Should You Buy, Sell or Hold Steven Madden Stock Post Q2 Earnings?

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A Quick Look at Steven Madden's Q2 Results

Steven Madden reported second-quarter revenues of $665.9 million, up 19.1% year over year. Excluding Kurt Geiger, revenues increased 11.2%.

Wholesale revenues increased 13% to $407.5 million, while DTC revenues climbed 30.6% to $255.4 million. Excluding Kurt Geiger, wholesale and DTC revenues increased 11.5% and 11.1%, respectively. Steve Madden global comparable sales rose 9%, including a 17% increase in the United States, reflecting continued strength in the company's flagship brand.

Profitability improved meaningfully during the quarter. Adjusted gross margin expanded 460 basis points year over year to 46.5%, driven by higher average selling prices, reduced promotional activity, lower tariff pressure and a lower mix of private-label business. Adjusted operating margin increased to 6.7% from 4% a year ago, while adjusted earnings more than doubled to 44 cents per share from 20 cents.

Steven Madden strengthened its balance sheet by using tariff-related refunds to reduce debt. The company ended the quarter with $94.7 million in cash and cash equivalents and net debt of $30.1 million, while inventories declined 13.7% year over year.

Steve Maddens’s Raised 2026 Outlook Reflects Confidence

Following the strong second quarter, management raised its fiscal 2026 outlook. Steven Madden expects revenue growth of 11-13%, up from the prior expectation of 10-12%. Adjusted earnings per share are projected in the range of $2.05-$2.15, compared with the earlier guidance of $2.00-$2.10. The company reaffirmed its EPS guidance of $2.55-$2.65.

Management raised its expectations for several key brands. The Steve Madden brand is expected to deliver high single-digit revenue growth in 2026, Kurt Geiger is projected to generate mid-teens pro forma revenue growth and Dolce Vita is expected to post high single-digit to low-double-digit revenue growth.

Steven Madden Shares Still Look Reasonably Valued

Despite the recent rally, Steven Madden's valuation remains attractive. The stock currently trades at a trailing 12-month price-to-sales ratio of 1.21X, below the industry average of 1.27X, suggesting investors are not paying a premium for its improving growth profile. It has a Value Score of A.

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The Case for SHOO Stock

Steven Madden continues to execute well across multiple growth initiatives, led by the strong momentum of its flagship Steve Madden brand. Management highlighted healthy demand across women's footwear, men's footwear and handbags, driven by trend-right product assortments and effective marketing campaigns. Reflecting the brand's growing consumer appeal, global online searches for the Steve Madden brand increased 71% during the second quarter, reinforcing management's confidence in its long-term growth prospects.

Kurt Geiger remains another important long-term growth driver. The company expanded the brand's U.S. retail footprint by opening two full-price stores during the quarter, bringing the total to seven. Existing stores generated 12% comparable sales growth, while Steven Madden acquired Spain and Portugal distribution business and continues to pursue additional distribution and joint venture opportunities to further expand Kurt Geiger's international presence. The company noted that its in-store personalization service has emerged as a key differentiator for the brand.

Dolce Vita continues to gain momentum as an important growth brand within Steven Madden's portfolio. Management highlighted strong performance across both wholesale and DTC channels, supported by demand for jellies, ballet flats, Mary Janes, mid-heel dress shoes and thongs. The brand continued to gain traction in handbags while expanding its presence in international markets, including Canada, Mexico and the United Kingdom.

Beyond its brand portfolio, Steven Madden continues to strengthen its market position through disciplined execution across its wholesale and DTC businesses. Management noted strong sell-throughs and reorder activity in the branded wholesale business, while DTC momentum continued into the third quarter. Strong performance during the Nordstrom Anniversary Sale, particularly in the Steve Madden women's footwear business, further underscores the company's ability to capitalize on consumer demand across multiple distribution channels.

Risks to Watch

Despite the strong momentum, Steven Madden faces several near-term challenges. The company's private-label business remains under pressure, with management expecting revenues from the segment to decline at a mid- to high-teens rate in fiscal 2026. While branded products continue to perform well, ongoing weakness in private label could weigh on wholesale growth.

Freight and sourcing costs also remain a concern. Management noted that the prolonged conflict in the Middle East has increased air freight usage as the company works to replenish best-selling products and mitigate supply-chain disruptions. Suppliers are finding it increasingly difficult to absorb higher logistics costs, resulting in greater cost pressures during the second half of the year.

Tariff uncertainty continues to cloud the outlook. While Steven Madden has benefited from lower tariff pressure this year, management's guidance assumes additional tariffs in the fourth quarter as investigations into structural excess capacity and intellectual property practices remain unresolved. Any further changes in trade policies could increase sourcing costs and dampen profitability.

Although management expects gross margins to improve year over year in the second half, it cautioned that the pace of expansion will moderate as the company laps prior pricing actions and the favorable mix benefits from the Kurt Geiger acquisition. These headwinds could limit further margin improvement despite continued healthy demand for the company's brands.

Analyst Sentiment Remains Constructive

The Zacks Consensus Estimate for Steven Madden's 2026 earnings has increased by 3 cents over the past seven days, while the 2027 estimate has remained unchanged.

Current consensus estimates indicate earnings growth of 25.9% in 2026 and 24.5% in 2027, reflecting confidence in the company's long-term earnings trajectory.

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SHOO: Buy, Sell or Hold?

Steven Madden remains well-positioned for long-term growth, supported by strong brand momentum, healthy consumer demand and an improving earnings outlook. While freight costs, tariff uncertainty and weakness in the private-label business remain near-term headwinds, the stock trades at a modest valuation relative to the industry and analysts continue to project robust earnings growth over the next two years.

Given its balanced risk-reward profile following the recent rally, Steven Madden appears to be a stock worth holding. The company currently carries a Zacks Rank #3 (Hold).

Key Picks

Canada Goose GOOS is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. The company flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings and sales suggests growth of 58.9% and 3.4%, respectively, from the year-ago actuals. GOOS delivered a trailing four-quarter average negative earnings surprise of 42%.

Tilly's, Inc. TLYS is a specialty retailer in the action sports industry selling clothing, shoes and accessories. The company also sports a Zacks Rank #1 at present. 

The Zacks Consensus Estimate for Tilly's current fiscal-year sales indicates growth of 4.9% from the year-ago actuals. TLYS delivered a trailing four-quarter average earnings surprise of 155.3%. 

Designer Brands Inc. DBI designs, produces and retails footwear and accessories. It offers shoes, boots, sandals, sneakers, socks, handbags and accessories. It currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Designer Brands’ current fiscal-year earnings and sales suggests growth of 137.5% and 0.5%, respectively, from the year-ago actuals. DBI delivered a trailing four-quarter average earnings surprise of 112.8%.

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

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