Steven Madden, Ltd. (NASDAQ:SHOO) Q4 2024 Earnings Call Transcript

Steven Madden, Ltd. (NASDAQ:SHOO) Q4 2024 Earnings Call Transcript February 26, 2025

Steven Madden, Ltd. beats earnings expectations. Reported EPS is $0.55, expectations were $0.53.

Edward Rosenfeld: Good morning, everyone. And thank you for joining us to review Steven Madden, Ltd.’s fourth quarter and full year 2024 results. We are pleased to have delivered earnings results at the high end of our guidance range for the fourth quarter of 2024, capping off a strong year in which we grew revenue 15% and diluted EPS 9% compared to 2023. These results demonstrate the power of our brands and the strength of our business as well as our team’s disciplined execution of our strategy. Let me walk you through the highlights. First and foremost, our top priority is always to win with product. In 2024, our teams utilized our proven model which combines talented design teams, a test and react strategy, and an industry-leading speed to market capability to create trend-right product assortments across our various brands and product categories that resonated with consumers.

We then supported this great product with increased investment in our full funnel marketing strategy, highlighted by our global marketing campaign for the Steven Madden, Ltd. brand in fall that we called “Never Miss a Beat,” a love letter to our hometown of New York City, featuring the iconic Deee-Lite song, “Groove Is in the Heart.” Together, this combination of outstanding product and effective marketing enabled us to deepen our connection with our consumers and drive results across our four key business drivers. The first of those key business drivers is expanding our business in international markets. In 2024, our international revenue grew 12% versus the prior year. Revenue in the EMEA region increased 18%, including a solid gain in Europe despite a challenging retail environment, strong expansion in the Middle East, and explosive growth in South Africa.

In the Americas ex-US, revenue grew 9%, including mid-single-digit percentage gains in Canada and Mexico, as well as the contribution from our new joint venture in Latin America, which is off to a strong start. We also continue to transition from the distributor model to an ownership model in key markets. In addition to the aforementioned joint venture for certain countries in Latin America, which we formed in the second quarter of 2024, we also converted our distributor business in Southeastern Europe, including Serbia and Croatia, to a joint venture with our partner Fashion Company in Q2 2020. Then in the fourth quarter, we formed a JV for Singapore with leading regional player Valorant Group. And in January, we converted our partnership with Valorant in Malaysia to a majority-owned JV structure.

We currently operate 14 stores in e-commerce through the joint ventures with Valorant. And also in January, we formed a new JV in Australia, and we currently operate eight stores in e-commerce and have wholesale distribution in retailers including David Jones and Myers. Our second key business driver is expanding in categories outside of footwear like accessories and apparel. In 2024, our overall accessories and apparel revenue increased 53% compared to 2023, or 25% excluding Almost Famous. Our Steven Madden handbag business was outstanding, crossing the $300 million mark in revenue for the first time and increasing 31% compared to the prior year. Since 2019, Steven Madden handbag revenue has increased 23% per year on a compounded annual basis.

DeepMind apparel also continued to gain traction, with revenue up 23% versus 2023. And the Almost Famous division exceeded expectations in its first full year under our own, contributing $179 million in revenue with an operating margin of nearly 11%. Our third key driver is growing our business in the direct-to-consumer channel. DTC revenue in 2024 was $550 million, a 9% increase versus 2023, or 5% growth on a comp basis. Steven Madden DTC revenue increased 6%, while Dolce Vita DTC revenue grew 36%. And our last key driver is strengthening our core US wholesale. While many of our key wholesale customers continue to take a cautious approach to orders as they prioritize inventory control, we are pleased to return to revenue growth in this business in 2024, with a 2% increase compared to 2023.

So overall, 2024 was a strong year for Steven Madden, Ltd., with robust top and bottom-line growth driven by tangible progress on our key strategic initiatives. We also demonstrated our ongoing commitment to returning capital to our shareholders, with nearly $160 million in combined dividends and share repurchases. As we look ahead, however, we are cautious on our outlook for 2025 as we face meaningful near-term headwinds. Most notably, our earnings will be negatively impacted by new tariffs on goods imported into the United States and by our efforts to aggressively diversify production out of China. We also expect our handbag business, which has been a leading growth driver for us in recent years, to face pressure this year as handbag inventories in certain parts of the wholesale channel have backed up, resulting in constrained open-to-buys and more cautious ordering from key wholesale customers.

That said, we have a proven ability to navigate difficult market conditions with our agile business model. We are also looking forward to adding a powerful new growth engine to the company with the acquisition of Kurt Geiger, which we announced on February 13 and expect to close in the second quarter of 2025. The Kurt Geiger London brand has exhibited exceptional growth over the last several years, as its unique brand image, distinctive design aesthetic, and compelling value proposition have driven success across multiple categories, led by handbags. Its differentiated and elevated positioning and its alignment with our strategic initiatives of expanding in international markets, accessories categories, and direct-to-consumer channels make it a highly attractive and complementary addition to our portfolio.

In addition to Kurt Geiger London, Kurt Geiger’s brand portfolio includes KG Kurt Geiger and Carvela, and the company also operates footwear concessions within luxury and premium department stores in the United Kingdom, including Harrods and Selfridges. It sells both its own and third-party brands. For the twelve months ended February 1, 2025, Kurt Geiger had revenue of £400 million. The purchase price in the transaction reflects an enterprise value of £289 million, with £275 million in cash due at closing and the balance payable to management over a five-year period upon achievement of certain financial targets. Importantly, all members of the executive management team have agreed to stay on and continue to lead Kurt Geiger under our ownership, including CEO Neil Clifford, who has led Kurt Geiger for over twenty years.

So in sum, we are pleased to have delivered strong revenue and earnings as well as meaningful progress on our key strategic initiatives in 2024. And while we clearly face some headwinds in 2025, we are confident that the combination of our strong brands and proven business model, supplemented by a significant new growth driver in Kurt Geiger, will enable us to drive sustainable revenue and earnings growth over the long term. Now I’ll turn over to Zine Mazouzi to review our fourth quarter and full year 2024 financial results in more detail and provide our initial outlook for 2025.

Zine Mazouzi: Thanks, Ed, and good morning, everyone. In the fourth quarter, our consolidated revenue was $582.3 million, a 12% increase compared to the fourth quarter of 2023. Our wholesale revenue was $402.9 million, up 13.6% compared to the fourth quarter of 2023. Wholesale footwear revenue was $227.4 million, a 1% increase from the comparable period in 2023. Also, accessories and apparel revenue was $175.4 million, up 35.4% to the fourth quarter in the prior year, driven by strong growth across the board, with double-digit percentage gains in accessories and apparel categories, domestic and international markets, and branded and private label businesses. Our wholesale business in the quarter also benefited from approximate shipments to the mass channel that were expected to ship in January 2025 and were moved up to the end of Q4 2024.

In our direct-to-consumer segment, revenue was $176 million, an 8.4% increase compared to the fourth quarter of 2023, with increases in both the brick-and-mortar and e-commerce businesses. Comp sales rose 4.5% in the quarter. We ended the year with 291 company-operated brick-and-mortar retail stores, including 68 outlets, as well as five e-commerce websites and 42 company-operated concessions in international markets. Our license and royalty income was $3.5 million in the quarter, compared to $2.7 million in the fourth quarter of 2023. Consolidated gross margin was 40.4% compared to 41.7% in the comparable period of 2023. Wholesale gross margin was 30.5% compared to 31.7% in the fourth quarter of 2023, primarily driven by a greater mix of private label businesses.

Direct-to-consumer gross margin was 62% compared to 62.7% in the comparable period of 2023, driven by an increase in promotional activity. While we did not run more or deeper promotions, we saw a higher concentration of consumer spend during the promotional periods compared to the prior year. Operating expenses were $182.9 million or 31.4% of revenue in the quarter, compared to $163.9 million or 31.5% of revenue in the fourth quarter of 2023. Operating income for the quarter was $52.6 million or 9% of revenue compared to $53 million or 10.2% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 21.4% compared to 14.3% in the fourth quarter of 2023, driven by lower discrete benefits related to stock-based compensation.

Finally, net income attributable to Steven Madden, Ltd. for the quarter was $39.3 million or $0.55 per diluted share compared to $45 million or $0.61 per diluted share in the fourth quarter of 2023. Now I would like to touch briefly on full-year results. Total revenue for 2024 increased 15.2% to $2.3 billion compared to $2 billion in 2023. Net income attributable to Steven Madden, Ltd. was $192.4 million or $2.67 per diluted share for the year ended December 31, 2024, compared to $182.7 million or $2.45 per diluted share for the year ended December 31, 2023. Moving to the balance sheet, our financial foundation remains strong. As of December 31, 2024, we had $203.4 million of cash, cash equivalents, and short-term investments and no debt. Inventory was $257.6 million, up 12.5% to the prior year.

Our CapEx in the fourth quarter was $9.3 million and for the year was $25.9 million. During the fourth quarter and full year 2024, the company spent $2.6 million and $98.4 million respectively on repurchases of its common stock, including shares acquired through the net settlement of employee stock awards. The company’s board of directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on March 21, 2025, to stockholders of record as of the close of business on March 10. Turning to our outlook, we expect revenue for 2025 to increase 17% to 19% compared to 2024, and we expect diluted EPS to be in the range of $2.30 to $2.40. This outlook assumes the Kurt Geiger acquisition closes on May 1 and includes Kurt Geiger from that date.

Excluding Kurt Geiger, we expect revenue to increase low single digits on a percentage basis, and we expect diluted EPS to be in the range of $2.20 to $2.30. In the first quarter, we expect diluted EPS to decline approximately 30% to 35% versus the first quarter of 2024, as Q1 represents our toughest comparison to last year. We are also significantly increasing our year-over-year marketing investments in Q1, and our DTC business has been under pressure quarter to date. Now, I would like to turn the call over to the operator for questions. Kevin?

Q&A Session

Operator: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. We’ll pause for a moment while we compile our Q&A roster. Our first question comes from Paul Lejuez with Citi. Your line is open.

Paul Lejuez: Hey. Hey, guys. Can you maybe talk about how you’re thinking about gross margin pressure throughout the year just given the tariff impact and what your plans are to mitigate as you move throughout the year? And then also on the Kurt Geiger investment, curious if you are baking in any needed investment looped in and into that business as you kinda get it if there’s any drag that we should be thinking about that occurs this year from needed investment versus what you’ll see going forward. Thanks.

Edward Rosenfeld: Yeah. Thanks, Paul. So in terms of the first question, yeah, obviously, we are dealing with good pressure from tariffs this year. The plan to mitigate is really essentially the playbook that we’ve outlined previously. It’s number one, diversifying production out of China. And we are making significant progress with respect to that part of the strategy already. You’ll recall that on the last call, we said at that time that on the goods that we imported to the United States, that about 71% of those were coming from China. Sitting here today, based on what we’ve already brought in so far this year and what’s on order, that number is already down to 58%. So almost a 20% reduction since the last call, and we expect to continue to make further progress throughout the year.

You’ll recall that our goal was to be down to the low forties in terms of goods that we’re placing a year from the election. So, essentially, November of this year, we’re placing goods because we are targeting low forties and we think we’re marching towards that. The other pieces of the mitigation plan are, of course, going back to the factories and looking for price concessions. And those discussions are ongoing. And then the third piece is we will be selectively raising prices. And, you know, it’s not gonna be an across-the-board price increase, but we will be surgical about it, and we’re, you know, we think that we can get a little bit more for the goods, we will do that starting in fall. In terms of specific gross margin guidance, I think, you know, essentially, given all the uncertainty here and the fluidity, we’re not gonna provide specific gross margin guidance today.

You know, we’re signing up for the revenue and the EPS that we’ve disclosed, but not prepared to make any commitments around gross margin or specific tariff impact today. But, obviously, as we go throughout the year, I more clarity here, we’ll we will provide you more color at that time.

Paul Lejuez: You. One moment for Sorry. Go ahead. I just need the Kurt Geiger.

Edward Rosenfeld: Oh, I’m sorry. I’m sorry. I apologize. I forgot to respond to the second part. Yes. So on Kurt Geiger, I don’t think there’s any meaningful investment required upfront. You know, we certainly see a lot of opportunities to grow that business and we’ll be investing, but there’s no operating margin drag in the first year or two for big investments.

Paul Lejuez: I just go back to the gross margin, Ed. You know, any color just in terms of the first half-second half pressure, just your ability to execute on some of those mitigation efforts? Like, are you seeing, you know, that come through as an offset in the first half, or is that not, you know, that’s something that we won’t see for the second half?

Edward Rosenfeld: Again, we first of all, we don’t provide quarterly guidance in the first place, and this is a situation that’s even more uncertain. So I’m hesitant to try to give too much color around the quarterly cadence there. Obviously, the longer the farther out we are, the more the mitigation efforts have an impact. But in the near term, we’re also engaging in certain discussions with our factories and seeing what we can do to give us a little bit of help in the near term as well.

Paul Lejuez: Got it. Thank you. Good luck.

Edward Rosenfeld: Thank you. One moment for our next question. Our next question comes from Anna Andrifa with…

Anna Andrifa: Great. Thank you so much, and good morning. A couple from us. First, you mentioned DTC is under some pressure quarter to date. Can you just parse out what are you seeing in January versus February? Any improvement in Feb? And you think this is mostly macro and the tariff conversation, but is weather hurting you guys as well? And then we have a follow-up.

Edward Rosenfeld: Yeah. We have seen a slow start to the year. I would say in particular, we’ve seen a slow start to the selling of spring products, including sandals, and overall, weak traffic to stores. And, you know, I think this is not something that is just a Steven Madden, Ltd. phenomenon. We talked to a lot of folks in the industry, and we’re hearing something consistent from a lot of the other retailers that we speak with. I’ll say that in my conversations with other folks, I think at this point, you know, while we are loathed to blame the weather, we are hearing from a lot of other folks in this industry that they’re attributing a lot of this very cold across the country. Slow start to the year to weather. It’s obviously been But look, I think we have to we’re gonna have to monitor that because there are some other signs that we need to be watching.

Obviously, I think we’ve all seen the consumer confidence figures over the last couple of weeks that have shown a pretty significant drop in consumer sentiment. So we’ll have to monitor that carefully. Not any major difference between January and February in terms of the trend.

Anna Andrifa: Okay. That’s super helpful. And secondly, on KG, congrats on the acquisition. Can you talk about why you think now is the right time to make this acquisition? How do you guys think about offsetting the tariffs exposure there? I think over 80% of their production is in China. And you mentioned their revenue contribution from the business. How should we think about EPS contribution for this year?

Edward Rosenfeld: Sure. So in terms of why now, look, this opportunity became available. And fundamentally, you know, we want to make this acquisition because we think that the Kurt Geiger London brand can be a very big and very profitable brand. As I mentioned in the prepared remarks, it’s a brand with a really unique and differentiated brand image and design aesthetic. And that combined with a really strong price value proposition has, you know, is really resonating with consumers. It plays in a really attractive part of the market. You know, what we would call, for lack of a better term, accessible luxury. Led by handbags. Obviously, a very strong shoe business as well. And it’s a brand that’s, you know, generated outstanding growth and sustained brand heat over the last several years.

So this is a brand that was up over 25% last year. Over 35% per year on a compounded annual basis since 2019. You know, if you look just at the US, it’s the business that was there was under $10 million in the US in 2019 and did over $170 million last year. But despite all that exceptional growth in recent years, I think what’s exciting about it is that it’s still really in the very early innings of its growth journey. It’s still lots of runway and untapped growth potential ahead of it. It also, I think, is just a really good fit with our company. It’s a brand that has a very different image, very different aesthetic, very different positioning, very different price point from the other brands in our portfolio. So it’s complementary in that respect.

And it advances the strategic initiatives that we’ve been talking about in the last several years, which is because it increases our penetration in international accept in wholesale accessories and apparel. In terms of branded versus private label, we actually think branded will grow will have better growth than private label in 2025, different from what we saw last year.

Anna Andrifa: Great. And then just in the wholesale accessories and apparel down mid-single digits, I assume that would mean handbags down more significantly. How are you thinking about the apparel growth this year now that you’ve started to lap the Almost Famous acquisition?

Edward Rosenfeld: Yeah. I think that’s right. I think that, you know, we think that we’ve talked about the pressure on the Steven Madden handbag business, and we are looking at that being down double digits at this point. In terms of apparel, we’re bullish on the Steven Madden apparel business and think we’ll continue to see nice growth there. We do have a private label apparel business as well. And there we do expect to see some pressure. Part of that is just a big chunk of that is just a move. I think Zine called out in his prepared remarks that there was a fairly significant move of goods that typically would go out in January into December. And so that’s causing a little bit of pressure there.

Anna Andrifa: Great. Thanks so much.

Edward Rosenfeld: Moment for our next question. Our next question comes from Marnie Shapiro with the Retail Tracker. Your line is open.

Marnie Shapiro: Hey, guys. Can I just actually follow-up on that last comment? The pressure from the shift into December from January, once you’re past that, are there any other shifts or anything we should be aware of, or is it just a general kind of pressure on the private label and apparel side?

Edward Rosenfeld: I think that well, I think that’s a big piece of it. But I do expect to see a little pressure on that side as well. We are seeing some of those mass customers get a little bit more concerned with their orders.

Marnie Shapiro: That makes sense. And then could you just stop by the way, the Steven Madden branded apparel at retail looks fantastic. Beautiful sets at the stores and growing. It’s nice to see. Could you talk a little bit about the slowdown you’re seeing in the bags? I think you said it was, you know, a little bit too much inventory in the pipeline and in shoes. Are you seeing it at every level at mass all the way up to Dolce Vita’s customers? Is it more specifically at the mass level?

Edward Rosenfeld: Yeah. First of all, thank you for the comments about Steven Madden apparel. We’re really excited about the progress that we’re making there, and it’s still really good about that. In terms of handbags, where we’re seeing that most acutely is in that Steven Madden handbag business and that tier of distribution. And that is obviously the bulk of our business. That’s the business that’s been so much growth for us. And it’s been such a strong tailwind for us in recent years. And so it does put some pressure on the overall numbers and handbags when that one slows down because that’s the bulk of it.

Marnie Shapiro: And, Christine, give one more just following up on the tariff conversation. I guess, how much of your spring product were you able to bring in before? Because, obviously, you’ve been shipping spring product over the last month or so. It’s going to continue to come in. Those goods came in before the tariffs went back in. So when is sort of I don’t wanna call it peak tariff, but you know, when does the product that came in pre-tariff start to wane and you start to really feel the impact? Is that Q2 or Q3? Or is it any guidance around that?

Edward Rosenfeld: Yeah. I mean, the only thing I’ll say is that in contrast to some of the other companies that you may follow, because we turn our inventory so quickly, you know, we still turn our inventories faster than just about anybody else in the industry. We will feel this earlier than others. And, you know, particularly in our wholesale channel, we turn our inventories close to ten times a year, which means that, you know, if the tariffs went into effect in early February, we’re gonna start to feel it even at the end of the first quarter on certain goods.

Marnie Shapiro: Got it. That makes sense. Best of luck. The product looks fantastic, guys.

Edward Rosenfeld: Thanks so much. Moment for our next question. Our next question from Laura Champine with Loop Capital. Your line is open.

Laura Champine: Thanks for taking my question. I concur that the valuation on Kurt Geiger was attractive. Is that widespread? Are you seeing that kind of across the board? And if so, would you be open to other M&A this year, or is this a big enough transaction that you feel like this is one and done for this year?

Edward Rosenfeld: This is a really important transaction for us. We think this is a super impactful opportunity going forward. So I think that our focus this year is gonna be on integrating this and setting this up for success. And I’ll never say never, but we’ll be certainly oriented towards focusing on Kurt Geiger for the time being.

Laura Champine: Understood. And then on the wholesale footwear business, you mentioned that gross margin was pressured because of higher penetration of private label. Would wholesale footwear have grown in Q4 without growth from the mass channel?

Edward Rosenfeld: Now the branded business was down about 3% in Q4.

Laura Champine: Okay. And is that similar to do you have an expectation for improvement in 2025?

Edward Rosenfeld: Yeah. I do. I think we’ll I think it’ll get better. I think we’ll we should be able to turn positive in Q1, but up low singles. And that’s really how we’re thinking about it for 2025. Got it.

Laura Champine: You.

Edward Rosenfeld: One moment for our next question. Our next question comes from Sam Poser with Williams Trading. Your line is open.

Sam Poser: Thank you very much. Good morning. I’ve got a handful. Hopefully, we can get this. At least half of them. Just some housekeeping on what you’re anticipating the interest expense to be for the year, Lene, we look out, to the back half. Well, we’re not gonna guide to every line on the income statement, Sam, but what I would I guess what I would tell you is that we are incurring debt to do the new transaction. We’ve built that in. Again, we’ve assumed that that transaction closes May 1. That the new term loan there will be at SOFR plus 200 to start, hopefully, that gives you enough to do your model. You know me well enough to know that it’s not accurate, but okay. Anyway, with the changes in moving the JVs to subsidiaries and or distributors to JVs and so on. How much revenue like, like, how does that work on sort of on how much does that lift the revenue, all other things being equal? In those places where you’ve done it or do or planning to do it?

Zine Mazouzi: Yeah. That does give us a revenue bump. I would say, the incremental revenue from those changes this year is probably gonna approach $25 million. Unfortunately, there’s also a negative exchange rate impact this year from translation, which is actually more than $25 million, so all that and more is being offset by a stronger dollar.

Sam Poser: Okay. And then when you look at with the Kurt Geiger business, I mean, do you what other synergies do you know, initially foresee that, let’s say, help the international growth of Kurt Geiger. And just what percent of the Kurt Geiger business in Europe is UK? And how might having Kurt Geiger plus their concessions help maybe grow some of the other businesses that you have? I guess, primarily in the UK.

Edward Rosenfeld: Sure. Yeah. So if you look at Kurt Geiger’s revenue by geography, it’s about, as we mentioned, 35% in the US, a little over 50% in the UK, and the balance is in the rest of the world of which Europe is obviously important. If we look at it, excluding those concessions, just at the branded business, it’s about 50% in the US, a little over 30% in the UK, and then the balance in the rest of the world. So we do think that that is one area of a pretty significant synergy opportunity. Is utilizing our Steven Madden network to expand Kurt Geiger into some new international markets. And capitalize on the relationships and the infrastructure that we have in some of these markets. And that’s gonna be really a top priority for us once we close the transaction to start to work on those synergy opportunities.

In terms of the concessions that they have, look, we already we have already been partnering with Kurt Geiger for years? And they already have Steven Madden in their concessions. They also operate two stores for us in London. But we’ll obviously continue to, you know, look to expand that relationship and roll out more stores in the UK under Kurt Geiger’s operation and that’s another piece of exciting synergy here.

Sam Poser: Well, I may come back on. Thank you. One moment for our next question. Our next question comes from Aubrey Tianello with BNP Paribas. Your line is open.

Aubrey Tianello: Hey. Good morning. Thanks for taking the questions. On Kurt Geiger, could you give more color on how we should think about the longer-term growth and margin profile there? I think it grew double digits last year. Is that the right rate to think about long term and then how do the margins compare to your existing business, and what are the opportunities to expand there?

Edward Rosenfeld: Sure. Yeah. We are forecasting double-digit growth for Kurt Geiger this year. And, frankly, I think that there’s runway for this business to grow double digits for a number of years here. In terms of the margin profile, you know, last year, they had an EBITDA margin of a little over 11%. Now for this year, we’ve taken a small haircut to that just because of tariff impact. And then, you know, when you take out depreciation and our current estimate for amortization of intangibles, which has not been finalized, looking at an operating margin this year about 7.5%. But certainly long term, there’s clear opportunity for this to be a double-digit operating margin business. Don’t think I wanna provide a timeline on how quickly we’ll get there on today’s call. But once we get the transaction closed and work with the team there, we’ll come back to you with more specifics on how we’ll get there.

Aubrey Tianello: That’s great. And then maybe just in terms of a balance sheet leverage, is the plan to get back to a net cash position, and what’s the time frame to kinda get to whatever your target is?

Edward Rosenfeld: Look. We’ve been operating with this net cash position of, you know, approximately $200 million in net cash. I don’t think we need to be there. You know, we will have a small net debt position at closing. We’re talking about half a turn of net debt to EBITDA though, so pretty modest. And I think the plan would be to try to get back to net debt of zero, you know, sort of a neutral position at that point, we would then look to, you know, most likely resume share and it goes from there. First, but we do need to get some price increases pushed through here to mitigate some of the impact of tariffs. And so what we’re really focused on is, again, being surgical, looking for where we have newness, where we have a very or we’re delivering a really strong price value proposition and raising those prices, and then there will be other items that will not come up at all.

And that’s what one of the things that we really have focused on is we’re looking at the fall line is really elevating the materials and the detailing so that there is increased perception of value in the product. And we can raise product. And therefore, we can raise prices. In terms of Almost Famous, had a very strong Q4. Very strong year overall in 2024. As we mentioned, they did benefit from a move in of some shipments that otherwise normally would have gone out in January that went out in Q4. So that will impact them in 2025. But overall, I feel very good about how about the branded business there and how they’re doing with Madden Girl. And Madden NYC. I am more cautious on the private label piece in 2025. And then the last question was about marketing in Q1.

Oh, I’m Danny, could you just repeat the question about marketing?

Aubrey Tianello: Yes. On marketing, how much is investment going up in 2025? And anything special that you’re doing in any quarter that we should be mindful of?

Edward Rosenfeld: Sure. I think you will see marketing increase in 2025. I think, as a percentage of revenue. Again, excluding Kurt Geiger, it should be relatively in line. However, Q1 there is a significant increase in marketing investment in Q1 because we had that very successful fall campaign that we think drove really great results. And we wanted to follow that up with something similar, and we think even better for spring. So we’ve got a really exciting new campaign that we call we’re calling “House of Steve” that’s gonna launch next week. And in support of that, there is a significant increase in marketing investment in Q1. Once we get into Q2, you will not, you know, we’ll essentially be more in line with what we’ve seen in the prior year for the balance of the year. Thank you. One moment for our next question. Our next question comes from Corey Tarlowe with Jefferies. Your line is open.

Corey Tarlowe: Yeah. Great. Thanks. Was wondering if you could talk a little about your inventory. It was up double digits, relatively amount of sales, but just curious if you could talk about the health of that inventory, the newness that you’re flowing in, what’s working, and then also if you could touch on the performance of boots as the weather’s gotten colder. So much.

Zine Mazouzi: Okay. So I’ll take the first part of the question as it relates to the 12.5% increase. If you look at our inventory at the end of Q4, obviously, we feel very good about the composition of it. And the increase is primarily due to the fact that we’re accounting for inventory for longer periods of time due to transit times. On average, globally, our transit times are around six days longer and that’s for both China and Cambodia as an example. But if you look at it in the US, it’s probably around five days longer to get good here and international businesses it could peak to thirty days when you look at the Middle East. Six days of inventory out as an example. So if you take those of the balance at the end of the year and you look at it from an apple to apple perspective versus last year, were up low single digits, and that’s consistent with how we’re expecting next year to be.

Edward Rosenfeld: Right. And then in terms of boots, yeah, we had a very good boot season, and we felt that and particularly with our tall shaft boots that we really outperformed in the market because we had the right styles. You know, we just great suede boots, brown suede in particular, and stretch boots. There are a lot of good things working in that category. And as we’ve come into the first quarter, of course, with cold weather in the first part of the year, we’ve continued to sell quite a lot of boots. But obviously, right now, our focus is on getting that consumer to transition into the spring styles. Now the one thing I will say is boots are still gonna remain important in spring because we do have a very strong festival package that we’re very excited about. And as we’ve been talking about, boots is more of a year-round category for us these days, but obviously not as big this time of year as what we saw in Q4.

Corey Tarlowe: Got it. That’s very helpful. And then just to follow-up on an earlier question, comments you made about your international changes that you’ve made. How much more work do you think there is to be done in terms of some of the shifts in business structures that you’ve made, in international markets, and where else do you think there’s further opportunity to optimize the structure of these agreements internationally?

Edward Rosenfeld: I mean, that’s an ongoing process. We’ve done a lot there. We still have some distributor markets that I think over time that could make sense to transition to the joint venture model. And I could also see, you know, some of these joint ventures becoming wholly owned subsidiaries over time. From a regional standpoint, I think the biggest opportunity though is in APAC. You know, where we’re doing the we’ve got a very meaningful business in EMEA now that’s continues to see very strong growth. We’ve also got a big business in the we call the Americas ex-US, Canada, Mexico, Latin America, etcetera. But APAC is still a relatively small region for us. And so that’s gonna be a big focus for us over the next couple of years is making that more meaningful. You. One moment for our next question. Our next question comes from Sam Poser with Williams Trading. Your line is open.

Sam Poser: I get another chance. Okay. So thank you guys again. With the shift that’s moving from China to other areas as you move product out. You Zine, you said it was a six-day it was taken six days longer, total five days longer to the US. What how does that as you move more product to Vietnam, I guess, primarily, but other places as well, and with sort of the unknown going on with Mexico, I guess we’ll find out next week. How do you how is that gonna change your speed to market? And again, guess the visual look at the inventories in future quarters. We’ll see if the inventory increases in the future.

Zine Mazouzi: So just to clarify, the five to six business days is not just diversification. That’s also the pressure on the supply chain that we’re seeing for two reasons. One, Chinese New Year being earlier and also the front load in that a lot of folks were doing was clocking up the supply chain. And after that, basically, the kind of sways and everything that we always know about. So that was the main reason behind the five to six days that I mentioned earlier. But as we move forward in our diversification, I think as we said earlier in either on calls or the meetings that we had, we’re looking at basically, it takes about a week to ten days longer to get from these other countries versus China. And that’s what we would expect to see.

And as said, our inventory is in line, and the only thing that seems to impact it is just the transit dates at this point in time, and we expect it to continue as we move forward. And it will also be impacted by the penetration of DTC to Total.

Edward Rosenfeld: And just to follow-up on that, Sam, go ahead. Oh, go ahead. And I was just gonna say, obviously, you know, speed to market is absolutely critical to the way we operate and we’re not going to accept any meaningful reduction in how fast we can be. So we have to operate under that, under those guidelines. And so, you know, we have to plan around that. There as Zine mentioned, when we move to some of these other countries in Asia, we do have slightly longer lead times, but we can plan around that. We can leave certain things in China where we need to move faster. Obviously, you mentioned Mexico. Mexico has been a priority for us to move products, particularly in the Steven Madden brand because there, we can actually be faster due to the obviously much shorter transit times.

Now there’s been a little bit of a monkey wrench going into that plan because of the potential tariffs that are scheduled to start next week. But, you know, we’ll monitor that situation. Hopefully, that’ll get resolved and we can focus on Mexico again.

Sam Poser: And then with Kurt Geiger, I mean, what is their how does the input where how does their time frame work? And is that something that using your resources, you could you could speed up as well?

Edward Rosenfeld: Yeah. Look. We’ll have to get into that with them. I imagine their lead times are a little bit longer. It’s also a different it’s a different kind of a business, and I think that by the nature of their product assortments, their price points, their positioning, don’t necessarily need to have the same test and react speed to market model that we do. But where there are areas for us to collaborate and utilize our sourcing capability to help them, we will certainly do that. Thanks very much. Good luck.

Operator: One moment for our next question. And next question comes from Paul Lejuez of Citi. Your line is open.

Kelly Crago: Hi. Good. Hi. This is Kelly on for Paul. Just a follow-up on your previous comment. What are you embedding in terms of your tariff assumptions this year? Are you assuming just China tariffs, or are you including, you know, Mexico tariffs as well and just maybe I missed this, but did you say how much of your first thing comes from Mexico currently? Thanks.

Edward Rosenfeld: So, yeah, we have included an impact from Mexico as well. That’s about mid-single digits as a percentage of our overall. But we also have assumed that if those tariffs are in effect that we would then move products back out of Mexico in fall. So the primary impact that we’ve built in would be over the next few months things that are already on the didn’t work or on the way. And then there’s also an impact in the country of Mexico because they have also implemented anti-dumping additional duties on goods from China. That and that’s embedded in the guidance as well.

Kelly Crago: Alright. Thank you.

Operator: And I’m not showing any further questions at this time. I’ll turn the call back over to Ed for any closing remarks.

Edward Rosenfeld: Great. Well, thanks so much for joining us on the call today. Have a great day, and we look forward to speaking with you on the next call.

Operator: Thank you, ladies and gentlemen. This does conclude today’s presentation. You may now disconnect, and have a wonderful day.