Steve Madden Faces Looming Margin Pressure And Tariff Headwinds, Analyst Predicts Tough Road Ahead

Needham analyst Tom Nikic reiterated the Hold rating on Steven Madden, Ltd. SHOO.

Yesterday, the company reported fourth-quarter 2024 financial results.

It clocked a fourth-quarter adjusted EPS of 55 cents, beating the Wall Street View of 53 cents. Quarterly revenues of $582.32 million increased 12.0% year over year, surpassing the analyst consensus of $548.50 million.

The analyst mentioned that the fourth quarter earnings call reflected caution, citing the ongoing impact of tariffs, struggles in the accessories business, and a decline in consumer sentiment, with the operating environment remaining challenging.

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Nikic noted that the company is shifting its sourcing away from China, aiming for a low-40% reliance by November 2025, but anticipates tariff impacts starting in the first quarter.

Mitigation efforts are expected to take time, with any meaningful effects not likely until mid-2025 or 2026.

Additionally, the analyst supposed that gross margins could be adversely affected by at least 200 basis points.

Nikic highlighted that while the newly acquired Kurt Geiger brand still relies heavily on China for production, its U.S. exposure is lower, thus limiting the tariff impact compared to the core Steve Madden brand.

Management sees growth potential in expanding the brand's reach, particularly in APAC, and expects strong international growth, building on the 12% rise in the fourth quarter.

The Kurt Geiger brand is anticipated to grow in double digits this year, with plans to improve EBIT margins as synergies and tariff mitigation strategies take effect, the analyst adds.

Price Action: SHOO shares are trading lower by 4.25% to $33.36 at last check On Thursday.

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