Steven Madden Ltd (SHOO) Q4 2024 Earnings Call Highlights: Strong Revenue Growth Amid Margin ...

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Thu, Feb 27, 2025, 12:09 AM 5 min read

Revenue: $582.3 million in Q4 2024, a 12% increase compared to Q4 2023.
Wholesale Revenue: $402.9 million in Q4 2024, up 13.6% from Q4 2023.
Wholesale Footwear Revenue: $227.4 million in Q4 2024, a 1% increase from Q4 2023.
Accessories and Apparel Revenue: $175.4 million in Q4 2024, up 35.4% from Q4 2023.
Direct-to-Consumer Revenue: $176 million in Q4 2024, an 8.4% increase from Q4 2023.
Gross Margin: 40.4% in Q4 2024, compared to 41.7% in Q4 2023.
Operating Expenses: $182.9 million in Q4 2024, or 31.4% of revenue.
Net Income: $39.3 million in Q4 2024, or $0.55 per diluted share.
Total Revenue for 2024: $2.3 billion, a 15.2% increase from 2023.
Net Income for 2024: $192.4 million, or $2.67 per diluted share.
Cash and Equivalents: $203.4 million as of December 31, 2024.
Inventory: $257.6 million, up 12.5% from the prior year.
Capital Expenditures: $9.3 million in Q4 2024, $25.9 million for the year.
Share Repurchases: $2.6 million in Q4 2024, $98.4 million for the year.
Quarterly Dividend: $0.21 per share, payable on March 21, 2025.
2025 Revenue Outlook: Expected to increase 17% to 19% compared to 2024.
2025 EPS Outlook: Expected to be in the range of $2.30 to $2.40.

Warning! GuruFocus has detected 7 Warning Signs with THTX.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Steven Madden Ltd (NASDAQ:SHOO) delivered earnings results at the high end of their guidance range for Q4 2024, with a 15% revenue growth and a 9% increase in diluted EPS compared to 2023.
The company saw a 12% increase in international revenue, with notable growth in the EMEA region and a strong start for their new joint venture in Latin America.
Accessories and apparel revenue increased by 53% in 2024, with the Steve Madden handbag business crossing the $300 million mark for the first time.
Direct-to-consumer revenue grew by 9% in 2024, with Dolce Vita DTC revenue increasing by 36%.
The acquisition of Kurt Geiger is expected to add a powerful new growth engine, with the brand showing exceptional growth and aligning with strategic initiatives in international markets and accessories categories.

Negative Points

The company faces near-term headwinds in 2025 due to new tariffs on goods imported into the United States and efforts to diversify production out of China.
Handbag business is expected to face pressure due to backed-up inventories in certain parts of the wholesale channel, leading to more cautious ordering from key wholesale customers.
Gross margin was pressured in Q4 2024, primarily due to a greater mix of private-label businesses and increased promotional activity.
The effective tax rate for Q4 2024 was higher at 21.4% compared to 14.3% in Q4 2023, driven by lower discrete benefits related to stock-based compensation.
The company expects diluted EPS to decline approximately 30% to 35% in Q1 2025 compared to Q1 2024, due to increased marketing investment and pressure on the DTC business.

Q & A Highlights

Q: Can you discuss the gross margin pressure due to tariffs and your plans to mitigate it? Also, are there any investments needed for the Kurt Geiger acquisition? A: Edward Rosenfeld, CEO: We are facing tariff pressures and plan to mitigate them by diversifying production out of China, seeking price concessions from factories, and selectively raising prices. We've reduced our China sourcing from 71% to 58% and aim for the low 40s by November. Regarding Kurt Geiger, no significant upfront investment is needed, and we don't expect an operating margin drag in the first year.

Q: How is the Direct-to-Consumer (DTC) segment performing, and what factors are affecting it? A: Edward Rosenfeld, CEO: The DTC segment is under pressure, particularly with a slow start to spring product sales and weak store traffic. This trend is consistent across the industry, and while weather is a factor, we are also monitoring consumer confidence levels.

Q: Why is now the right time for the Kurt Geiger acquisition, and how will tariffs affect it? A: Edward Rosenfeld, CEO: The opportunity to acquire Kurt Geiger arose, and we believe in its potential for significant growth. The brand aligns with our strategic initiatives and offers a unique market position. While 35% of its business is in the US and subject to tariffs, we plan to diversify production and leverage its strong international presence.

Q: Can you elaborate on the expected growth for wholesale versus DTC, and within wholesale, how different segments are expected to perform? A: Edward Rosenfeld, CEO: We anticipate low single-digit growth overall, with wholesale down slightly and DTC up high single digits. Within wholesale, footwear is expected to grow slightly, while accessories and apparel may decline mid-single digits. We expect branded growth to outperform private label in 2025.

Q: How are you managing inventory levels, and what is the impact of longer transit times? A: Zine Mazouzi, CFO: Inventory increased by 12.5% due to longer transit times, averaging six days globally. Adjusting for this, inventory is up low single digits. We are managing inventory carefully to align with sales growth and maintain healthy stock levels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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