Steven Madden (SHOO) Q2 FY26 earnings call: guidance and Q&A

The Steve Madden brand demonstrated strong momentum in Q2 FY26, with global online searches rising 71%. This was fueled by trend-right assortments in women's footwear, including dress shoes, casual styles, split toes, jellies, and thongs. Men's footwear also performed well, particularly in loafers, and the handbag category returned to strong growth with trending materials like straw and denim. Integrated marketing campaigns, such as the 'Bait & Switch' summer campaign with Delilah Belle, contributed to a meaningful increase in brand heat.

Steven Madden is actively expanding the Kurt Geiger brand, particularly in the U.S. Two new full-price stores were opened in premium malls (Tysons Corner and Dadeland) in Q2, bringing the total to 7 U.S. full-price locations. These new stores are performing well, and existing stores achieved a 12% comparable store sales gain. The unique one-of-a-kind personalization service for Kensington bags, available in 6 of 7 stores, drove 17% of handbag sales in those locations. Internationally, the company acquired its distributor's business in Spain and Portugal and is in discussions for new distribution and joint venture partners globally.

Dolce Vita delivered an outstanding second quarter, experiencing strong growth across both wholesale and direct-to-consumer channels. This performance was attributed to a compelling product assortment featuring popular styles such as jellies, ballet flats, Mary Janes, mid-heel dress shoes, and thongs. The brand also continued to gain momentum in its handbag category and expanded its presence in international markets, including Canada, Mexico, and the U.K.

Consolidated gross margin significantly improved to 46.5% in Q2 FY26, up from 41.9% in the prior year. This was driven by increases in both wholesale and DTC channels. Wholesale gross margin rose to 35.2% from 30.9% due to higher average selling prices, a smaller negative impact from tariffs, and a lower penetration of private label. Direct-to-consumer gross margin increased to 64% from 61.3%, benefiting from higher average selling prices and reduced promotional activity.

The company's financial foundation remains strong. During the quarter, Steven Madden received $92.1 million in refunds related to the reversal of IEEPA tariffs, including $3.1 million in interest. These funds were used to pay down debt, resulting in a net debt position of $30.1 million as of June 30, 2026. Inventory decreased 13.7% year-over-year to $377.2 million, largely due to a 30% reduction in Kurt Geiger inventory. The Board of Directors approved a quarterly cash dividend of $0.21 per share.

The ongoing Iran conflict has introduced additional freight cost pressures, leading to an estimated $0.06 impact on EPS for the second half of FY26. This is primarily due to increased reliance on higher-cost air freight to chase bestsellers and manage supply chain disruption^🌐s in international markets. The company is absorbing these costs, which are also contributing to higher supplier costs, without passing them directly to consumers.