Steven Madden beats earnings estimates but shares fall on margin pressure
Footwear company reports 29% revenue growth yet operating margins contract, cites tariff uncertainty for withheld 2026 guidance
Steven Madden reported fourth-quarter revenue of $753.7 million, surpassing analyst expectations by 7.9% but delivering adjusted earnings that fell 12.7% from the prior year as operating margins contracted amid higher costs and tariff uncertainty.
The footwear company posted adjusted earnings per share of 48 cents, exceeding Wall Street estimates of 46 to 47 cents, according to analyst forecasts compiled by Investing.com. However, the earnings represented a decline from 55 cents per share in the same period last year, reflecting continued pressure on profitability despite strong top-line growth.
Adjusted operating margins contracted to 6.8% from 9% in the fourth quarter of 2024, as the company reported in its earnings release. The margin squeeze reflects higher selling, general and administrative expenses, which the company attributed to the normalization of incentive compensation and restoration of senior executive salaries.
Steven Madden shares have declined approximately 18% since reaching a 52-week high of $46.88 in early February, according to market data. The stock was trading around $37.36 at Tuesday's close, reflecting investor concerns about profitability challenges and the company's decision not to provide earnings guidance for 2026.
Looking ahead, the company expects revenue to increase between 9% and 11% in 2026 but withheld earnings guidance due to ongoing tariff uncertainty. The lack of earnings visibility has contributed to analyst skepticism, with Jefferies downgrading the stock to "Underperform" on February 6 with a $30 price target, citing persistent weakness in the wholesale business.
Edward Rosenfeld, chairman and chief executive officer, said the fourth-quarter results exceeded guidance, driven by improved performance in the core Steve Madden footwear business and a strong contribution from the newly acquired Kurt Geiger. However, he acknowledged challenges ahead, including "pressure on our private label business" and higher SG&A expenses.
The private label business, which manufactures footwear for other retailers, has faced headwinds from large wholesale partners resisting price increases and slower sales in off-price channels, according to analyst commentary. This segment has been a drag on profitability even as the company's branded businesses have shown momentum.
Tariff uncertainty has emerged as a significant overhang for the footwear industry. While a Supreme Court ruling in late February struck down certain Trump-era tariffs as unconstitutional, new Section 122 global tariffs of 10% took effect on February 24, creating fresh uncertainty for import-dependent companies. Steven Madden has been working to diversify its supply chain away from China, a strategy analysts believe could help stabilize gross margins over time.
Despite the current challenges, some analysts maintain a more optimistic outlook. Needham and BTIG have reiterated "Buy" ratings with $50 price targets, highlighting the strong momentum in the company's branded footwear division. The consensus price target among analysts ranges from $42.46 to $46.67, suggesting potential upside from current levels.
Full-year 2025 revenue increased 11% to $2.53 billion, while adjusted operating margins declined to 6.9% from 11.1% in 2024, reflecting the ongoing margin pressure. For the year, adjusted diluted EPS fell to $1.70 from $2.67 in 2024.
Investors will be watching closely for signs that the company can restore margin growth while maintaining revenue expansion. The integration of Kurt Geiger, acquired in 2024, and opportunities in international markets represent potential growth drivers, though the timing and magnitude of margin recovery remain uncertain given the volatile tariff environment.