value proposition. Some items could see a rise in prices, while for other items a price increase won’t come up at all, he said. He further explained that the company is looking at the fall line and elevating the materials and detailing so that there is an increased perception of value in the product.
Rosenfeld assured investors the company is up to the challenge. “We have a proven ability to navigate difficult market conditions with our agile business model,” he said.
The CEO also touched upon Mexico, noting that the country “has been a priority for us to move products, particularly in the Steven Madden brand,” mostly because of shorter transit times. He noted the “monkey wrench built into the plan because of potential tariffs” that are scheduled to start in April, concluding that the company will monitor that situation and hopefully it will get resolved.
During the conference call, which was held after the company posted its fourth-quarter earnings report, Rosenfeld also said the firm expects its handbag business—a leading growth driver in recent years—to face pressure in 2025. He explained that “handbag inventories in certain parts of the wholesale channel have backed up, resulting in constrained open to buys and more cautious ordering from key wholesale customers.”
For the quarter ended Dec. 31, net income slipped 3 percent to $34.8 million, or 49 cents a diluted share, from $35.9 million, or 49 cents, a year ago. Total revenue rose 12 percent to $582.3 million from $519.7 million, which included a net sales increase of 11.9 percent to $578.8 million from $517.1 million. The balance of revenue was from commission and licensing income.
Wall Street was expecting diluted earnings per share (EPS) of 62 cents on revenue of $569.9 million.
Wholesale revenue in the quarter rose 13.6 percent to $402.9 million, led by a 35.4 percent jump in wholesale accessories and apparel revenue. Direct-to-consumer revenue rose 8.4 percent to $176 million, driven by increases in both the brick-and-mortar and e-commerce businesses.
Steven Madden acquired the Almost Famous apparel brand in October for $52 million, which has provided a boost to its apparel sales. And in December, the company acquired apparel brand ATM from Anthony Thomas Melillo and Public Clothing Co. Earlier this month, Steven Madden inked a deal to acquire British footwear and accessories firm Kurt Geiger for $360 million.
Rosenfeld said that Kurt Geiger has shown “exceptional growth over the last several years,” with a distinctive design aesthetic and a compelling value proposition that has helped drive success across multiple categories, led by handbags. He also said the brand’s elevated positioning aligns with Steve Madden’s strategic initiatives of “expanding in international markets, accessories categories and direct-to-consumer channels make it a highly attractive and complementary addition to our portfolio.” He also said that 85 percent of Kurt Geiger’s sourcing is from China, but the exposure to tariffs in the U.S. is lower than Steve Madden’s because only 35 percent of its business is in the U.S. Rosenfeld said the company has a plan to help Kurt Geiger diversify its sourcing, and that it can be accomplished “over a relatively short period of time.”
For the full year, net income slipped 1.3 percent to $169.4 million, or $2.35 a diluted share, from $171.6 million, or $2.34, in 2023. Total revenue was up 15.2 percent to $2.28 billion from $1.98 billion, which included a net sales gain of 15.3 percent to $2.27 billion from $1.97 billion. The balance of revenue was from commission and licensing income.
For 2025, the company said it expects diluted EPS in the range of $2.30 to $2.40, with revenue to increase between 17 and 19 percent from 2024 levels. The outlook also presumes that the Kurt Geiger acquisition will close on May 1, 2025.
The company ended the year with 291 company-operated retail stores and five e-commerce websites. It also operates 42 concessions in international markets.
Investors weren’t moved by the cautious outlook for 2025. They sent shares of Steve Madden down 6.6 percent to $35.39 in early afternoon trading on Wednesday.
