STEVEN MADDEN, LTD. — Call Transcript 2025

Good day, and thank you for standing by. Welcome to the Q3 2025 Steve Madden Ltd. earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead. Thanks, Brittany, and good morning, everyone. Thank you for joining our third quarter 2025 earnings call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. We explain any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today are Ed Rosenfeld, Chairman and Chief Executive Officer, and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I'll turn the call over to Ed. Ed. All right. Thanks, Danielle. Good morning, everyone. Thank you for joining us to review Steve Madden's third quarter 2025 results. As anticipated, the third quarter was challenging, driven largely by the impact of new tariffs on goods imported into the United States. During the period in April and May when new tariffs on Chinese imports reached 145%, wholesale customers cut back meaningfully on orders for the third quarter, and we shifted large amounts of production out of China midstream, which led to shipment delays. These factors, together with the negative impact to gross margin from the significant increase in our landed costs, resulted in substantial pressure on both revenue and earnings in Q3. Fortunately, while we will continue to see negative impacts from tariffs, we believe the worst is behind us. Order patterns from our wholesale customers are normalizing, and we are mitigating a larger percentage of the gross margin pressure through strategic pricing actions and sourcing initiatives. Most importantly, underlying consumer demand for our brands and products is strong. Despite the noise from tariffs, our team has stayed laser-focused on executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing, and we are seeing those efforts pay off, particularly in our flagship Steve Madden brand. Steve and his design team have created an outstanding fall product assortment that is resonating with consumers and enabling us to outperform the competition. Boots have been the standout, led by our casual tall shaft styles, but we're also seeing strong performance in dress shoes across various heel heights, as well as casuals like loafers, Mary Janes, and mules. Our marketing team is amplifying this great assortment with richer brand and product storytelling and increased investment across YouTube, TikTok, Snapchat, and Pinterest, which is driving measurable increases in awareness and conversion with our key Gen Z and millennial consumers. As a result, both wholesale sell-through and DTC sales trends for Steve Madden have accelerated meaningfully in recent months. Our new brand, Kurt Geiger London, also has strong momentum as consumers continue to respond to its bold, statement-making designs and eye-catching marketing, including the current campaign featuring Emily Ratajkowski. Comp sales for the brand were up mid-teens in the third quarter. Overall, the acquisition integration remains on track, and our teams continue to make progress on revenue synergies, including expanding Kurt Geiger in international markets through the Steve Madden network and growing Steve Madden in the U.K. through the Kurt Geiger platform, as well as cost savings opportunities in areas like freight and logistics. We are also making meaningful progress in advancing our other own brands. In Dolce Vita, we're building on the outstanding success we've had over the last several years in our U.S. footwear business by expanding international markets and extending the brand into other categories like handbags. In Betsey Johnson, we are driving renewed cultural relevance for the brand with elevated talent partnerships, authentic community engagement, high-impact activations, and differentiated merchandise assortments. Both Dolce Vita and Betsey Johnson are on track to deliver revenue gains for the full year 2025, despite the headwinds from tariffs. In sum, while the third quarter was undeniably challenging and our financial results were not up to our usual standards, our team's disciplined execution of our strategy is strengthening our brands and building relevance and demand with consumers. We are confident that we will begin to see improved financial performance in the fourth quarter, and looking out further, that we have the brands, business model, and strategy to drive sustainable revenue and earnings growth over the long term. I will now turn it over to Zine to review our third quarter 2025 financial results in more detail. Thanks, Ed. Good morning, everyone. In the third quarter, our consolidated revenue was $667.9 million, a 6.9% increase compared to the third quarter of 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 14.8%. Our wholesale revenue was $442.7 million, down 10.7% compared to Q3 2024. Excluding Kurt Geiger, our wholesale revenue decreased 19%. Wholesale footwear revenue was $266.5 million, a 10.9% decrease from the comparable period in 2024, or down 16.7% excluding Kurt Geiger. Wholesale accessories and apparel revenue was $176.2 million, down 10.3% compared to the third quarter in the prior year, or down 22.5% excluding Kurt Geiger. The majority of the organic decline in wholesale revenue can be attributed to tariff-related order reductions, shipment delays, and other impacts related to the production disruption. In our direct-to-consumer segment, revenue increased 76.6% to $221.5 million. Excluding Kurt Geiger, our direct-to-consumer revenue increased 1.5%. We ended the quarter with 397 company-operated brick-and-mortar retail stores, including 99 outlets, as well as 7 e-commerce websites and 133 company-operated concessions in international markets. Our license and royalty income was $3.7 million in the quarter compared to $3.5 million in the third quarter of 2024. Consolidated gross margin was 43.4% in the quarter, up from 41.6% in the comparable period of 2024 due to the impact of Kurt Geiger, which has a much higher mix of DTC than the legacy business and therefore has higher overall gross margin. Wholesale gross margin was 33.6% compared to 35.5% in the third quarter of 2024 due to pressure from tariffs, partially offset by our mitigation efforts. Direct-to-consumer gross margin was 61.9% compared to 64% in the comparable period in 2024 due to pressure from tariffs, as well as the addition of Kurt Geiger, which had lower DTC margin in the quarter than the existing business, driven by the concessions business. Operating expenses were $243.4 million, or 36.4% of revenue in the quarter, compared to $174.2 million, or 27.9% of revenue in the third quarter of 2024. Operating income for the quarter was $46.3 million, or 6.9% of revenue, compared to $85.4 million, or 13.7% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 23.4% compared to 23.8% in the third quarter of 2024. Finally, net income attributable to Steve Madden Ltd. for the quarter was $30.4 million, or $0.43 per diluted share, compared to $64.8 million, or $0.91 per diluted share in the third quarter of 2024. Moving to the balance sheet, our financial foundation remains strong. As of September 30, 2025, we had $293.8 million of outstanding debt and $108.9 million of cash, cash equivalents, and short-term investments for a net debt of $185 million. Inventory at the end of the quarter was $476 million compared to $268.7 million in the third quarter of 2024. Excluding Kurt Geiger, inventory was $275.6 million, a 2.6% increase compared to the same period last year. Our CapEx in the third quarter was $11.6 million. During the third quarter, the company did not repurchase any shares of its common stock in the open market. The company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on December 26, 2025, to stockholders of record as of the close of business on December 15, 2025. Turning to our fourth quarter 2025 guidance, we expect revenue to increase 27%-30% compared to the fourth quarter of 2024, and we expect earnings per share to be in the range of $0.41-$0.46. Now I'd like to turn the call over to the operator for questions. Brittany. Thank you. At this time, we will be conducting a question-and-answer session. As a reminder, to ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question comes from the line of Paul Lejuez with Citi. Your line is now open. Hi there. This is Kelly on for Paul. Thanks for taking our question. Ed, you sounded pretty positive on what you're seeing on the fashion front. I'm just curious if you could talk more about how you're seeing the fashion develop this fall, how inventory levels in the wholesale channel are looking, and if that makes you think differently about sort of the prospects for spring, particularly in the wholesale channel. Yeah. Good morning, Kelly. Yeah, we feel really good about what we've seen in fall. As we mentioned, we've seen a pretty meaningful acceleration in the trends, particularly in that core Steve Madden women's shoe business. As I called out, I think the biggest driver has been boots. Our boot assortment has just seen really strong performance. We called out that it's been led by the casual tall shaft styles. Those have been most important, but we've got a number of other things working in the boot and booty category as well. As I said earlier, it's not just about boots because we've really seen a nice improvement in the dress shoe category. That's obviously a category where we think we have a really strong competitive positioning. Our team has executed there. We're seeing strength in a number of different sort of looks within the dress category, and as I mentioned, really at various heel heights. Casuals have been important too. The fashion sneaker business has downshifted a bit, and we're picking that business up, and then some in loafers and mules and Mary Janes. Really feeling better than we have in some time about our fashion and Steve Madden and how it's performing. Yes, it does give us confidence going into spring. I think we feel better than we did a few months ago about how spring is shaping up. Great. Good to hear there. Unfortunately, you have got well above sort of where consensus is looking. Could you just break that down a bit for us in terms of what you are expecting from the core relative to the kind of down 15% you saw in the third quarter, whether there are any shifts there or what is kind of driving any acceleration there and just what you would expect from KG in the fourth quarter? Sure. Yeah. So the core business, if you exclude KG, the revenue guide is essentially down 2% to down 4%. That includes increases in both wholesale footwear and DTC, but still offset by a decline in wholesale accessories and apparel. The KG contribution to revenue, I think at the low end, we are at $182 million and the high end, $187 million. Any sense of, sort of, the breakdown when we think about our models and how much of that KG revenue is coming from the DTC channel in the fourth quarter and what kind of impact that'll have on the grosses? Yeah. I mean, as you know, overall, KG is over 70% DTC. I think I'd have to—I mean, I want to say it's probably about $135 million, something like that, in the fourth quarter coming from DTC. Obviously, that does have a meaningful mixed impact to gross margin. Got it. Thank you. Best of luck. Thank you. Thank you so much. Our next question comes from the line of Anna Andreeva with Piper Sandler. Your line is now open. Great. Thank you so much. Good morning and congrats. Nice results. A couple of questions. Are you seeing stockouts in the core Madden business, just given everything that's going on with the supply chain and how quickly can you chase? Great to hear about DTC x KG bouncing back to positive. Ed, you mentioned a strong consumer response to a number of categories. Can you parse out how owned e-com did versus brick and mortar? How does the 10% reduction in China affect your thinking about sourcing? Sure. Yeah. Look. Are there certain styles where we've had stockouts? Yes. Generally speaking, we've been able to chase some of the additional demand in the core Steve Madden business. As you point out, because of the supply chain disruption, we do not have the ability to chase that we normally do and the speed that we normally do. We did front-load some merchandise here because we had good reads on these products. We were in a position to fill some reorders, for instance, in Steve Madden. Also, some of this product is coming, or a good portion of it is coming from Mexico. Obviously, that's where we have a lot of speed, and we can get back into reorders in 30 days. I think it's been an okay story. Sure, I think the second quarter was about e-commerce versus brick and mortar. In both Steve Madden and Kurt Geiger, e-commerce is outpacing brick and mortar, but we've seen— We talked about the acceleration in Steve Madden. We've seen that in both e-com and stores in recent months. In terms of the final question, I think it was, how does the China reduction impact our sourcing? Look, it's obviously a welcome development to see the reduction in the tariff on China. The way that this tariff regime looks right now, the math would tell us we would move quite a bit back to China. I think that we're going to be careful about that. We want to remain diversified. We don't want to get back into a position where we have 70%+ of our sourcing coming from one country. We are going to continue to try to be diversified. It obviously does give us greater flexibility to go back to China where we need to to get the right deliveries. And quality, pricing, speed, etc. Makes sense. No, thank you for that. Just as a follow-up, as we think about the KG rollout plan, as we look into next year, just any color you could provide how we should think about the store growth versus wholesale? Yeah. We will be— We're going to, I think, not get into a lot of detail about 2026 overall because we'll obviously be talking about that on the next call. I can tell you that we do plan to open a handful of stores in the United States next year for Kurt Geiger. We're working on those plans now. As we've talked about, the initial six stores in the United States are performing very well. We're getting pretty close on a handful of leases for next year to continue that rollout. There will be some wholesale growth as well because I think that we have opportunity in both channels. Awesome. Thanks so much again. Thank you. Thank you so much. Our next question comes from the line of Jay Sole with UBS. Your line is now open. Great. Thank you so much. I think I heard you say that legacy Steve Madden should be down 2%-4% with wholesale footwear and DTC positive. Can you just talk about how you're thinking about 4Q for the entire wholesale footwear segment and then wholesale accessories? That'd be helpful. Thank you. Yeah. Wholesale. Including Kurt Geiger or excluding Kurt Geiger? I guess excluding Kurt Geiger. Excluding Kurt Geiger, wholesale footwear, we're looking at up two to up four and a half. And wholesale accessories and apparel, excluding Kurt Geiger, still down mid to high teens. Got it. Okay. All right. That makes sense. I guess if you think about Kurt Geiger retail versus wholesale, I mean, how are you thinking about that? We have provided the DTC revenue for Kurt Geiger, which I said I think is going to be around $135 million. And then the overall number for Kurt Geiger, $182 million-$187 million is the range. Okay. Understood. Got that. Thank you for clarifying that. I guess just, you've asked this already a couple of times, but just on your visibility, I mean, have you taken orders? Do you take orders earlier for Kurt Geiger relative to the Steve Madden business? I mean, do you have visibility out into Q1 and Q2 yet for Kurt Geiger, or is it going to be on the same sort of quick-turning supply chain that Steve Madden is on? No. We do take orders earlier there. And so we'll have more visibility over time there. I guess any comment on sort of the order book and how that's shaping up right now? I think we're going to postpone all discussion of 2026 until the next call. Look, the Kurt Geiger brand continues to perform very well. We're going to see growth next year. Got it. Okay. Thank you so much. Thank you so much. Our next question comes from the line of Aubrey Tianello with BNP Paribas. Your line is now open. Hey, good morning. Thanks for taking the questions. I wanted to ask on Kurt Geiger as well. Appreciate the comment on comp sales up mid-teens. Any color you can share on how Kurt Geiger performed by region in the quarter? Yeah. It's growing in all the core regions. They performed well in their home market of the U.K., continues to grow in the U.S., and we're also growing in Europe. Got it. Ed, you've talked about the revenue synergy potential there. One of the first pieces of that being sort of plugging KG into your existing international markets. I know it's still early, but any updates on that in terms of how that's progressing or when you could start seeing some of those benefits? Yeah. We've been hard at work on that. The Kurt Geiger CEO just went on a world tour. I think he hit, I want to say, four continents over a three-week period, meeting with all of our international teams and international partners. That work is underway. I think we'll start to see some benefits in 2026. Probably more. I think anything that will be meaningful to the numbers would be towards the back end of 2026. Got it. Thank you. Thank you so much. Our next question comes from the line of Marni Shapiro with The Retail Tracker. Your line is now open. Hey, guys. Thanks so much for taking my question. Your stores have really looked beautiful. Could we just focus a little bit on some of your smaller but growing areas? It sounds like the handbag business was a little bit disrupted. I'm guessing some late deliveries. I'm curious if you could just talk a little bit about what's going on there. Could we get an update on the apparel business, both at stores like Macy's, Bloomingdale's, and Revolve, as well as Madden NYC at Walmart? Yeah. Sure. In terms of handbags, look, that's obviously been a category, if we're talking about Steve Madden handbags, that we have talked about all year was going to be down based on the excess inventory in the channel and some of the market pressures that we've experienced there. We came into the year expecting that business to be down double digits. That's been exacerbated by all the tariff disruption and everything that's happened with the supply chain and deliveries and everything else. We have certainly felt a lot of pressure there. We're going to continue to feel that in Q4. The good news is that the underlying demand, I think, is improving. We've seen good sell-throughs in fall so far, improved over spring. We've got a number of things working there. I think that our online Hobos, shoulder bags, EastWest bags, anything in brown suede. We've got the trends, and they're performing. I do expect that business to stabilize as we come into spring 2026. Apparel, as you know, has been a nice growth story for us. The focus, of course, is Steve Madden apparel. That's a business that we've been—the sell-throughs have been good, and we've been steadily growing it in those key accounts that you mentioned: Nordstrom, Dillard's, Bloomingdale's, Top Doors of Macy's, Revolve, etc. To your point, we also have the mass business that we do with Walmart under Madden NYC. That's an important business for us as well, although our overall business in the mass channel has definitely felt some pressure from tariffs. We expect that to get better as we go into 2026. Can I just follow up on what's going on on the back side in the department stores? I'm sorry, in the shoe side in the department stores. Are you seeing a big difference between the higher-end stores that you sell, some of the better stores, or I guess even more fashion stores? Revolve is a much more fashion store than some of the others versus stores that are a little bit less fashion, or it's across the board, your sell-through has been good, and there's not a lot of price resistance to the Madden brand when the product is right? Yeah. We've been really pleased so far with the lack of price resistance that we've seen, particularly in the Madden brand. I think, as we've said, we have a lot of very strong fashion right now. I think overall, if you look at the overall company, the real takeaway on the price increases is that when you have real fashion-forward products or new fashion, the consumer is willing to pay. Where you have to be much more careful with price increases is on the core and more basic product. The good news is that's how we did it. That's how we planned it. As you know, we were very surgical about it. We didn't take a peanut butter approach where we spread the price increases evenly everywhere. We went style by style. I think so far we've been pleased with how the price increases have been received by the consumer. Fantastic. Thank you. The product really looks outstanding. Some of the best product out there in the market. Best of luck for holiday, you guys. Thanks. Thanks so much. Thank you so much. Our next question comes from the line of Corey Tarlowe with Jefferies. Your line is now open. Great. Thanks and good morning. Ed, I was just wondering if you could talk to the AUR lift in the business. So you're selling $200 boots today versus sneakers that were more like $70 previously. How is that affecting the business, and what's the impact on sales and comp? How do you measure that? How do these fashion trends speak to what AUR could be next year? Yeah. We are seeing a pretty significant increase in AUR. And it's really twofold. It's one, it's based on the price increases that we've put through in response to tariffs. And number two, as you point out, there's a mixed benefit due to selling more boots and in higher-priced categories. So in Q3, in our DTC, we were up about high singles in AUR. In Q4, we're running more like mid-teens increases in AUR. That's really helpful. It does feel as if there's a bit of a tone shift in your commentary around wholesale, where kind of the first half of the year I talked about order cancellations, and now you're talking about orders ramping back up. I'm curious, is this the fact that the channels are doing better, or is it that you see Steve Madden gaining more market share in these channels? How do you think about that? I think it's both. I think. Look, my tone didn't get better from how I was talking when we had 145% tariffs and everybody canceled every order. It would be pretty depressing. Some of that, the external noise has abated a bit. I think things are normalizing in the wake of all the tariff disruption. In addition to that, we are also seeing improved underlying demand, improved sell-through. That's causing the wholesale customers to come back to us with more aggressive plans. Got it. If I could just squeeze one more in. It seems like the product's resonating really nicely. Intuitively, what do you think that means for promotions, and what's embedded in your outlook for that? Thanks so much. Yeah. I mean, the good news is we have been able, for instance, in our DTC channels, we have so far in Q4 reduced promotional days by a pretty meaningful amount compared to what we were doing last year. We have been able to be less promotional because of the strength of the product and the trend. We will do, obviously, we need to remain competitive when we get into the fall, the part of the holiday season here when everybody is promotional, but we are going to attempt to continue to be less promotional where we can. Great. Thanks so much and best of luck. Thank you. Thank you so much. Our next question comes from the line of Tom Nikic with Needham. Your line is now open. Hey, good morning, guys. Thanks for taking my question. I wanted to ask about the margin structure of the business. So obviously, 2025, between tariffs and the acquisition and maybe some tough first half of the year at the core brand or a tough first nine months, there was quite a bit of margin erosion this year. How do we think about how much of that is recoverable and how much may be structural? Thanks. I'd like to think all of it is recoverable over time. I think it's going to take a little bit of time. I don't expect us to get it all back in 2026. Certainly, over time, I do believe that the tariffs are going to find their way into the retail prices, and we'll be able to get back to our pre-tariff margins in the core business. The Kurt Geiger business is obviously lower margin than the legacy business, but we think that business has a path to getting to where the Steve Madden levels or potentially even higher over time. That's the goal. All right. Sounds good. Thanks very much, and best of luck this holiday season. Thank you. Thank you so much. Our next question comes from the line of James Ross with Williams Trading. Your line is now open. Hey, good morning, and thank you for the question. Two questions, actually. The first being, will the mix of business with the addition of Kurt Geiger impact gross margins in Q4? I know we kind of touched on it in the first question, but I was hoping you could sort of dig into that a little deeper, maybe. The second being, can you provide some color on brand growth and opportunities internationally and what that looks like going into next year? Thank you. Yeah. Go ahead. As far as your first question related to Kurt Geiger impacting gross margin in Q4, I think it would be similar to what we've seen in Q3, somewhere around 300 basis points. I'm sorry, what was the second part of the question? Yeah. The second part was, could you provide some color on brand growth and just generally the opportunities internationally and what that looks like going into next year? Okay. So is this about the legacy business or Kurt Geiger? Are you asking about Kurt Geiger or the legacy? Yeah. Kirk. Steve Madden? Yeah. So Steve Madden and then also Kurt Geiger as well. Sure. Yeah. Steve Madden, we continue to have nice momentum in international markets. For 2025, we're looking at high single-digit revenue growth. That is very similar across the three regions. Very similar growth in our three key regions being EMEA, APAC, and the Americas ex U.S. Nice momentum really across the board, and we'll look for continued growth into 2026. Kirk Geiger, as we've said, they're in really the early stages of their growth outside the U.K. and the U.S. We will be looking for very strong double-digit growth internationally out of them for a handful of years here. Wonderful. All right. Thank you so much. Best of luck. Thanks. Thank you so much. Our next question comes from the line of Janine Stichter, I'm sorry, with BTIG. Your line is now open. Hi. Good morning. I just wanted to follow up on the margin recapture if you could help us out. I think the tariffs you had said hit gross margin a little over 200 basis points in Q2. How much was it in Q3, and then how to think about Q4? Maybe help us unpack that, Kurt Geiger, between that and the core business. I think Kurt Geiger had been hit a bit more in the start of the year just because you had not been able to move as quickly there. Yeah. As far as the tariff impact in Q3, given all the moving parts with the price increases, factory discounts, our renegotiated costing, as well as FOB differential between all the countries, I think it is best to look at it from a growth and mitigated perspective. Q3 was about 100 basis points more than what Q2 was. I think you are asking about Q4 as well. I think it would be a little bit worse than that in Q4. The Q4 is the 100 is mitigated, and it'll be worse in Q4 versus Q3? Q3 was about 100 basis points worse than Q2. We expect Q4 to be a little bit worse than Q3. Those are unmitigated, and the mitigation gets bigger over time. The net impact to gross margin will be considerably less in Q4 than it has been. Understood. Okay. And then just maybe on the mitigation, I just wanted to clarify on pricing. I think you took 10% increases earlier this year. Have you taken more, or do you plan to take more? That's where we are right now. We'll have to look at it as we go forward. That obviously is still not enough to offset the full amount of the tariffs. Over time, we'd like to see if we can take more, but we want to be prudent about it. Perfect. Best of luck. Thank you so much. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open. Hi. Good morning, everyone. As you think about the wholesale business, what differed by type, whether off-price, department stores, mass? What did you see, and what do you think of the outlook going forward? On the DTC side, was there a difference between full price and outlet performance? Thank you. Yeah. So in wholesale, I would say we're seeing the strongest performance in the regular price channels. Where we have had more pressure is in the value price channels like the off-price and the mass. In terms of DTC, we're seeing much better performance in full price channels. Outlet remains a drag. I think we're being hurt by a couple of things there. One is five of our biggest eight outlet stores are on the border with Mexico, and those stores are running down about 40%. That has been a big headwind there. The other thing is that I think we were impacted more acutely there by some of the disruption from the supply chain in the wake of tariffs. Outlet has still been trending negative, and full price stores have been much better. Got it. And then just on the value side of the wholesale channel, are they just not taking orders? Are they waiting for newness? Are they waiting for more goods, not accepting the price increase? Any way to articulate it? They were the ones that pulled back most significantly. Again, it was during the period in April and May when China tariffs were 145%. They are coming back now, and we're seeing those businesses normalize. That was where we felt a big part of the pullback in the last couple of quarters. Got it. Just lastly on marketing, as you think about Q4, anything we should be watching on the marketing side, given your improved social that you've had in terms of marketing as we head into the holiday season? Thank you. No. We're just going to continue to keep doing the storytelling. I think that we see it's working. I think our marketing teams are hitting the bullseye, and we just got to keep investing and keep telling and keep engaging with consumers. Thank you. Thanks, Dana. Thank you so much. Our next question comes from the line of Paul Lejuez with Citi, your line is now open. Hi. It's Kelly again. Thanks for the follow-up. I just wanted to follow up on an earlier question around the KG margin structure. In your disclosure, you said KG was about a 9% even margin business in 2024. Curious where that's going to shake out this year with the tariffs. As we look to 2026, how much can you recover? Can you get back to the 9% next year? Just longer term, I mean, you spoke pretty positively about KG margins. Where ultimately do you think this business can land, and how do you get there? Is it through SG&A synergies, anything in the gross margin to speak about? Just any color on sort of how we should think about the KG margins as we look forward. Thanks. Yeah. In terms of this year, for the partial period that we're going to that we own them from May on, I think that they're going to come in around 6%. In terms of next year, we'll talk in more detail about that on the next call, but certainly we should see improvement from where we were today or from where we were this year. I think we'll postpone any further discussion of that until that call. In terms of the last one with the drivers to get to a longer term. Drivers. Yeah. I think there's opportunity in both gross margin and SG&A, but I think the bigger opportunity is in SG&A. There's some cost savings opportunities that they're going to get from the combination with us, which we're already, all that work is already underway. We also think there's a significant opportunity to just leverage operating expenses over time as we grow that business. Just curious where you maybe think that those margins could go longer term. Yeah. I think what we said earlier was that certainly. The intermediate target would be to get to where Steve Madden, the legacy business, was historically, but we think there's opportunity beyond that. Got it. Best of luck. Thanks. Thanks, Kelly. All right. Thank you so much. I'm showing no further questions at this time. I would now like to turn it back to Ed Rosenfeld for closing remarks. Great. Thanks so much for joining us today. We hope you have a wonderful day, and we look forward to speaking with you on the next call. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker 4: Good day, and thank you for standing by. Welcome to the Q3 2025 Steve Madden Ltd. earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead. Good day, and thank you for standing by. good day and thank you for standing by Welcome to the Q3 2025 Steve Madden Ltd. earnings conference call. welcome to the q3 2025 steve madden ltd earnings conference call At this time, all participants are in a listen-only mode. at this time all participants are in a listen-only mode After the speaker's presentation, there will be a question-and-answer session. after the speaker's presentation there will be a question-and-answer session To ask a question during the session, you will need to press star one one on your telephone. to ask a question during the session you will need to press star one one on your telephone You will then hear an automated message advising your hand is raised. you will then hear an automated message advising your hand is raised To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please be advised that today's conference is being recorded. please be advised that today's conference is being recorded I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. i would now like to hand the conference over to your first speaker today danielle mccoy vp of corporate development and investor relations Please go ahead. please go ahead

Speaker 3: Thanks, Brittany, and good morning, everyone. Thank you for joining our third quarter 2025 earnings call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. We explain any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis unless otherwise noted. Thanks, Brittany, and good morning, everyone. thanks brittany and good morning everyone Thank you for joining our third quarter 2025 earnings call and webcast. thank you for joining our third quarter 2025 earnings call and webcast Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. before we begin i'd like to remind you that our remarks that follow including answers to your questions contain statements that we believe to be forward-looking statements within the meaning of the private securities litigation reform act These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. these forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. these risks include among others matters that we have described in our press release issued earlier today and filings we make with the sec We explain any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. we explain any obligation to update these forward-looking statements which may not be updated until our next quarterly earnings conference call if at all The financial results discussed on today's call are on an adjusted basis unless otherwise noted. the financial results discussed on today's call are on an adjusted basis unless otherwise noted A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today are Ed Rosenfeld, Chairman and Chief Executive Officer, and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I'll turn the call over to Ed. Ed. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. a reconciliation to the most directly comparable gaap financial measure and other associated disclosures are contained in our earnings release Joining me on the call today are Ed Rosenfeld, Chairman and Chief Executive Officer, and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. joining me on the call today are ed rosenfeld chairman and chief executive officer and zine mazouzi chief financial officer and executive vice president of operations With that, I'll turn the call over to Ed. with that i'll turn the call over to ed Ed. ed

Speaker 1: All right. Thanks, Danielle. Good morning, everyone. Thank you for joining us to review Steve Madden's third quarter 2025 results. As anticipated, the third quarter was challenging, driven largely by the impact of new tariffs on goods imported into the United States. During the period in April and May when new tariffs on Chinese imports reached 145%, wholesale customers cut back meaningfully on orders for the third quarter, and we shifted large amounts of production out of China midstream, which led to shipment delays. These factors, together with the negative impact to gross margin from the significant increase in our landed costs, resulted in substantial pressure on both revenue and earnings in Q3. Fortunately, while we will continue to see negative impacts from tariffs, we believe the worst is behind us. All right. all right Thanks, Danielle. thanks danielle Good morning, everyone. good morning everyone Thank you for joining us to review Steve Madden's third quarter 2025 results. thank you for joining us to review steve madden's third quarter 2025 results As anticipated, the third quarter was challenging, driven largely by the impact of new tariffs on goods imported into the United States. as anticipated the third quarter was challenging driven largely by the impact of new tariffs on goods imported into the united states During the period in April and May when new tariffs on Chinese imports reached 145%, wholesale customers cut back meaningfully on orders for the third quarter, and we shifted large amounts of production out of China midstream, which led to shipment delays. during the period in april and may when new tariffs on chinese imports reached 145% wholesale customers cut back meaningfully on orders for the third quarter and we shifted large amounts of production out of china midstream which led to shipment delays These factors, together with the negative impact to gross margin from the significant increase in our landed costs, resulted in substantial pressure on both revenue and earnings in Q3. these factors together with the negative impact to gross margin from the significant increase in our landed costs resulted in substantial pressure on both revenue and earnings in q3 Fortunately, while we will continue to see negative impacts from tariffs, we believe the worst is behind us. fortunately while we will continue to see negative impacts from tariffs we believe the worst is behind us Order patterns from our wholesale customers are normalizing, and we are mitigating a larger percentage of the gross margin pressure through strategic pricing actions and sourcing initiatives. Most importantly, underlying consumer demand for our brands and products is strong. Despite the noise from tariffs, our team has stayed laser-focused on executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing, and we are seeing those efforts pay off, particularly in our flagship Steve Madden brand. Steve and his design team have created an outstanding fall product assortment that is resonating with consumers and enabling us to outperform the competition. Boots have been the standout, led by our casual tall shaft styles, but we're also seeing strong performance in dress shoes across various heel heights, as well as casuals like loafers, Mary Janes, and mules. Order patterns from our wholesale customers are normalizing, and we are mitigating a larger percentage of the gross margin pressure through strategic pricing actions and sourcing initiatives. order patterns from our wholesale customers are normalizing and we are mitigating a larger percentage of the gross margin pressure through strategic pricing actions and sourcing initiatives Most importantly, underlying consumer demand for our brands and products is strong. most importantly underlying consumer demand for our brands and products is strong Despite the noise from tariffs, our team has stayed laser-focused on executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing, and we are seeing those efforts pay off, particularly in our flagship Steve Madden brand. despite the noise from tariffs our team has stayed laser-focused on executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing and we are seeing those efforts pay off particularly in our flagship steve madden brand Steve and his design team have created an outstanding fall product assortment that is resonating with consumers and enabling us to outperform the competition. steve and his design team have created an outstanding fall product assortment that is resonating with consumers and enabling us to outperform the competition Boots have been the standout, led by our casual tall shaft styles, but we're also seeing strong performance in dress shoes across various heel heights, as well as casuals like loafers, Mary Janes, and mules. boots have been the standout led by our casual tall shaft styles but we're also seeing strong performance in dress shoes across various heel heights as well as casuals like loafers mary janes and mules Our marketing team is amplifying this great assortment with richer brand and product storytelling and increased investment across YouTube, TikTok, Snapchat, and Pinterest, which is driving measurable increases in awareness and conversion with our key Gen Z and millennial consumers. As a result, both wholesale sell-through and DTC sales trends for Steve Madden have accelerated meaningfully in recent months. Our new brand, Kurt Geiger London, also has strong momentum as consumers continue to respond to its bold, statement-making designs and eye-catching marketing, including the current campaign featuring Emily Ratajkowski. Comp sales for the brand were up mid-teens in the third quarter. Our marketing team is amplifying this great assortment with richer brand and product storytelling and increased investment across YouTube, TikTok, Snapchat, and Pinterest, which is driving measurable increases in awareness and conversion with our key Gen Z and millennial consumers. our marketing team is amplifying this great assortment with richer brand and product storytelling and increased investment across youtube tiktok snapchat and pinterest which is driving measurable increases in awareness and conversion with our key gen z and millennial consumers As a result, both wholesale sell-through and DTC sales trends for Steve Madden have accelerated meaningfully in recent months. as a result both wholesale sell-through and dtc sales trends for steve madden have accelerated meaningfully in recent months Our new brand, Kurt Geiger London, also has strong momentum as consumers continue to respond to its bold, statement-making designs and eye-catching marketing, including the current campaign featuring Emily Ratajkowski. our new brand kurt geiger london also has strong momentum as consumers continue to respond to its bold statement-making designs and eye-catching marketing including the current campaign featuring emily ratajkowski Comp sales for the brand were up mid-teens in the third quarter. comp sales for the brand were up mid-teens in the third quarter Overall, the acquisition integration remains on track, and our teams continue to make progress on revenue synergies, including expanding Kurt Geiger in international markets through the Steve Madden network and growing Steve Madden in the U.K. through the Kurt Geiger platform, as well as cost savings opportunities in areas like freight and logistics. We are also making meaningful progress in advancing our other own brands. In Dolce Vita, we're building on the outstanding success we've had over the last several years in our U.S. footwear business by expanding international markets and extending the brand into other categories like handbags. In Betsey Johnson, we are driving renewed cultural relevance for the brand with elevated talent partnerships, authentic community engagement, high-impact activations, and differentiated merchandise assortments. Both Dolce Vita and Betsey Johnson are on track to deliver revenue gains for the full year 2025, despite the headwinds from tariffs. Overall, the acquisition integration remains on track, and our teams continue to make progress on revenue synergies, including expanding Kurt Geiger in international markets through the Steve Madden network and growing Steve Madden in the U.K. through the Kurt Geiger platform, as well as cost savings opportunities in areas like freight and logistics. overall the acquisition integration remains on track and our teams continue to make progress on revenue synergies including expanding kurt geiger in international markets through the steve madden network and growing steve madden in the u.k through the kurt geiger platform as well as cost savings opportunities in areas like freight and logistics We are also making meaningful progress in advancing our other own brands. we are also making meaningful progress in advancing our other own brands In Dolce Vita, we're building on the outstanding success we've had over the last several years in our U.S. footwear business by expanding international markets and extending the brand into other categories like handbags. in dolce vita we're building on the outstanding success we've had over the last several years in our u.s footwear business by expanding international markets and extending the brand into other categories like handbags In Betsey Johnson, we are driving renewed cultural relevance for the brand with elevated talent partnerships, authentic community engagement, high-impact activations, and differentiated merchandise assortments. in betsey johnson we are driving renewed cultural relevance for the brand with elevated talent partnerships authentic community engagement high-impact activations and differentiated merchandise assortments Both Dolce Vita and Betsey Johnson are on track to deliver revenue gains for the full year 2025, despite the headwinds from tariffs. both dolce vita and betsey johnson are on track to deliver revenue gains for the full year 2025 despite the headwinds from tariffs In sum, while the third quarter was undeniably challenging and our financial results were not up to our usual standards, our team's disciplined execution of our strategy is strengthening our brands and building relevance and demand with consumers. We are confident that we will begin to see improved financial performance in the fourth quarter, and looking out further, that we have the brands, business model, and strategy to drive sustainable revenue and earnings growth over the long term. I will now turn it over to Zine to review our third quarter 2025 financial results in more detail. In sum, while the third quarter was undeniably challenging and our financial results were not up to our usual standards, our team's disciplined execution of our strategy is strengthening our brands and building relevance and demand with consumers. in sum while the third quarter was undeniably challenging and our financial results were not up to our usual standards our team's disciplined execution of our strategy is strengthening our brands and building relevance and demand with consumers We are confident that we will begin to see improved financial performance in the fourth quarter, and looking out further, that we have the brands, business model, and strategy to drive sustainable revenue and earnings growth over the long term. we are confident that we will begin to see improved financial performance in the fourth quarter and looking out further that we have the brands business model and strategy to drive sustainable revenue and earnings growth over the long term I will now turn it over to Zine to review our third quarter 2025 financial results in more detail. i will now turn it over to zine to review our third quarter 2025 financial results in more detail

Speaker 5: Thanks, Ed. Good morning, everyone. In the third quarter, our consolidated revenue was $667.9 million, a 6.9% increase compared to the third quarter of 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 14.8%. Our wholesale revenue was $442.7 million, down 10.7% compared to Q3 2024. Excluding Kurt Geiger, our wholesale revenue decreased 19%. Wholesale footwear revenue was $266.5 million, a 10.9% decrease from the comparable period in 2024, or down 16.7% excluding Kurt Geiger. Wholesale accessories and apparel revenue was $176.2 million, down 10.3% compared to the third quarter in the prior year, or down 22.5% excluding Kurt Geiger. The majority of the organic decline in wholesale revenue can be attributed to tariff-related order reductions, shipment delays, and other impacts related to the production disruption. In our direct-to-consumer segment, revenue increased 76.6% to $221.5 million. Excluding Kurt Geiger, our direct-to-consumer revenue increased 1.5%. Thanks, Ed. thanks ed Good morning, everyone. good morning everyone In the third quarter, our consolidated revenue was $667.9 million, a 6.9% increase compared to the third quarter of 2024. in the third quarter our consolidated revenue was $667.9 million a 6.9% increase compared to the third quarter of 2024 Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 14.8%. excluding the newly acquired kurt geiger consolidated revenue decreased 14.8% Our wholesale revenue was $442.7 million, down 10.7% compared to Q3 2024. our wholesale revenue was $442.7 million down 10.7% compared to q3 2024 Excluding Kurt Geiger, our wholesale revenue decreased 19%. excluding kurt geiger our wholesale revenue decreased 19% Wholesale footwear revenue was $266.5 million, a 10.9% decrease from the comparable period in 2024, or down 16.7% excluding Kurt Geiger. wholesale footwear revenue was $266.5 million a 10.9% decrease from the comparable period in 2024 or down 16.7% excluding kurt geiger Wholesale accessories and apparel revenue was $176.2 million, down 10.3% compared to the third quarter in the prior year, or down 22.5% excluding Kurt Geiger. wholesale accessories and apparel revenue was $176.2 million down 10.3% compared to the third quarter in the prior year or down 22.5% excluding kurt geiger The majority of the organic decline in wholesale revenue can be attributed to tariff-related order reductions, shipment delays, and other impacts related to the production disruption. the majority of the organic decline in wholesale revenue can be attributed to tariff-related order reductions shipment delays and other impacts related to the production disruption In our direct-to-consumer segment, revenue increased 76.6% to $221.5 million. in our direct-to-consumer segment revenue increased 76.6% to $221.5 million Excluding Kurt Geiger, our direct-to-consumer revenue increased 1.5%. excluding kurt geiger our direct-to-consumer revenue increased 1.5% We ended the quarter with 397 company-operated brick-and-mortar retail stores, including 99 outlets, as well as 7 e-commerce websites and 133 company-operated concessions in international markets. Our license and royalty income was $3.7 million in the quarter compared to $3.5 million in the third quarter of 2024. Consolidated gross margin was 43.4% in the quarter, up from 41.6% in the comparable period of 2024 due to the impact of Kurt Geiger, which has a much higher mix of DTC than the legacy business and therefore has higher overall gross margin. Wholesale gross margin was 33.6% compared to 35.5% in the third quarter of 2024 due to pressure from tariffs, partially offset by our mitigation efforts. We ended the quarter with 397 company-operated brick-and-mortar retail stores, including 99 outlets, as well as 7 e-commerce websites and 133 company-operated concessions in international markets. we ended the quarter with 397 company-operated brick-and-mortar retail stores including 99 outlets as well as 7 e-commerce websites and 133 company-operated concessions in international markets Our license and royalty income was $3.7 million in the quarter compared to $3.5 million in the third quarter of 2024. our license and royalty income was $3.7 million in the quarter compared to $3.5 million in the third quarter of 2024 Consolidated gross margin was 43.4% in the quarter, up from 41.6% in the comparable period of 2024 due to the impact of Kurt Geiger, which has a much higher mix of DTC than the legacy business and therefore has higher overall gross margin. consolidated gross margin was 43.4% in the quarter up from 41.6% in the comparable period of 2024 due to the impact of kurt geiger which has a much higher mix of dtc than the legacy business and therefore has higher overall gross margin Wholesale gross margin was 33.6% compared to 35.5% in the third quarter of 2024 due to pressure from tariffs, partially offset by our mitigation efforts. wholesale gross margin was 33.6% compared to 35.5% in the third quarter of 2024 due to pressure from tariffs partially offset by our mitigation efforts Direct-to-consumer gross margin was 61.9% compared to 64% in the comparable period in 2024 due to pressure from tariffs, as well as the addition of Kurt Geiger, which had lower DTC margin in the quarter than the existing business, driven by the concessions business. Operating expenses were $243.4 million, or 36.4% of revenue in the quarter, compared to $174.2 million, or 27.9% of revenue in the third quarter of 2024. Operating income for the quarter was $46.3 million, or 6.9% of revenue, compared to $85.4 million, or 13.7% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 23.4% compared to 23.8% in the third quarter of 2024. Direct-to-consumer gross margin was 61.9% compared to 64% in the comparable period in 2024 due to pressure from tariffs, as well as the addition of Kurt Geiger, which had lower DTC margin in the quarter than the existing business, driven by the concessions business. direct-to-consumer gross margin was 61.9% compared to 64% in the comparable period in 2024 due to pressure from tariffs as well as the addition of kurt geiger which had lower dtc margin in the quarter than the existing business driven by the concessions business Operating expenses were $243.4 million, or 36.4% of revenue in the quarter, compared to $174.2 million, or 27.9% of revenue in the third quarter of 2024. operating expenses were $243.4 million or 36.4% of revenue in the quarter compared to $174.2 million or 27.9% of revenue in the third quarter of 2024 Operating income for the quarter was $46.3 million, or 6.9% of revenue, compared to $85.4 million, or 13.7% of revenue in the comparable period in the prior year. operating income for the quarter was $46.3 million or 6.9% of revenue compared to $85.4 million or 13.7% of revenue in the comparable period in the prior year The effective tax rate for the quarter was 23.4% compared to 23.8% in the third quarter of 2024. the effective tax rate for the quarter was 23.4% compared to 23.8% in the third quarter of 2024 Finally, net income attributable to Steve Madden Ltd. for the quarter was $30.4 million, or $0.43 per diluted share, compared to $64.8 million, or $0.91 per diluted share in the third quarter of 2024. Moving to the balance sheet, our financial foundation remains strong. As of September 30, 2025, we had $293.8 million of outstanding debt and $108.9 million of cash, cash equivalents, and short-term investments for a net debt of $185 million. Inventory at the end of the quarter was $476 million compared to $268.7 million in the third quarter of 2024. Excluding Kurt Geiger, inventory was $275.6 million, a 2.6% increase compared to the same period last year. Our CapEx in the third quarter was $11.6 million. During the third quarter, the company did not repurchase any shares of its common stock in the open market. Finally, net income attributable to Steve Madden Ltd. for the quarter was $30.4 million, or $0.43 per diluted share, compared to $64.8 million, or $0.91 per diluted share in the third quarter of 2024. finally net income attributable to steve madden ltd for the quarter was $30.4 million or $0.43 per diluted share compared to $64.8 million or $0.91 per diluted share in the third quarter of 2024 Moving to the balance sheet, our financial foundation remains strong. moving to the balance sheet our financial foundation remains strong As of September 30, 2025, we had $293.8 million of outstanding debt and $108.9 million of cash, cash equivalents, and short-term investments for a net debt of $185 million. as of september 30 2025 we had $293.8 million of outstanding debt and $108.9 million of cash cash equivalents and short-term investments for a net debt of $185 million Inventory at the end of the quarter was $476 million compared to $268.7 million in the third quarter of 2024. inventory at the end of the quarter was $476 million compared to $268.7 million in the third quarter of 2024 Excluding Kurt Geiger, inventory was $275.6 million, a 2.6% increase compared to the same period last year. excluding kurt geiger inventory was $275.6 million a 2.6% increase compared to the same period last year Our CapEx in the third quarter was $11.6 million. our capex in the third quarter was $11.6 million During the third quarter, the company did not repurchase any shares of its common stock in the open market. during the third quarter the company did not repurchase any shares of its common stock in the open market The company's Board of Directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on December 26, 2025, to stockholders of record as of the close of business on December 15, 2025. Turning to our fourth quarter 2025 guidance, we expect revenue to increase 27%-30% compared to the fourth quarter of 2024, and we expect earnings per share to be in the range of $0.41-$0.46. Now I'd like to turn the call over to the operator for questions. Brittany. The company's Board of Directors approved a quarterly cash dividend of $0.21 per share. the company's board of directors approved a quarterly cash dividend of $0.21 per share The dividend will be payable on December 26, 2025, to stockholders of record as of the close of business on December 15, 2025. the dividend will be payable on december 26 2025 to stockholders of record as of the close of business on december 15 2025 Turning to our fourth quarter 2025 guidance, we expect revenue to increase 27%-30% compared to the fourth quarter of 2024, and we expect earnings per share to be in the range of $0.41-$0.46. turning to our fourth quarter 2025 guidance we expect revenue to increase 27%-30% compared to the fourth quarter of 2024 and we expect earnings per share to be in the range of $0.41-$0.46 Now I'd like to turn the call over to the operator for questions. now i'd like to turn the call over to the operator for questions Brittany. brittany

Speaker 4: Thank you. At this time, we will be conducting a question-and-answer session. As a reminder, to ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question comes from the line of Paul Lejuez with Citi. Your line is now open. Thank you. thank you At this time, we will be conducting a question-and-answer session. at this time we will be conducting a question-and-answer session As a reminder, to ask a question during the session, you will need to press star one one on your telephone. as a reminder to ask a question during the session you will need to press star one one on your telephone You will then hear an automated message advising your hand is raised. you will then hear an automated message advising your hand is raised To withdraw your question, please press star one one again. to withdraw your question please press star one one again One moment while we compile our Q&A roster. one moment while we compile our q&a roster Our first question comes from the line of Paul Lejuez with Citi. our first question comes from the line of paul lejuez with citi Your line is now open. your line is now open

Speaker 7: Hi there. This is Kelly on for Paul. Thanks for taking our question. Ed, you sounded pretty positive on what you're seeing on the fashion front. I'm just curious if you could talk more about how you're seeing the fashion develop this fall, how inventory levels in the wholesale channel are looking, and if that makes you think differently about sort of the prospects for spring, particularly in the wholesale channel. Hi there. hi there This is Kelly on for Paul. this is kelly on for paul Thanks for taking our question. thanks for taking our question Ed, you sounded pretty positive on what you're seeing on the fashion front. ed you sounded pretty positive on what you're seeing on the fashion front I'm just curious if you could talk more about how you're seeing the fashion develop this fall, how inventory levels in the wholesale channel are looking, and if that makes you think differently about sort of the prospects for spring, particularly in the wholesale channel. i'm just curious if you could talk more about how you're seeing the fashion develop this fall how inventory levels in the wholesale channel are looking and if that makes you think differently about sort of the prospects for spring particularly in the wholesale channel

Speaker 1: Yeah. Good morning, Kelly. Yeah, we feel really good about what we've seen in fall. As we mentioned, we've seen a pretty meaningful acceleration in the trends, particularly in that core Steve Madden women's shoe business. As I called out, I think the biggest driver has been boots. Our boot assortment has just seen really strong performance. We called out that it's been led by the casual tall shaft styles. Those have been most important, but we've got a number of other things working in the boot and booty category as well. As I said earlier, it's not just about boots because we've really seen a nice improvement in the dress shoe category. That's obviously a category where we think we have a really strong competitive positioning. Our team has executed there. Yeah. yeah Good morning, Kelly. good morning kelly Yeah, we feel really good about what we've seen in fall. yeah we feel really good about what we've seen in fall As we mentioned, we've seen a pretty meaningful acceleration in the trends, particularly in that core Steve Madden women's shoe business. as we mentioned we've seen a pretty meaningful acceleration in the trends particularly in that core steve madden women's shoe business As I called out, I think the biggest driver has been boots. as i called out i think the biggest driver has been boots Our boot assortment has just seen really strong performance. our boot assortment has just seen really strong performance We called out that it's been led by the casual tall shaft styles. we called out that it's been led by the casual tall shaft styles Those have been most important, but we've got a number of other things working in the boot and booty category as well. those have been most important but we've got a number of other things working in the boot and booty category as well As I said earlier, it's not just about boots because we've really seen a nice improvement in the dress shoe category. as i said earlier it's not just about boots because we've really seen a nice improvement in the dress shoe category That's obviously a category where we think we have a really strong competitive positioning. that's obviously a category where we think we have a really strong competitive positioning Our team has executed there. our team has executed there We're seeing strength in a number of different sort of looks within the dress category, and as I mentioned, really at various heel heights. Casuals have been important too. The fashion sneaker business has downshifted a bit, and we're picking that business up, and then some in loafers and mules and Mary Janes. Really feeling better than we have in some time about our fashion and Steve Madden and how it's performing. Yes, it does give us confidence going into spring. I think we feel better than we did a few months ago about how spring is shaping up. We're seeing strength in a number of different sort of looks within the dress category, and as I mentioned, really at various heel heights. we're seeing strength in a number of different sort of looks within the dress category and as i mentioned really at various heel heights Casuals have been important too. casuals have been important too The fashion sneaker business has downshifted a bit, and we're picking that business up, and then some in loafers and mules and Mary Janes. the fashion sneaker business has downshifted a bit and we're picking that business up and then some in loafers and mules and mary janes Really feeling better than we have in some time about our fashion and Steve Madden and how it's performing. really feeling better than we have in some time about our fashion and steve madden and how it's performing Yes, it does give us confidence going into spring. yes it does give us confidence going into spring I think we feel better than we did a few months ago about how spring is shaping up. i think we feel better than we did a few months ago about how spring is shaping up

Speaker 7: Great. Good to hear there. Unfortunately, you have got well above sort of where consensus is looking. Could you just break that down a bit for us in terms of what you are expecting from the core relative to the kind of down 15% you saw in the third quarter, whether there are any shifts there or what is kind of driving any acceleration there and just what you would expect from KG in the fourth quarter? Great. great Good to hear there. good to hear there Unfortunately, you have got well above sort of where consensus is looking. unfortunately you have got well above sort of where consensus is looking Could you just break that down a bit for us in terms of what you are expecting from the core relative to the kind of down 15% you saw in the third quarter, whether there are any shifts there or what is kind of driving any acceleration there and just what you would expect from KG in the fourth quarter? could you just break that down a bit for us in terms of what you are expecting from the core relative to the kind of down 15% you saw in the third quarter whether there are any shifts there or what is kind of driving any acceleration there and just what you would expect from kg in the fourth quarter

Speaker 1: Sure. Yeah. So the core business, if you exclude KG, the revenue guide is essentially down 2% to down 4%. That includes increases in both wholesale footwear and DTC, but still offset by a decline in wholesale accessories and apparel. The KG contribution to revenue, I think at the low end, we are at $182 million and the high end, $187 million. Sure. sure Yeah. yeah So the core business, if you exclude KG, the revenue guide is essentially down 2% to down 4%. so the core business if you exclude kg the revenue guide is essentially down 2% to down 4% That includes increases in both wholesale footwear and DTC, but still offset by a decline in wholesale accessories and apparel. that includes increases in both wholesale footwear and dtc but still offset by a decline in wholesale accessories and apparel The KG contribution to revenue, I think at the low end, we are at $182 million and the high end, $187 million. the kg contribution to revenue i think at the low end, we are at $182 million and the high end, $187 million

Speaker 7: Any sense of, sort of, the breakdown when we think about our models and how much of that KG revenue is coming from the DTC channel in the fourth quarter and what kind of impact that'll have on the grosses? Any sense of, sort of, the breakdown when we think about our models and how much of that KG revenue is coming from the DTC channel in the fourth quarter and what kind of impact that'll have on the grosses? any sense of sort of the breakdown when we think about our models and how much of that kg revenue is coming from the dtc channel in the fourth quarter and what kind of impact that'll have on the grosses

Speaker 1: Yeah. I mean, as you know, overall, KG is over 70% DTC. I think I'd have to—I mean, I want to say it's probably about $135 million, something like that, in the fourth quarter coming from DTC. Obviously, that does have a meaningful mixed impact to gross margin. Yeah. yeah I mean, as you know, overall, KG is over 70% DTC. i mean as you know overall kg is over 70% dtc I think I'd have to—I mean, I want to say it's probably about $135 million, something like that, in the fourth quarter coming from DTC. i think i'd have to—i mean i want to say it's probably about $135 million something like that in the fourth quarter coming from dtc Obviously, that does have a meaningful mixed impact to gross margin. obviously that does have a meaningful mixed impact to gross margin

Speaker 7: Got it. Thank you. Best of luck. Got it. got it Thank you. thank you Best of luck. best of luck

Speaker 1: Thank you. Thank you. thank you

Speaker 4: Thank you so much. Our next question comes from the line of Anna Andreeva with Piper Sandler. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Anna Andreeva with Piper Sandler. our next question comes from the line of anna andreeva with piper sandler Your line is now open. your line is now open

Speaker 2: Great. Thank you so much. Good morning and congrats. Nice results. A couple of questions. Are you seeing stockouts in the core Madden business, just given everything that's going on with the supply chain and how quickly can you chase? Great to hear about DTC x KG bouncing back to positive. Ed, you mentioned a strong consumer response to a number of categories. Can you parse out how owned e-com did versus brick and mortar? How does the 10% reduction in China affect your thinking about sourcing? Great. great Thank you so much. thank you so much Good morning and congrats. good morning and congrats Nice results. nice results A couple of questions. a couple of questions Are you seeing stockouts in the core Madden business, just given everything that's going on with the supply chain and how quickly can you chase? are you seeing stockouts in the core madden business just given everything that's going on with the supply chain and how quickly can you chase Great to hear about DTC x KG bouncing back to positive. great to hear about dtc x kg bouncing back to positive Ed, you mentioned a strong consumer response to a number of categories. ed you mentioned a strong consumer response to a number of categories Can you parse out how owned e-com did versus brick and mortar? can you parse out how owned e-com did versus brick and mortar How does the 10% reduction in China affect your thinking about sourcing? how does the 10% reduction in china affect your thinking about sourcing

Speaker 1: Sure. Yeah. Look. Are there certain styles where we've had stockouts? Yes. Generally speaking, we've been able to chase some of the additional demand in the core Steve Madden business. As you point out, because of the supply chain disruption, we do not have the ability to chase that we normally do and the speed that we normally do. We did front-load some merchandise here because we had good reads on these products. We were in a position to fill some reorders, for instance, in Steve Madden. Also, some of this product is coming, or a good portion of it is coming from Mexico. Obviously, that's where we have a lot of speed, and we can get back into reorders in 30 days. I think it's been an okay story. Sure, I think the second quarter was about e-commerce versus brick and mortar. Sure. sure Yeah. yeah Look. look Are there certain styles where we've had stockouts? are there certain styles where we've had stockouts Yes. yes Generally speaking, we've been able to chase some of the additional demand in the core Steve Madden business. generally speaking we've been able to chase some of the additional demand in the core steve madden business As you point out, because of the supply chain disruption, we do not have the ability to chase that we normally do and the speed that we normally do. as you point out because of the supply chain disruption we do not have the ability to chase that we normally do and the speed that we normally do We did front-load some merchandise here because we had good reads on these products. we did front-load some merchandise here because we had good reads on these products We were in a position to fill some reorders, for instance, in Steve Madden. we were in a position to fill some reorders for instance in steve madden Also, some of this product is coming, or a good portion of it is coming from Mexico. also some of this product is coming or a good portion of it is coming from mexico Obviously, that's where we have a lot of speed, and we can get back into reorders in 30 days. obviously that's where we have a lot of speed and we can get back into reorders in 30 days I think it's been an okay story. i think it's been an okay story Sure, I think the second quarter was about e-commerce versus brick and mortar. sure i think the second quarter was about e-commerce versus brick and mortar In both Steve Madden and Kurt Geiger, e-commerce is outpacing brick and mortar, but we've seen— We talked about the acceleration in Steve Madden. We've seen that in both e-com and stores in recent months. In terms of the final question, I think it was, how does the China reduction impact our sourcing? Look, it's obviously a welcome development to see the reduction in the tariff on China. The way that this tariff regime looks right now, the math would tell us we would move quite a bit back to China. I think that we're going to be careful about that. We want to remain diversified. We don't want to get back into a position where we have 70%+ of our sourcing coming from one country. We are going to continue to try to be diversified. It obviously does give us greater flexibility to go back to China where we need to to get the right deliveries. And quality, pricing, speed, etc. In both Steve Madden and Kurt Geiger, e-commerce is outpacing brick and mortar, but we've seen— We talked about the acceleration in Steve Madden. in both steve madden and kurt geiger e-commerce is outpacing brick and mortar but we've seen— we talked about the acceleration in steve madden We've seen that in both e-com and stores in recent months. we've seen that in both e-com and stores in recent months In terms of the final question, I think it was, how does the China reduction impact our sourcing? in terms of the final question i think it was how does the china reduction impact our sourcing Look, it's obviously a welcome development to see the reduction in the tariff on China. look it's obviously a welcome development to see the reduction in the tariff on china The way that this tariff regime looks right now, the math would tell us we would move quite a bit back to China. the way that this tariff regime looks right now the math would tell us we would move quite a bit back to china I think that we're going to be careful about that. i think that we're going to be careful about that We want to remain diversified. we want to remain diversified We don't want to get back into a position where we have 70%+ of our sourcing coming from one country. we don't want to get back into a position where we have 70%+ of our sourcing coming from one country We are going to continue to try to be diversified. we are going to continue to try to be diversified It obviously does give us greater flexibility to go back to China where we need to to get the right deliveries. it obviously does give us greater flexibility to go back to china where we need to to get the right deliveries And quality, pricing, speed, etc. and quality pricing speed etc

Speaker 7: Makes sense. No, thank you for that. Just as a follow-up, as we think about the KG rollout plan, as we look into next year, just any color you could provide how we should think about the store growth versus wholesale? Makes sense. makes sense No, thank you for that. no thank you for that Just as a follow-up, as we think about the KG rollout plan, as we look into next year, just any color you could provide how we should think about the store growth versus wholesale? just as a follow-up as we think about the kg rollout plan as we look into next year just any color you could provide how we should think about the store growth versus wholesale

Speaker 1: Yeah. We will be— We're going to, I think, not get into a lot of detail about 2026 overall because we'll obviously be talking about that on the next call. I can tell you that we do plan to open a handful of stores in the United States next year for Kurt Geiger. We're working on those plans now. As we've talked about, the initial six stores in the United States are performing very well. We're getting pretty close on a handful of leases for next year to continue that rollout. There will be some wholesale growth as well because I think that we have opportunity in both channels. Yeah. yeah We will be— We're going to, I think, not get into a lot of detail about 2026 overall because we'll obviously be talking about that on the next call. we will be— we're going to i think not get into a lot of detail about 2026 overall because we'll obviously be talking about that on the next call I can tell you that we do plan to open a handful of stores in the United States next year for Kurt Geiger. i can tell you that we do plan to open a handful of stores in the united states next year for kurt geiger We're working on those plans now. we're working on those plans now As we've talked about, the initial six stores in the United States are performing very well. as we've talked about the initial six stores in the united states are performing very well We're getting pretty close on a handful of leases for next year to continue that rollout. we're getting pretty close on a handful of leases for next year to continue that rollout There will be some wholesale growth as well because I think that we have opportunity in both channels. there will be some wholesale growth as well because i think that we have opportunity in both channels

Speaker 7: Awesome. Thanks so much again. Awesome. awesome Thanks so much again. thanks so much again

Speaker 1: Thank you. Thank you. thank you

Speaker 4: Thank you so much. Our next question comes from the line of Jay Sole with UBS. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Jay Sole with UBS. our next question comes from the line of jay sole with ubs Your line is now open. your line is now open

Speaker 14: Great. Thank you so much. I think I heard you say that legacy Steve Madden should be down 2%-4% with wholesale footwear and DTC positive. Can you just talk about how you're thinking about 4Q for the entire wholesale footwear segment and then wholesale accessories? That'd be helpful. Thank you. Great. great Thank you so much. thank you so much I think I heard you say that legacy Steve Madden should be down 2%-4% with wholesale footwear and DTC positive. i think i heard you say that legacy steve madden should be down 2%-4% with wholesale footwear and dtc positive Can you just talk about how you're thinking about 4Q for the entire wholesale footwear segment and then wholesale accessories? can you just talk about how you're thinking about 4q for the entire wholesale footwear segment and then wholesale accessories That'd be helpful. that'd be helpful Thank you. thank you

Speaker 1: Yeah. Wholesale. Including Kurt Geiger or excluding Kurt Geiger? Yeah. yeah Wholesale. wholesale Including Kurt Geiger or excluding Kurt Geiger? including kurt geiger or excluding kurt geiger

Speaker 14: I guess excluding Kurt Geiger. I guess excluding Kurt Geiger. i guess excluding kurt geiger

Speaker 1: Excluding Kurt Geiger, wholesale footwear, we're looking at up two to up four and a half. And wholesale accessories and apparel, excluding Kurt Geiger, still down mid to high teens. Excluding Kurt Geiger, wholesale footwear, we're looking at up two to up four and a half. excluding kurt geiger wholesale footwear we're looking at up two to up four and a half And wholesale accessories and apparel, excluding Kurt Geiger, still down mid to high teens. and wholesale accessories and apparel excluding kurt geiger still down mid to high teens

Speaker 14: Got it. Okay. All right. That makes sense. I guess if you think about Kurt Geiger retail versus wholesale, I mean, how are you thinking about that? Got it. got it Okay. okay All right. all right That makes sense. that makes sense I guess if you think about Kurt Geiger retail versus wholesale, I mean, how are you thinking about that? i guess if you think about kurt geiger retail versus wholesale i mean how are you thinking about that

Speaker 1: We have provided the DTC revenue for Kurt Geiger, which I said I think is going to be around $135 million. And then the overall number for Kurt Geiger, $182 million-$187 million is the range. We have provided the DTC revenue for Kurt Geiger, which I said I think is going to be around $135 million. we have provided the dtc revenue for kurt geiger which i said i think is going to be around $135 million And then the overall number for Kurt Geiger, $182 million-$187 million is the range. and then the overall number for kurt geiger $182 million-$187 million is the range

Speaker 14: Okay. Understood. Got that. Thank you for clarifying that. I guess just, you've asked this already a couple of times, but just on your visibility, I mean, have you taken orders? Do you take orders earlier for Kurt Geiger relative to the Steve Madden business? I mean, do you have visibility out into Q1 and Q2 yet for Kurt Geiger, or is it going to be on the same sort of quick-turning supply chain that Steve Madden is on? Okay. okay Understood. understood Got that. got that Thank you for clarifying that. thank you for clarifying that I guess just, you've asked this already a couple of times, but just on your visibility, I mean, have you taken orders? i guess just you've asked this already a couple of times but just on your visibility i mean have you taken orders Do you take orders earlier for Kurt Geiger relative to the Steve Madden business? do you take orders earlier for kurt geiger relative to the steve madden business I mean, do you have visibility out into Q1 and Q2 yet for Kurt Geiger, or is it going to be on the same sort of quick-turning supply chain that Steve Madden is on? i mean do you have visibility out into q1 and q2 yet for kurt geiger or is it going to be on the same sort of quick-turning supply chain that steve madden is on

Speaker 1: No. We do take orders earlier there. And so we'll have more visibility over time there. No. no We do take orders earlier there. we do take orders earlier there And so we'll have more visibility over time there. and so we'll have more visibility over time there

Speaker 14: I guess any comment on sort of the order book and how that's shaping up right now? I guess any comment on sort of the order book and how that's shaping up right now? i guess any comment on sort of the order book and how that's shaping up right now

Speaker 1: I think we're going to postpone all discussion of 2026 until the next call. Look, the Kurt Geiger brand continues to perform very well. We're going to see growth next year. I think we're going to postpone all discussion of 2026 until the next call. i think we're going to postpone all discussion of 2026 until the next call Look, the Kurt Geiger brand continues to perform very well. look the kurt geiger brand continues to perform very well We're going to see growth next year. we're going to see growth next year

Speaker 14: Got it. Okay. Thank you so much. Got it. got it Okay. okay Thank you so much. thank you so much

Speaker 4: Thank you so much. Our next question comes from the line of Aubrey Tianello with BNP Paribas. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Aubrey Tianello with BNP Paribas. our next question comes from the line of aubrey tianello with bnp paribas Your line is now open. your line is now open

Speaker 12: Hey, good morning. Thanks for taking the questions. I wanted to ask on Kurt Geiger as well. Appreciate the comment on comp sales up mid-teens. Any color you can share on how Kurt Geiger performed by region in the quarter? Hey, good morning. hey good morning Thanks for taking the questions. thanks for taking the questions I wanted to ask on Kurt Geiger as well. i wanted to ask on kurt geiger as well Appreciate the comment on comp sales up mid-teens. appreciate the comment on comp sales up mid-teens Any color you can share on how Kurt Geiger performed by region in the quarter? any color you can share on how kurt geiger performed by region in the quarter

Speaker 1: Yeah. It's growing in all the core regions. They performed well in their home market of the U.K., continues to grow in the U.S., and we're also growing in Europe. Yeah. yeah It's growing in all the core regions. it's growing in all the core regions They performed well in their home market of the U.K., continues to grow in the U.S., and we're also growing in Europe. they performed well in their home market of the u.k continues to grow in the u.s and we're also growing in europe

Speaker 12: Got it. Ed, you've talked about the revenue synergy potential there. One of the first pieces of that being sort of plugging KG into your existing international markets. I know it's still early, but any updates on that in terms of how that's progressing or when you could start seeing some of those benefits? Got it. got it Ed, you've talked about the revenue synergy potential there. ed you've talked about the revenue synergy potential there One of the first pieces of that being sort of plugging KG into your existing international markets. one of the first pieces of that being sort of plugging kg into your existing international markets I know it's still early, but any updates on that in terms of how that's progressing or when you could start seeing some of those benefits? i know it's still early but any updates on that in terms of how that's progressing or when you could start seeing some of those benefits

Speaker 1: Yeah. We've been hard at work on that. The Kurt Geiger CEO just went on a world tour. I think he hit, I want to say, four continents over a three-week period, meeting with all of our international teams and international partners. That work is underway. I think we'll start to see some benefits in 2026. Probably more. I think anything that will be meaningful to the numbers would be towards the back end of 2026. Yeah. yeah We've been hard at work on that. we've been hard at work on that The Kurt Geiger CEO just went on a world tour. the kurt geiger ceo just went on a world tour I think he hit, I want to say, four continents over a three-week period, meeting with all of our international teams and international partners. i think he hit i want to say four continents over a three-week period meeting with all of our international teams and international partners That work is underway. that work is underway I think we'll start to see some benefits in 2026. i think we'll start to see some benefits in 2026 Probably more. probably more I think anything that will be meaningful to the numbers would be towards the back end of 2026. i think anything that will be meaningful to the numbers would be towards the back end of 2026

Speaker 12: Got it. Thank you. Got it. got it Thank you. thank you

Speaker 4: Thank you so much. Our next question comes from the line of Marni Shapiro with The Retail Tracker. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Marni Shapiro with The Retail Tracker. our next question comes from the line of marni shapiro with the retail tracker Your line is now open. your line is now open

Speaker 10: Hey, guys. Thanks so much for taking my question. Your stores have really looked beautiful. Could we just focus a little bit on some of your smaller but growing areas? It sounds like the handbag business was a little bit disrupted. I'm guessing some late deliveries. I'm curious if you could just talk a little bit about what's going on there. Could we get an update on the apparel business, both at stores like Macy's, Bloomingdale's, and Revolve, as well as Madden NYC at Walmart? Hey, guys. hey guys Thanks so much for taking my question. thanks so much for taking my question Your stores have really looked beautiful. your stores have really looked beautiful Could we just focus a little bit on some of your smaller but growing areas? could we just focus a little bit on some of your smaller but growing areas It sounds like the handbag business was a little bit disrupted. it sounds like the handbag business was a little bit disrupted I'm guessing some late deliveries. i'm guessing some late deliveries I'm curious if you could just talk a little bit about what's going on there. i'm curious if you could just talk a little bit about what's going on there Could we get an update on the apparel business, both at stores like Macy's, Bloomingdale's, and Revolve, as well as Madden NYC at Walmart? could we get an update on the apparel business both at stores like macy's bloomingdale's and revolve as well as madden nyc at walmart

Speaker 1: Yeah. Sure. In terms of handbags, look, that's obviously been a category, if we're talking about Steve Madden handbags, that we have talked about all year was going to be down based on the excess inventory in the channel and some of the market pressures that we've experienced there. We came into the year expecting that business to be down double digits. That's been exacerbated by all the tariff disruption and everything that's happened with the supply chain and deliveries and everything else. We have certainly felt a lot of pressure there. We're going to continue to feel that in Q4. The good news is that the underlying demand, I think, is improving. We've seen good sell-throughs in fall so far, improved over spring. We've got a number of things working there. I think that our online Hobos, shoulder bags, EastWest bags, anything in brown suede. Yeah. yeah Sure. sure In terms of handbags, look, that's obviously been a category, if we're talking about Steve Madden handbags, that we have talked about all year was going to be down based on the excess inventory in the channel and some of the market pressures that we've experienced there. in terms of handbags look that's obviously been a category if we're talking about steve madden handbags that we have talked about all year was going to be down based on the excess inventory in the channel and some of the market pressures that we've experienced there We came into the year expecting that business to be down double digits. we came into the year expecting that business to be down double digits That's been exacerbated by all the tariff disruption and everything that's happened with the supply chain and deliveries and everything else. that's been exacerbated by all the tariff disruption and everything that's happened with the supply chain and deliveries and everything else We have certainly felt a lot of pressure there. we have certainly felt a lot of pressure there We're going to continue to feel that in Q4. we're going to continue to feel that in q4 The good news is that the underlying demand, I think, is improving. the good news is that the underlying demand i think is improving We've seen good sell-throughs in fall so far, improved over spring. we've seen good sell-throughs in fall so far improved over spring We've got a number of things working there. we've got a number of things working there I think that our online Hobos, shoulder bags, EastWest bags, anything in brown suede. i think that our online hobos shoulder bags eastwest bags anything in brown suede We've got the trends, and they're performing. I do expect that business to stabilize as we come into spring 2026. Apparel, as you know, has been a nice growth story for us. The focus, of course, is Steve Madden apparel. That's a business that we've been—the sell-throughs have been good, and we've been steadily growing it in those key accounts that you mentioned: Nordstrom, Dillard's, Bloomingdale's, Top Doors of Macy's, Revolve, etc. To your point, we also have the mass business that we do with Walmart under Madden NYC. That's an important business for us as well, although our overall business in the mass channel has definitely felt some pressure from tariffs. We expect that to get better as we go into 2026. We've got the trends, and they're performing. we've got the trends and they're performing I do expect that business to stabilize as we come into spring 2026. i do expect that business to stabilize as we come into spring 2026 Apparel, as you know, has been a nice growth story for us. apparel as you know has been a nice growth story for us The focus, of course, is Steve Madden apparel. the focus of course is steve madden apparel That's a business that we've been—the sell-throughs have been good, and we've been steadily growing it in those key accounts that you mentioned: Nordstrom, Dillard's, Bloomingdale's, Top Doors of Macy's, Revolve, etc. To your point, we also have the mass business that we do with Walmart under Madden NYC. that's a business that we've been—the sell-throughs have been good and we've been steadily growing it in those key accounts that you mentioned nordstrom dillard's bloomingdale's top doors of macy's revolve etc to your point we also have the mass business that we do with walmart under madden nyc That's an important business for us as well, although our overall business in the mass channel has definitely felt some pressure from tariffs. that's an important business for us as well although our overall business in the mass channel has definitely felt some pressure from tariffs We expect that to get better as we go into 2026. we expect that to get better as we go into 2026

Speaker 10: Can I just follow up on what's going on on the back side in the department stores? I'm sorry, in the shoe side in the department stores. Are you seeing a big difference between the higher-end stores that you sell, some of the better stores, or I guess even more fashion stores? Revolve is a much more fashion store than some of the others versus stores that are a little bit less fashion, or it's across the board, your sell-through has been good, and there's not a lot of price resistance to the Madden brand when the product is right? Can I just follow up on what's going on on the back side in the department stores? can i just follow up on what's going on on the back side in the department stores I'm sorry, in the shoe side in the department stores. i'm sorry in the shoe side in the department stores Are you seeing a big difference between the higher-end stores that you sell, some of the better stores, or I guess even more fashion stores? are you seeing a big difference between the higher-end stores that you sell some of the better stores or i guess even more fashion stores Revolve is a much more fashion store than some of the others versus stores that are a little bit less fashion, or it's across the board, your sell-through has been good, and there's not a lot of price resistance to the Madden brand when the product is right? revolve is a much more fashion store than some of the others versus stores that are a little bit less fashion or it's across the board your sell-through has been good and there's not a lot of price resistance to the madden brand when the product is right

Speaker 1: Yeah. We've been really pleased so far with the lack of price resistance that we've seen, particularly in the Madden brand. I think, as we've said, we have a lot of very strong fashion right now. I think overall, if you look at the overall company, the real takeaway on the price increases is that when you have real fashion-forward products or new fashion, the consumer is willing to pay. Where you have to be much more careful with price increases is on the core and more basic product. The good news is that's how we did it. That's how we planned it. As you know, we were very surgical about it. We didn't take a peanut butter approach where we spread the price increases evenly everywhere. We went style by style. Yeah. yeah We've been really pleased so far with the lack of price resistance that we've seen, particularly in the Madden brand. we've been really pleased so far with the lack of price resistance that we've seen particularly in the madden brand I think, as we've said, we have a lot of very strong fashion right now. i think as we've said we have a lot of very strong fashion right now I think overall, if you look at the overall company, the real takeaway on the price increases is that when you have real fashion-forward products or new fashion, the consumer is willing to pay. i think overall if you look at the overall company the real takeaway on the price increases is that when you have real fashion-forward products or new fashion the consumer is willing to pay Where you have to be much more careful with price increases is on the core and more basic product. where you have to be much more careful with price increases is on the core and more basic product The good news is that's how we did it. the good news is that's how we did it That's how we planned it. that's how we planned it As you know, we were very surgical about it. as you know we were very surgical about it We didn't take a peanut butter approach where we spread the price increases evenly everywhere. we didn't take a peanut butter approach where we spread the price increases evenly everywhere We went style by style. we went style by style I think so far we've been pleased with how the price increases have been received by the consumer. I think so far we've been pleased with how the price increases have been received by the consumer. i think so far we've been pleased with how the price increases have been received by the consumer

Speaker 10: Fantastic. Thank you. The product really looks outstanding. Some of the best product out there in the market. Best of luck for holiday, you guys. Fantastic. fantastic Thank you. thank you The product really looks outstanding. the product really looks outstanding Some of the best product out there in the market. some of the best product out there in the market Best of luck for holiday, you guys. best of luck for holiday you guys

Speaker 1: Thanks. Thanks so much. Thanks. thanks Thanks so much. thanks so much

Speaker 4: Thank you so much. Our next question comes from the line of Corey Tarlowe with Jefferies. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Corey Tarlowe with Jefferies. our next question comes from the line of corey tarlowe with jefferies Your line is now open. your line is now open

Speaker 11: Great. Thanks and good morning. Ed, I was just wondering if you could talk to the AUR lift in the business. So you're selling $200 boots today versus sneakers that were more like $70 previously. How is that affecting the business, and what's the impact on sales and comp? How do you measure that? How do these fashion trends speak to what AUR could be next year? Great. great thanks and Thanks and good morning. great thanks and good morning Ed, I was just wondering if you could talk to the AUR lift in the business. ed i was just wondering if you could talk to the aur lift in the business So you're selling $200 boots today versus sneakers that were more like $70 previously. so you're selling $200 boots today versus sneakers that were more like $70 previously How is that affecting the business, and what's the impact on sales and comp? how is that affecting the business and what's the impact on sales and comp How do you measure that? how do you measure that How do these fashion trends speak to what AUR could be next year? how do these fashion trends speak to what aur could be next year

Speaker 1: Yeah. We are seeing a pretty significant increase in AUR. And it's really twofold. It's one, it's based on the price increases that we've put through in response to tariffs. And number two, as you point out, there's a mixed benefit due to selling more boots and in higher-priced categories. So in Q3, in our DTC, we were up about high singles in AUR. In Q4, we're running more like mid-teens increases in AUR. Yeah. yeah We are seeing a pretty significant increase in AUR. we are seeing a pretty significant increase in aur And it's really twofold. and it's really twofold It's one, it's based on the price increases that we've put through in response to tariffs. it's one it's based on the price increases that we've put through in response to tariffs And number two, as you point out, there's a mixed benefit due to selling more boots and in higher-priced categories. and number two as you point out there's a mixed benefit due to selling more boots and in higher-priced categories So in Q3, in our DTC, we were up about high singles in AUR. so in q3 in our dtc we were up about high singles in aur In Q4, we're running more like mid-teens increases in AUR. in q4 we're running more like mid-teens increases in aur

Speaker 11: That's really helpful. It does feel as if there's a bit of a tone shift in your commentary around wholesale, where kind of the first half of the year I talked about order cancellations, and now you're talking about orders ramping back up. I'm curious, is this the fact that the channels are doing better, or is it that you see Steve Madden gaining more market share in these channels? How do you think about that? That's really helpful. that's really helpful It does feel as if there's a bit of a tone shift in your commentary around wholesale, where kind of the first half of the year I talked about order cancellations, and now you're talking about orders ramping back up. it does feel as if there's a bit of a tone shift in your commentary around wholesale where kind of the first half of the year i talked about order cancellations and now you're talking about orders ramping back up I'm curious, is this the fact that the channels are doing better, or is it that you see Steve Madden gaining more market share in these channels? i'm curious is this the fact that the channels are doing better or is it that you see steve madden gaining more market share in these channels How do you think about that? how do you think about that

Speaker 1: I think it's both. I think. Look, my tone didn't get better from how I was talking when we had 145% tariffs and everybody canceled every order. It would be pretty depressing. Some of that, the external noise has abated a bit. I think things are normalizing in the wake of all the tariff disruption. In addition to that, we are also seeing improved underlying demand, improved sell-through. That's causing the wholesale customers to come back to us with more aggressive plans. I think it's both. i think it's both I think. i think Look, my tone didn't get better from how I was talking when we had 145% tariffs and everybody canceled every order. look my tone didn't get better from how i was talking when we had 145% tariffs and everybody canceled every order It would be pretty depressing. it would be pretty depressing Some of that, the external noise has abated a bit. some of that the external noise has abated a bit I think things are normalizing in the wake of all the tariff disruption. i think things are normalizing in the wake of all the tariff disruption In addition to that, we are also seeing improved underlying demand, improved sell-through. in addition to that we are also seeing improved underlying demand improved sell-through That's causing the wholesale customers to come back to us with more aggressive plans. that's causing the wholesale customers to come back to us with more aggressive plans

Speaker 11: Got it. If I could just squeeze one more in. It seems like the product's resonating really nicely. Intuitively, what do you think that means for promotions, and what's embedded in your outlook for that? Thanks so much. Got it. got it If I could just squeeze one more in. if i could just squeeze one more in It seems like the product's resonating really nicely. it seems like the product's resonating really nicely Intuitively, what do you think that means for promotions, and what's embedded in your outlook for that? intuitively what do you think that means for promotions and what's embedded in your outlook for that Thanks so much. thanks so much

Speaker 1: Yeah. I mean, the good news is we have been able, for instance, in our DTC channels, we have so far in Q4 reduced promotional days by a pretty meaningful amount compared to what we were doing last year. We have been able to be less promotional because of the strength of the product and the trend. We will do, obviously, we need to remain competitive when we get into the fall, the part of the holiday season here when everybody is promotional, but we are going to attempt to continue to be less promotional where we can. Yeah. yeah I mean, the good news is we have been able, for instance, in our DTC channels, we have so far in Q4 reduced promotional days by a pretty meaningful amount compared to what we were doing last year. i mean the good news is we have been able for instance in our dtc channels we have so far in q4 reduced promotional days by a pretty meaningful amount compared to what we were doing last year We have been able to be less promotional because of the strength of the product and the trend. We will do, obviously, we need to remain competitive when we get into the fall, the part of the holiday season here when everybody is promotional, but we are going to attempt to continue to be less promotional where we can. we have been able to be less promotional because of the strength of the product and the trend. we will do obviously we need to remain competitive when we get into the fall the part of the holiday season here when everybody is promotional but we are going to attempt to continue to be less promotional where we can

Speaker 11: Great. Thanks so much and best of luck. Great. great Thanks so much and best of luck. thanks so much and best of luck

Speaker 1: Thank you. Thank you. thank you

Speaker 4: Thank you so much. Our next question comes from the line of Tom Nikic with Needham. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Tom Nikic with Needham. our next question comes from the line of tom nikic with needham Your line is now open. your line is now open

Speaker 13: Hey, good morning, guys. Thanks for taking my question. I wanted to ask about the margin structure of the business. So obviously, 2025, between tariffs and the acquisition and maybe some tough first half of the year at the core brand or a tough first nine months, there was quite a bit of margin erosion this year. How do we think about how much of that is recoverable and how much may be structural? Thanks. Hey, good morning, guys. hey good morning guys Thanks for taking my question. thanks for taking my question I wanted to ask about the margin structure of the business. i wanted to ask about the margin structure of the business So obviously, 2025, between tariffs and the acquisition and maybe some tough first half of the year at the core brand or a tough first nine months, there was quite a bit of margin erosion this year. so obviously 2025 between tariffs and the acquisition and maybe some tough first half of the year at the core brand or a tough first nine months there was quite a bit of margin erosion this year How do we think about how much of that is recoverable and how much may be structural? how do we think about how much of that is recoverable and how much may be structural Thanks. thanks

Speaker 1: I'd like to think all of it is recoverable over time. I think it's going to take a little bit of time. I don't expect us to get it all back in 2026. Certainly, over time, I do believe that the tariffs are going to find their way into the retail prices, and we'll be able to get back to our pre-tariff margins in the core business. The Kurt Geiger business is obviously lower margin than the legacy business, but we think that business has a path to getting to where the Steve Madden levels or potentially even higher over time. That's the goal. I'd like to think all of it is recoverable over time. i'd like to think all of it is recoverable over time I think it's going to take a little bit of time. i think it's going to take a little bit of time I don't expect us to get it all back in 2026. i don't expect us to get it all back in 2026 Certainly, over time, I do believe that the tariffs are going to find their way into the retail prices, and we'll be able to get back to our pre-tariff margins in the core business. certainly over time i do believe that the tariffs are going to find their way into the retail prices and we'll be able to get back to our pre-tariff margins in the core business The Kurt Geiger business is obviously lower margin than the legacy business, but we think that business has a path to getting to where the Steve Madden levels or potentially even higher over time. the kurt geiger business is obviously lower margin than the legacy business but we think that business has a path to getting to where the steve madden levels or potentially even higher over time That's the goal. that's the goal

Speaker 13: All right. Sounds good. Thanks very much, and best of luck this holiday season. All right. all right Sounds good. sounds good Thanks very much, and best of luck this holiday season. thanks very much and best of luck this holiday season

Speaker 1: Thank you. Thank you. thank you

Speaker 4: Thank you so much. Our next question comes from the line of James Ross with Williams Trading. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of James Ross with Williams Trading. our next question comes from the line of james ross with williams trading Your line is now open. your line is now open

Speaker 8: Hey, good morning, and thank you for the question. Two questions, actually. The first being, will the mix of business with the addition of Kurt Geiger impact gross margins in Q4? I know we kind of touched on it in the first question, but I was hoping you could sort of dig into that a little deeper, maybe. The second being, can you provide some color on brand growth and opportunities internationally and what that looks like going into next year? Thank you. Hey, good morning, and thank you for the question. hey good morning and thank you for the question Two questions, actually. two questions actually The first being, will the mix of business with the addition of Kurt Geiger impact gross margins in Q4? the first being will the mix of business with the addition of kurt geiger impact gross margins in q4 I know we kind of touched on it in the first question, but I was hoping you could sort of dig into that a little deeper, maybe. i know we kind of touched on it in the first question but i was hoping you could sort of dig into that a little deeper maybe The second being, can you provide some color on brand growth and opportunities internationally and what that looks like going into next year? the second being can you provide some color on brand growth and opportunities internationally and what that looks like going into next year Thank you. thank you

Speaker 1: Yeah. Go ahead. As far as your first question related to Kurt Geiger impacting gross margin in Q4, I think it would be similar to what we've seen in Q3, somewhere around 300 basis points. I'm sorry, what was the second part of the question? Yeah. yeah Go ahead. go ahead As far as your first question related to Kurt Geiger impacting gross margin in Q4, I think it would be similar to what we've seen in Q3, somewhere around 300 basis points. as far as your first question related to kurt geiger impacting gross margin in q4 i think it would be similar to what we've seen in q3 somewhere around 300 basis points I'm sorry, what was the second part of the question? i'm sorry what was the second part of the question

Speaker 8: Yeah. The second part was, could you provide some color on brand growth and just generally the opportunities internationally and what that looks like going into next year? Yeah. yeah The second part was, could you provide some color on brand growth and just generally the opportunities internationally and what that looks like going into next year? the second part was could you provide some color on brand growth and just generally the opportunities internationally and what that looks like going into next year

Speaker 1: Okay. So is this about the legacy business or Kurt Geiger? Are you asking about Kurt Geiger or the legacy? Okay. okay So is this about the legacy business or Kurt Geiger? so is this about the legacy business or kurt geiger Are you asking about Kurt Geiger or the legacy? are you asking about kurt geiger or the legacy

Speaker 8: Yeah. Kirk. Yeah. yeah kirk Kirk. yeah kirk

Speaker 1: Steve Madden? Steve Madden? steve madden

Speaker 8: Yeah. So Steve Madden and then also Kurt Geiger as well. Yeah. yeah So Steve Madden and then also Kurt Geiger as well. so steve madden and then also kurt geiger as well

Speaker 1: Sure. Yeah. Steve Madden, we continue to have nice momentum in international markets. For 2025, we're looking at high single-digit revenue growth. That is very similar across the three regions. Very similar growth in our three key regions being EMEA, APAC, and the Americas ex U.S. Nice momentum really across the board, and we'll look for continued growth into 2026. Kirk Geiger, as we've said, they're in really the early stages of their growth outside the U.K. and the U.S. We will be looking for very strong double-digit growth internationally out of them for a handful of years here. Sure. sure Yeah. yeah Steve Madden, we continue to have nice momentum in international markets. steve madden we continue to have nice momentum in international markets For 2025, we're looking at high single-digit revenue growth. for 2025 we're looking at high single-digit revenue growth That is very similar across the three regions. that is very similar across the three regions Very similar growth in our three key regions being EMEA, APAC, and the Americas ex U.S. very similar growth in our three key regions being emea apac and the americas ex u.s Nice momentum really across the board, and we'll look for continued growth into 2026. nice momentum really across the board and we'll look for continued growth into 2026 Kirk Geiger, as we've said, they're in really the early stages of their growth outside the U.K. and the U.S. kirk geiger as we've said they're in really the early stages of their growth outside the u.k and the u.s We will be looking for very strong double-digit growth internationally out of them for a handful of years here. we will be looking for very strong double-digit growth internationally out of them for a handful of years here

Speaker 8: Wonderful. All right. Thank you so much. Best of luck. Wonderful. wonderful All right. all right Thank you so much. thank you so much Best of luck. best of luck

Speaker 1: Thanks. Thanks. thanks

Speaker 4: Thank you so much. Our next question comes from the line of Janine Stichter, I'm sorry, with BTIG. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Janine Stichter, I'm sorry, with BTIG. our next question comes from the line of janine stichter i'm sorry with btig Your line is now open. your line is now open

Speaker 9: Hi. Good morning. I just wanted to follow up on the margin recapture if you could help us out. I think the tariffs you had said hit gross margin a little over 200 basis points in Q2. How much was it in Q3, and then how to think about Q4? Maybe help us unpack that, Kurt Geiger, between that and the core business. I think Kurt Geiger had been hit a bit more in the start of the year just because you had not been able to move as quickly there. Hi. hi Good morning. good morning I just wanted to follow up on the margin recapture if you could help us out. i just wanted to follow up on the margin recapture if you could help us out I think the tariffs you had said hit gross margin a little over 200 basis points in Q2. i think the tariffs you had said hit gross margin a little over 200 basis points in q2 How much was it in Q3, and then how to think about Q4? how much was it in q3 and then how to think about q4 Maybe help us unpack that, Kurt Geiger, between that and the core business. maybe help us unpack that kurt geiger between that and the core business I think Kurt Geiger had been hit a bit more in the start of the year just because you had not been able to move as quickly there. i think kurt geiger had been hit a bit more in the start of the year just because you had not been able to move as quickly there

Speaker 1: Yeah. As far as the tariff impact in Q3, given all the moving parts with the price increases, factory discounts, our renegotiated costing, as well as FOB differential between all the countries, I think it is best to look at it from a growth and mitigated perspective. Q3 was about 100 basis points more than what Q2 was. I think you are asking about Q4 as well. I think it would be a little bit worse than that in Q4. Yeah. yeah As far as the tariff impact in Q3, given all the moving parts with the price increases, factory discounts, our renegotiated costing, as well as FOB differential between all the countries, I think it is best to look at it from a growth and mitigated perspective. as far as the tariff impact in q3 given all the moving parts with the price increases factory discounts our renegotiated costing as well as fob differential between all the countries i think it is best to look at it from a growth and mitigated perspective Q3 was about 100 basis points more than what Q2 was. q3 was about 100 basis points more than what q2 was I think you are asking about Q4 as well. i think you are asking about q4 as well I think it would be a little bit worse than that in Q4. i think it would be a little bit worse than that in q4

Speaker 9: The Q4 is the 100 is mitigated, and it'll be worse in Q4 versus Q3? The Q4 is the 100 is mitigated, and it'll be worse in Q4 versus Q3? the q4 is the 100 is mitigated and it'll be worse in q4 versus q3

Speaker 1: Q3 was about 100 basis points worse than Q2. We expect Q4 to be a little bit worse than Q3. Those are unmitigated, and the mitigation gets bigger over time. The net impact to gross margin will be considerably less in Q4 than it has been. Q3 was about 100 basis points worse than Q2. q3 was about 100 basis points worse than q2 We expect Q4 to be a little bit worse than Q3. we expect q4 to be a little bit worse than q3 Those are unmitigated, and the mitigation gets bigger over time. those are unmitigated and the mitigation gets bigger over time The net impact to gross margin will be considerably less in Q4 than it has been. the net impact to gross margin will be considerably less in q4 than it has been

Speaker 9: Understood. Okay. And then just maybe on the mitigation, I just wanted to clarify on pricing. I think you took 10% increases earlier this year. Have you taken more, or do you plan to take more? Understood. understood Okay. okay And then just maybe on the mitigation, I just wanted to clarify on pricing. and then just maybe on the mitigation i just wanted to clarify on pricing I think you took 10% increases earlier this year. i think you took 10% increases earlier this year Have you taken more, or do you plan to take more? have you taken more or do you plan to take more

Speaker 1: That's where we are right now. We'll have to look at it as we go forward. That obviously is still not enough to offset the full amount of the tariffs. Over time, we'd like to see if we can take more, but we want to be prudent about it. That's where we are right now. that's where we are right now We'll have to look at it as we go forward. we'll have to look at it as we go forward That obviously is still not enough to offset the full amount of the tariffs. that obviously is still not enough to offset the full amount of the tariffs Over time, we'd like to see if we can take more, but we want to be prudent about it. over time we'd like to see if we can take more but we want to be prudent about it

Speaker 9: Perfect. Best of luck. Perfect. perfect Best of luck. best of luck

Speaker 4: Thank you so much. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open. Thank you so much. thank you so much Our next question comes from the line of Dana Telsey with Telsey Advisory Group. our next question comes from the line of dana telsey with telsey advisory group Your line is now open. your line is now open

Speaker 6: Hi. Good morning, everyone. As you think about the wholesale business, what differed by type, whether off-price, department stores, mass? What did you see, and what do you think of the outlook going forward? On the DTC side, was there a difference between full price and outlet performance? Thank you. Hi. hi Good morning, everyone. good morning everyone As you think about the wholesale business, what differed by type, whether off-price, department stores, mass? as you think about the wholesale business what differed by type whether off-price department stores mass What did you see, and what do you think of the outlook going forward? what did you see and what do you think of the outlook going forward On the DTC side, was there a difference between full price and outlet performance? on the dtc side was there a difference between full price and outlet performance Thank you. thank you

Speaker 1: Yeah. So in wholesale, I would say we're seeing the strongest performance in the regular price channels. Where we have had more pressure is in the value price channels like the off-price and the mass. In terms of DTC, we're seeing much better performance in full price channels. Outlet remains a drag. I think we're being hurt by a couple of things there. One is five of our biggest eight outlet stores are on the border with Mexico, and those stores are running down about 40%. That has been a big headwind there. The other thing is that I think we were impacted more acutely there by some of the disruption from the supply chain in the wake of tariffs. Outlet has still been trending negative, and full price stores have been much better. Yeah. yeah So in wholesale, I would say we're seeing the strongest performance in the regular price channels. so in wholesale i would say we're seeing the strongest performance in the regular price channels Where we have had more pressure is in the value price channels like the off-price and the mass. where we have had more pressure is in the value price channels like the off-price and the mass In terms of DTC, we're seeing much better performance in full price channels. in terms of dtc we're seeing much better performance in full price channels Outlet remains a drag. outlet remains a drag I think we're being hurt by a couple of things there. i think we're being hurt by a couple of things there One is five of our biggest eight outlet stores are on the border with Mexico, and those stores are running down about 40%. one is five of our biggest eight outlet stores are on the border with mexico and those stores are running down about 40% That has been a big headwind there. that has been a big headwind there The other thing is that I think we were impacted more acutely there by some of the disruption from the supply chain in the wake of tariffs. the other thing is that i think we were impacted more acutely there by some of the disruption from the supply chain in the wake of tariffs Outlet has still been trending negative, and full price stores have been much better. outlet has still been trending negative and full price stores have been much better

Speaker 6: Got it. And then just on the value side of the wholesale channel, are they just not taking orders? Are they waiting for newness? Are they waiting for more goods, not accepting the price increase? Any way to articulate it? Got it. got it And then just on the value side of the wholesale channel, are they just not taking orders? and then just on the value side of the wholesale channel are they just not taking orders Are they waiting for newness? are they waiting for newness Are they waiting for more goods, not accepting the price increase? are they waiting for more goods not accepting the price increase Any way to articulate it? any way to articulate it

Speaker 1: They were the ones that pulled back most significantly. Again, it was during the period in April and May when China tariffs were 145%. They are coming back now, and we're seeing those businesses normalize. That was where we felt a big part of the pullback in the last couple of quarters. They were the ones that pulled back most significantly. they were the ones that pulled back most significantly Again, it was during the period in April and May when China tariffs were 145%. again it was during the period in april and may when china tariffs were 145% They are coming back now, and we're seeing those businesses normalize. they are coming back now and we're seeing those businesses normalize That was where we felt a big part of the pullback in the last couple of quarters. that was where we felt a big part of the pullback in the last couple of quarters

Speaker 6: Got it. Just lastly on marketing, as you think about Q4, anything we should be watching on the marketing side, given your improved social that you've had in terms of marketing as we head into the holiday season? Thank you. Got it. got it Just lastly on marketing, as you think about Q4, anything we should be watching on the marketing side, given your improved social that you've had in terms of marketing as we head into the holiday season? just lastly on marketing as you think about q4 anything we should be watching on the marketing side given your improved social that you've had in terms of marketing as we head into the holiday season Thank you. thank you

Speaker 1: No. We're just going to continue to keep doing the storytelling. I think that we see it's working. I think our marketing teams are hitting the bullseye, and we just got to keep investing and keep telling and keep engaging with consumers. No. no We're just going to continue to keep doing the storytelling. we're just going to continue to keep doing the storytelling I think that we see it's working. i think that we see it's working I think our marketing teams are hitting the bullseye, and we just got to keep investing and keep telling and keep engaging with consumers. i think our marketing teams are hitting the bullseye and we just got to keep investing and keep telling and keep engaging with consumers

Speaker 6: Thank you. Thank you. thank you

Speaker 1: Thanks, Dana. Thanks, Dana. thanks dana

Speaker 4: Thank you so much. Our next question comes from the line of Paul Lejuez with Citi, your line is now open. Thank you so much. thank you so much Our next question comes from the line of Paul Lejuez with Citi, your line is now open. our next question comes from the line of paul lejuez with citi your line is now open

Speaker 7: Hi. It's Kelly again. Thanks for the follow-up. I just wanted to follow up on an earlier question around the KG margin structure. In your disclosure, you said KG was about a 9% even margin business in 2024. Curious where that's going to shake out this year with the tariffs. As we look to 2026, how much can you recover? Can you get back to the 9% next year? Just longer term, I mean, you spoke pretty positively about KG margins. Where ultimately do you think this business can land, and how do you get there? Is it through SG&A synergies, anything in the gross margin to speak about? Just any color on sort of how we should think about the KG margins as we look forward. Thanks. Hi. hi It's Kelly again. it's kelly again Thanks for the follow-up. thanks for the follow-up I just wanted to follow up on an earlier question around the KG margin structure. i just wanted to follow up on an earlier question around the kg margin structure In your disclosure, you said KG was about a 9% even margin business in 2024. in your disclosure you said kg was about a 9% even margin business in 2024 Curious where that's going to shake out this year with the tariffs. curious where that's going to shake out this year with the tariffs As we look to 2026, how much can you recover? as we look to 2026 how much can you recover Can you get back to the 9% next year? can you get back to the 9% next year Just longer term, I mean, you spoke pretty positively about KG margins. just longer term i mean you spoke pretty positively about kg margins Where ultimately do you think this business can land, and how do you get there? where ultimately do you think this business can land and how do you get there Is it through SG&A synergies, anything in the gross margin to speak about? is it through sg&a synergies anything in the gross margin to speak about Just any color on sort of how we should think about the KG margins as we look forward. just any color on sort of how we should think about the kg margins as we look forward Thanks. thanks

Speaker 1: Yeah. In terms of this year, for the partial period that we're going to that we own them from May on, I think that they're going to come in around 6%. In terms of next year, we'll talk in more detail about that on the next call, but certainly we should see improvement from where we were today or from where we were this year. I think we'll postpone any further discussion of that until that call. In terms of the last one with the drivers to get to a longer term. Yeah. yeah In terms of this year, for the partial period that we're going to that we own them from May on, I think that they're going to come in around 6%. in terms of this year for the partial period that we're going to that we own them from may on i think that they're going to come in around 6% In terms of next year, we'll talk in more detail about that on the next call, but certainly we should see improvement from where we were today or from where we were this year. in terms of next year we'll talk in more detail about that on the next call but certainly we should see improvement from where we were today or from where we were this year I think we'll postpone any further discussion of that until that call. i think we'll postpone any further discussion of that until that call In terms of the last one with the drivers to get to a longer term. in terms of the last one with the drivers to get to a longer term

Speaker 7: Drivers. Drivers. drivers

Speaker 1: Yeah. I think there's opportunity in both gross margin and SG&A, but I think the bigger opportunity is in SG&A. There's some cost savings opportunities that they're going to get from the combination with us, which we're already, all that work is already underway. We also think there's a significant opportunity to just leverage operating expenses over time as we grow that business. Yeah. yeah I think there's opportunity in both gross margin and SG&A, but I think the bigger opportunity is in SG&A. i think there's opportunity in both gross margin and sg&a but i think the bigger opportunity is in sg&a There's some cost savings opportunities that they're going to get from the combination with us, which we're already, all that work is already underway. there's some cost savings opportunities that they're going to get from the combination with us which we're already all that work is already underway We also think there's a significant opportunity to just leverage operating expenses over time as we grow that business. we also think there's a significant opportunity to just leverage operating expenses over time as we grow that business

Speaker 7: Just curious where you maybe think that those margins could go longer term. Just curious where you maybe think that those margins could go longer term. just curious where you maybe think that those margins could go longer term

Speaker 1: Yeah. I think what we said earlier was that certainly. The intermediate target would be to get to where Steve Madden, the legacy business, was historically, but we think there's opportunity beyond that. Yeah. yeah I think what we said earlier was that certainly. i think what we said earlier was that certainly The intermediate target would be to get to where Steve Madden, the legacy business, was historically, but we think there's opportunity beyond that. the intermediate target would be to get to where steve madden the legacy business was historically but we think there's opportunity beyond that

Speaker 7: Got it. Best of luck. Thanks. Got it. got it Best of luck. best of luck Thanks. thanks

Speaker 1: Thanks, Kelly. Thanks, Kelly. thanks kelly

Speaker 4: All right. Thank you so much. I'm showing no further questions at this time. I would now like to turn it back to Ed Rosenfeld for closing remarks. All right. all right Thank you so much. thank you so much I'm showing no further questions at this time. i'm showing no further questions at this time I would now like to turn it back to Ed Rosenfeld for closing remarks. i would now like to turn it back to ed rosenfeld for closing remarks

Speaker 1: Great. Thanks so much for joining us today. We hope you have a wonderful day, and we look forward to speaking with you on the next call. Great. great Thanks so much for joining us today. thanks so much for joining us today We hope you have a wonderful day, and we look forward to speaking with you on the next call. we hope you have a wonderful day and we look forward to speaking with you on the next call

Speaker 4: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you for your participation in today's conference. thank you for your participation in today's conference This does conclude the program. this does conclude the program You may now disconnect. you may now disconnect