Steven Madden (SHOO)

Shoe and apparel company Steven Madden (NASDAQ:SHOO) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 6.9% year on year to $667.9 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $748.3 million at the midpoint, or 8.7% above analysts’ estimates. Its non-GAAP profit of $0.43 per share was 3.4% below analysts’ consensus estimates.

Company Overview

As seen in the infamous Wolf of Wall Street movie, Steven Madden (NASDAQ:SHOO) is a fashion brand famous for its trendy and innovative footwear, appealing to a young and style-conscious audience.

Before the advent of the internet, styles changed, but consumers mainly bought shoes by visiting local brick-and-mortar shoe, department, and specialty stores. Today, not only do styles change more frequently as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some footwear companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Steve Madden's primary competitors include Sam Edelman (owned by Caleres NYSE:CAL), Michael Kors (owned by Capri Holdings NYSE:CPRI), Zara (owned by Inditex BME:ITX), and private companies Aldo and Nine West.

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Steven Madden grew its sales at a 13.2% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Steven Madden’s recent performance shows its demand has slowed as its annualized revenue growth of 10.6% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Wholesale and Retail, which are 66.3% and 33.2% of revenue. Over the last two years, Steven Madden’s Wholesale revenue (sales to retailers) averaged 8.7% year-on-year growth while its Retail revenue (direct sales to consumers) averaged 19.6% growth.

This quarter, Steven Madden’s revenue grew by 6.9% year on year to $667.9 million, missing Wall Street’s estimates. Company management is currently guiding for a 28.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 13.8% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and indicates its newer products and services will fuel better top-line performance.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Steven Madden’s operating margin has shrunk over the last 12 months and averaged 6.8% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

In Q3, Steven Madden generated an operating margin profit margin of 4.7%, down 7.2 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Steven Madden’s EPS grew at a remarkable 18.9% compounded annual growth rate over the last five years, higher than its 13.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q3, Steven Madden reported adjusted EPS of $0.43, down from $0.91 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Steven Madden’s full-year EPS of $1.78 to grow 2.3%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Steven Madden has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 7.8%, subpar for a consumer discretionary business.

Steven Madden broke even from a free cash flow perspective in Q3. This cash profitability was in line with the comparable period last year but below its two-year average. In a silo, this isn’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Steven Madden hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 21.7%, impressive for a consumer discretionary business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Steven Madden’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Steven Madden reported $108.9 million of cash and $540.2 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $193.1 million of EBITDA over the last 12 months, we view Steven Madden’s 2.2× net-debt-to-EBITDA ratio as safe. We also see its $6.68 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by Steven Madden’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. On the other hand, its Wholesale revenue missed and its revenue fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $33 immediately after reporting.

Updated: December 3, 2025 at 10:11 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Steven Madden.

We see the value of companies helping consumers, but in the case of Steven Madden, we’re out. To kick things off, its revenue growth was weak over the last five years. On top of that, Steven Madden’s low free cash flow margins give it little breathing room, and its operating margins reveal poor profitability compared to other consumer discretionary companies.

Steven Madden’s P/E ratio based on the next 12 months is 20.5x. This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $43.75 on the company (compared to the current share price of $44.14).