SHOO Raises 2026 Outlook as Brand Strength Offsets Rising Cost Risks

SHOO’s Raised Guidance Signals Greater Confidence

SHOO now expects 2026 revenues to increase 11%-13%, up from its previous forecast of 10%-12%. Adjusted earnings are projected in the range of $2.05-$2.15 per share, compared with the prior outlook of $2.00-$2.10.

Management said the revenue increase mainly reflects stronger expectations for the periods ahead. Better-than-expected second-quarter gross margin also supported the earnings revision. Adjusted gross margin expanded 460 basis points year over year to 46.5%, helped by higher average selling prices, lower private-label penetration and a smaller tariff drag.

Crocs, Inc. CROX also reported record second-quarter 2026 results and raised its full-year outlook, showing that differentiated footwear brands can still produce growth. Urban Outfitters, Inc. URBN posted record fiscal first-quarter sales and income, reinforcing the importance of brand relevance and merchandise execution across consumer businesses.

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Steve Madden Drives the Guidance Increase

The Steve Madden brand was the primary growth engine in the second quarter. Trend-right assortments lifted demand across women’s footwear, men’s footwear and handbags, while global comparable sales increased 9%, including a 17% gain in the United States.

Branded wholesale revenues rose 20% as sell-through, reorders and the ability to chase best sellers improved. Handbag revenues increased about 30% across channels. Management raised its 2026 outlook for the flagship brand to high-single-digit revenue growth from the previous mid- to high-single-digit range.

Demand also remained favorable entering the third quarter. Management cited similar direct-to-consumer trends and higher sell-through at the Nordstrom Anniversary Sale, suggesting that momentum was broad across categories and channels rather than dependent on one product cycle.

Kurt Geiger and Dolce Vita Add Growth Depth

Kurt Geiger is expanding SHOO’s premium direct-to-consumer and international exposure. The company opened two U.S. full-price stores in the second quarter, bringing the total to seven. Existing locations generated 12% comparable-store growth and healthy four-wall profitability.

SHOO also acquired the Kurt Geiger distribution business in Spain and Portugal and continues to pursue distribution and joint-venture opportunities in other markets. Management maintained its outlook for mid-teens pro forma revenue growth for the brand.

Dolce Vita delivered gains across wholesale and direct-to-consumer channels, supported by footwear, handbags and international expansion. Management raised its 2026 revenue outlook to high-single-digit to low-double-digit growth from high-single-digit growth.

SHOO’s Margin Gains May Moderate

Management still expects year-over-year gross margin improvement in each remaining quarter of 2026, but the rate of expansion is likely to slow. SHOO will lap the Kurt Geiger acquisition, which reduces the benefit from a richer mix comparison, while prior pricing actions also become part of the year-ago base.

Freight and supplier costs are moving in the opposite direction. The company is using more air freight to chase best sellers and work around disrupted ocean routes, while supplier cost pressure is becoming harder to defer. These factors could limit the margin benefit from branded and direct-to-consumer growth.

SHOO’s Cost Headwinds Test the New Outlook

The prolonged Middle East conflict added 6 cents per share of second-half freight pressure to management’s forecast. SHOO is also absorbing higher shipping costs to direct customers.

The company incorporated announced third-quarter tariffs into its outlook and continues to assume a 15% tariff rate for the fourth quarter because additional trade investigations remain unresolved. Further disruption could require additional pricing, reduce gross margin gains or test demand elasticity.

Adjusted operating expenses also remain elevated as SHOO invests in marketing, incentive compensation and direct-to-consumer expansion. Management expects selling, general and administrative expenses to equal about 38.3% of revenues in 2026.

SHOO’s Scores Back Growth With Caution

The raised outlook and improving brand trends support a constructive operating view. SHOO’s stronger mix, direct-to-consumer growth and broader brand contribution could sustain earnings progress if execution remains on track.

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The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its Growth Score of A, Momentum Score of A and VGM Score of A align with improving fundamentals and price momentum. Its Value Score of C, together with tariff, freight and expense risks, suggests investors should monitor whether earnings execution keeps pace with the higher expectations.

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This article originally published on Zacks Investment Research (zacks.com).

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