Good day and thank you for standing by. Welcome to the Q1 2025 Steve Madden Limited Earnings Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Thanks, Lauren and good morning everyone. Thank you for joining our first quarter 2025 earnings call and webcast. Before we begin, I’d like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today’s call are on an adjusted basis, unless otherwise noted. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release. Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer; and Zine Mazouzi, Chief Financial Officer and Executive Vice President of Operations. With that, I’ll turn the call over to Ed. Ed?

Alright. Thank you, Danielle, and good morning everyone and thank you for joining us to review Steve Madden’s first quarter 2025 results. We were pleased with our performance in the first quarter with earnings results significantly exceeding expectations. While sales trends across the industry were somewhat sluggish in January and February, we saw a strong improvement in March as weather turned warmer and more consumers began to look for spring fashion. Our product teams did an outstanding job of creating on-trend spring assortments that resonated with consumers, and we supported these assortments with increased investment in our full funnel marketing strategy, highlighted by our global marketing campaign, House of Steve, featuring social media sensation Tefi and the iconic Salt-N-Pepa song, Shoop. Overall, our team’s disciplined execution of our strategy continues to create deeper consumer connections and drive demand for our brands and products. That said, it’s no secret that in the near term, we face meaningful headwinds and heightened uncertainty due to the impact of new tariffs on goods imported into the United States. After the most recent additional tariffs were implemented in early April, our team moved swiftly to adapt to the changing landscape with a focus on mitigating near-term impacts while positioning the company for long-term growth. We leveraged our strong and longstanding supplier relationships to negotiate meaningful discounts on products coming from China to the U.S. so we could limit the negative impact to earnings in the short term while keeping goods flowing, continuing to deliver the most important fashion items and protecting market share. Simultaneously, we sharply accelerated our shift of production out of China, capitalizing on the groundwork we’ve laid in alternative countries of production over the last several years to move quickly and minimize disruption as we did so. Due to the foundation we have built in these other countries, combined with our model of working close to season, we have been able to significantly reduce the amount of fall 2025 production out of China. On previous earnings calls, we disclosed that in 2024, we sourced 71% of our U.S. imports from China. For fall of 2025, we expect the comparable figure, excluding Kurt Geiger, to be in the mid-teens and by spring 2026 down to the mid-single digits. Additionally, we have begun selectively raising prices to consumers and wholesale customers. We have taken a surgical approach, raising prices by differing amounts and sometimes not at all, depending on the brand, product category and style. The first adjustments to retail prices were made over the last several days. So, it’s too early to assess the impact, but we will monitor the elasticity of demand carefully and react accordingly. Finally, we are also looking for expense savings and operational efficiencies where we can and recently completed a reduction in force that will result in over $12 million in annual savings. While the tariffs and the related uncertainty are undeniably challenging in the short term, we believe that we are well positioned relative to many of our closest competitors, most of whom do not have the ability to shift production as quickly as we can and/or are not as well capitalized. We will continue to invest in marketing and the other strategic initiatives that position us for long-term growth, and we believe that the current disruption will create opportunities for us to take market share over time. The most important investment we’ve made this year is the acquisition of Kurt Geiger, which we were excited to close yesterday. The Kurt Geiger London brand continues to demonstrate outstanding momentum as its unique brand image, distinctive design aesthetic and compelling value proposition drives 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. For the 12 months ended February 1, 2025, Kurt Geiger had revenue of £400 million and the purchase price in the transaction reflected an enterprise value of £289 million, of which approximately £14 million is deferred and payable to management over a 5-year period upon achievement of certain financial targets. In connection with the acquisition, the company entered into a new credit agreement, which provides for a $300 million term loan facility and a $250 million revolving credit facility and we funded the acquisition with borrowings under the new credit agreement and cash on hand. With the transaction consummated, we are thrilled to get to work in supporting the Kurt Geiger management team, led by CEO, Neil Clifford, in their journey to making Kurt Geiger London a $1 billion brand. So in sum, we delivered solid results in the first quarter in a tough environment. Looking ahead, we are clear-eyed about the challenges and uncertainty we face due to the impact of tariffs, but our team has moved quickly to adapt and we believe the agility of our business model, combined with our fortress balance sheet gives us a competitive advantage in dynamic environments like this one. We are confident that we are well positioned to navigate the current disruption and to return to profitable and sustainable growth when the dust settles. And with the acquisition of Kurt Geiger, we have added a powerful brand to our portfolio that meaningfully enhances the growth profile of our company going forward. And now I’ll turn it over to Zine to review our first quarter 2025 financial results in more detail.

Thanks, Ed, and good morning, everyone. In the first quarter, our consolidated revenue was $553.5 million, a 0.2% increase compared to the first quarter of 2024. Our wholesale revenue was $439.3 million, up 0.2% compared to Q1 2024. Wholesale footwear revenue was $296.1 million, a 0.2% increase from the comparable period in 2024. Wholesale accessories and apparel revenue was $143.2 million, up 0.4% compared to the first quarter in the prior year. In both businesses, gains in the branded business were partially offset by declines in private label. As a reminder, we moved approximately $13 million of shipments related to the mass channel from January 2025 to December 2024, which benefited wholesale revenue in the fourth quarter of 2024 and negatively impacted revenue in the first quarter of 2025. In our direct-to-consumer segment, revenue declined 0.2% to $112.1 million as a modest increase in our digital business was offset by a decline in brick-and-mortar. We ended the quarter with 314 company-operated brick-and-mortar retail stores, including 72 outlets as well as 5 e-commerce websites and 61 company-operated concessions in international markets. Our licensing royalty income was $2.2 million in the quarter compared to $1.8 million in the first quarter of 2024. Consolidated gross margin was 40.9% in the quarter compared to 40.7% in the comparable period of 2024, a 20-basis point increase despite approximately 20 basis points of negative impact from the tariffs implemented in February and March. Wholesale gross margin was 35.7% compared to 35.1% in the first quarter of 2024, with increases in both the wholesale footwear and wholesale accessories and apparel businesses. Direct-to-consumer gross margin was 60.1% compared to 61.9% in the comparable period in 2024, driven by an increase in promotional activity. Operating expenses were $170.5 million or 30.8% of revenue in the quarter compared to $164.1 million or 29.7% of revenue in the first quarter of 2024. Operating income for the quarter was $56.1 million or 10.1% of revenue compared to $61 million or 11% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 24% compared to 23.6% in the first quarter of 2024. And finally, net income attributable to Steve Madden Limited for the quarter was $42.4 million or $0.60 per diluted share compared to $47 million or $0.65 per diluted share in the first quarter of 2024. Moving to the balance sheet, our financial foundation remains strong. As of March 31, 2025, we had $147.2 million of cash, cash equivalents and short-term investments and no debt. Inventory was $238.6 million compared to $202 million in the first quarter of 2024. This is driven primarily by longer lead times caused by the disruption in the Suez Canal and our diversification out of China as well as shipments we accelerated ahead of the April 2 tariff announcement. Our CapEx in the first quarter was $9.8 million. And during the first quarter, the company did not repurchase any shares of its common stock in the open market. The company spent $7.8 million on repurchases of shares 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 June 20, 2025 to stockholders of record as of the close of business on June 9, 2025. As mentioned in our press release issued earlier this morning, due to uncertainty related to the impact of new tariffs on goods imported into the United States, we are withdrawing the 2025 financial guidance we provided on February 26, 2025, and will not be providing guidance at this time. Now, I would like to turn the call over to the operator for questions.

Thank you. Our first question comes from the line of Paul Lejuez with Citi. Your line is now open.

Hi, this is Kelly on for Paul. Thanks for taking our question. First, just on your more aggressive moves outside of China, it’s good to see you are only going to see a mid-teens penetration. I guess, could you just talk more broadly about how you’re handling the orders from China? Is there a sense that it would not make sense altogether to take orders? And then, on where the production is moving, just any color on the countries where you’re moving to and what the margin profile looks like from sourcing from those countries relative to kind of pre-tariff margins, just to sort of understand the impact there. And then I’ll have a follow-up.

Sure. So, in terms of how we’re handling production that was in China, on the stuff that was far along in the production process or done, we are taking the majority of that in, but we have worked with our factory partners and suppliers to negotiate price concessions on those goods, so we can at least mitigate some of the damage in the near-term, and again, keep those goods flowing and make sure we’re still delivering fashion to our customers and consumers. But basically, anything that was early enough in the production process to move, we have moved. And so, we have taken components from China, for instance, and moved them to other countries. And that’s why you’ve seen those - that fall production come down so significantly. And in fact, in brands like Steve Madden shoes or Dolce Vita shoes, that fall production in China is going to be virtually nothing. Overall, in footwear and accessories, we think we’ll be below 5% in fall. It’s really some of the apparel and the more value-priced apparel that’s bringing the number up because it’s taken us a little longer to move those goods. But we’ve been very proactive and we moved very quickly to move those goods for fall. Now, I do want to point out that as we – some of these goods, as we move them to the other countries, it is – it does mean that the goods are going to come a month to even 45 days later. And so that will push out some of our deliveries. In terms of the countries that we’re moving to, it’s really the same countries that we have been talking about. You’ve got some countries in Asia like Cambodia and Vietnam that are important. And then Mexico and Brazil are also very important. And we’ve particularly been focused on pushing as hard as we can on Mexico and Brazil for a couple of reasons. One is, those are countries where we can actually see improved speed from where we were out of – when we were sourcing out of China, whereas right now, Vietnam and Cambodia, the lead times are extended from what we’re traditionally used to out of China. And then also, as you know, Mexico and Brazil did not receive reciprocal tariffs. So there is less risk when July 9 comes along with respect to tariffs in those countries.

Just to follow-up on the question around moving the production, I guess, within that the - sort of the sourcing penetrations that you’ve cited, is some of that as a result of just not choosing to take orders in China in terms of where the penetration is going or are you - I guess, trying to get at the question of whether or not we’re going to see some kind of impact on the top line in the back half of the year because obviously your penetration of China will come down if you’re just not taking orders at all? So just want to clarify there in terms of potential impact from lost sales? And then just a follow-up on sort of just the margins or any other sort of impact on your business model, you’re fast turning as you pointed to - as you point out, the longer lead times, how does that impact your normal course of business?

Yes. No, for the most part, we are replacing all the production in these other countries. So, we’re not walking away from whole businesses or whole categories of business or anything like that. Now that’s not to say there won’t be any top line impact from what’s going on with tariffs. So, we have experienced some cancellations. I want to explain that - as you know, we have certain customers who buy from us on what’s called an FOB business - basis rather, where they are the importer of record and they are responsible for the tariffs. We have seen some cancellations from those customers. We’ve also seen some cancellations from customers who are not willing to accept the price increases that we are putting through in fall. And also certain customers are canceling because the goods, as I mentioned, when they get moved to the other countries, may come in later. And even if the customers are taking those goods in, if the initial sets go in a month or 1.5 months later, we do think that will have an impact on reorder business. And then I guess the last point would be we are starting to hear about certain wholesale customers who are getting more - thinking about their fall plans more conservatively given the current environment. And I think we all have to be aware that there may be a consumer demand impact from the turmoil here. So, certainly, there will be a revenue impact from all of this, but it’s not because we just can’t ship goods. In terms of - I think you asked about the margin impact of moving to the other countries. It’s a very fluid situation. So, I’m not going to be too specific about that. But certainly, we are accepting lower margins than we’ve historically achieved when we’re moving to some of these other countries. And there is price pressure on some of these other countries as everybody is trying to move so quickly out of China to these alternative countries. So if you look at Vietnam, Cambodia, Brazil, these are countries where the FOB prices prior to this disruption were already slightly higher than what you see in China. And we have seen additional pressure recently due to the greater demand for - in those countries of as much as 10% to 15% additional price hikes relative to where things were before. So, we’re obviously managing through that. And then you asked about the lead times. Yes, again, the lead times are longer right now in Vietnam and Cambodia, but we have Brazil and Mexico, where we’re actually faster than we are in China. And so, we’re utilizing this network where we have multiple countries to manage the business and make sure that when we need to move very quickly, we try to lean on Mexico and Brazil and where we have a little bit more time, we can work in some of these other countries.

Thank you. Our next question comes from the line of Anna Andreeva with Piper Sandler. Your line is now open.

Great. Thanks so much and good morning, guys. We wanted to follow-up on gross margins. It came in better than expectations and up in wholesale. How much of that was FX as a benefit? And others have called out higher costs trickling through the P&L starting kind of now mid-2Q and you’re a faster inventory turning business. Just any color on how we should think about gross margin directionally as we go through the year, just given all the moving pieces?

Sure. So, in Q1, we did come in a little better than we had anticipated. I think there was a couple of things there. One was, March was just a better month than we anticipated and we guided at the end of February. And as we mentioned, had a somewhat soft start to the year and then saw this big improvement in March. So that was part of it. I think the team really did a good job of managing inventory as well and that enabled us to deliver a better gross margin. You called out FX. That was not a significant issue for us at all. There is also - if you’re looking at it versus last year, a benefit that - from mix because as Zine called out in his prepared remarks, on the wholesale side, we were positive in the branded business and had a decline in the private label business. So that’s a mix benefit for us. And then as you pointed out, you’re asking about when tariffs start to impact us because we turned our inventory quickly, we start to see the tariff impact quick - sooner than some others. So we did, in fact, have even - as Zine called out, about a 20 basis point negative impact in Q1 and obviously, there will be a much more significant impact in Q2.

And just - okay, that’s very helpful. Thank you. And just as a follow-up, you mentioned March better you did call out promo activity in DTC. Just anything to share on quarter-to-date curious if you are seeing different trends of full price versus outlet and are you starting to see the industry get more promotional or not necessarily yet?

Yes. In terms of April, it’s been - in DTC, it’s been a touch softer than March, but still better than we were in the January, February period, has not been super promotional. So that has - we have not seen any major uptick in promotions and we haven’t had to be more promotional than expected in our own DTC to-date.

Alright. Well, thank you so much guys.

Thank you. Our next question comes from the line of Jay Sole with UBS. Your line is now open.

Great. Thank you so much. Ed, does moving production out of China restrict your ability to deliver different fashion styles in any way? In other words, is there certain types of footwear that if you don’t produce in China that you can’t make? So in other words, if that’s the trend that consumer is looking for you’d be sort of constrained in your ability to deliver that trend?

No. There are certain things that are, I would say, a little bit more difficult, but there is nothing that we are prevented from making at all. If there is any category of footwear that I would highlight as probably the most difficult, I think kids is challenging, but we totally think we have a good plan there as well and we’re going to figure that out.

Got it. And then, how do you think about just the 10% tariff on the other countries? Obviously, China sort of is in its own category, but what’s sort of the strategy to mitigate the impact of just the 10% tariff on countries like Cambodia or some of the other places that you’re doing business?

Yes. Well, we – as we mentioned in the earlier remarks, we are raising prices. And so even absent what’s happening in China, we do need to raise prices because of the additional cost in the other countries, which includes the 10% baseline tariff. And so that’s – I think you’re going to see that from us and I expect you’ll see that from most others in the marketplace as well over time.

Got it. And maybe one more if I can. Just on the inventory being up 18%, can you just make – is it possible to break it down in terms of units or ASPs or Kurt Geiger? What are the different components of that inventory growth? If you can give us a little bit more color on that, that would be super helpful?

Yes. This is Zine. The inventory does not - just to answer your question, does not include Kurt Geiger. So, the over 70% of that increase is primarily related to the 3 things I mentioned in the remarks, which relate to the longer lead times based on the disruption in the supply chain also the fact that we’re diversifying outside of China, and those are creating also longer lead times. And the third component is the fact that we decided to accelerate certain production that was ready to ship and would have shipped otherwise in April, and we shipped it in March. So that’s basically the main drivers for the inventory. We remain confident in inventory composition and the health of our inventory, and we feel that we’re set up nicely for Q2 from an inventory position.

Okay, thank you so much.

Thank you. Our next question comes from the line of Laura Champine with Loop. Your line is now open.

Thanks for taking my question. I think you mentioned in your prepared comments some price increases that you are rolling out already. Can you generalize about how significant those increases are and how fully they recapture your cost increases?

Yes. So, look, as I mentioned, we are really looking at this at the style level. And we are not taking an approach where we are just applying a blanket percentage increase across the portfolio. There are goods that we are not raising the prices at all, and there are goods we’re raising the prices as much as 20%. If I had to give you a round number, I think we’re in and around 10% on average. But that’s – this is a very fluid situation, and again, we are going to be monitoring the elasticity of demand carefully and we’ll continue to iterate going forward.

Is it your sense that that’s the stance of the industry as a whole that your price increases are kind of in keeping with what you are seeing out there in the competitive environment or do you have a different philosophy?

I think it’s a little bit too early to say. I mean, I could speculate based on conversations with some of our wholesale customers, but I think it’s better to wait to see what actually happens.

Our next question comes from the line of Sam Poser with Williams Trading. Your line is now open.

Good morning. Thanks for taking my questions. I’ve got a pile of questions. So first thing is, you mentioned in your – I think Ed, you mentioned in – towards the end of your comments, I don’t have the exact quote but something, you know we expect to return to profitability next year, whatever. You said something like that, can you rehash what you said there, repeat what you said there? And then I have a question about that.

I said return to profitable growth. So no, not return to profitability. We are not - well we are not providing guidance, I will tell you we are not expecting to be loss-making either.

No, because you said return to profitable growth, which makes me feel like you’re not going to have profitable growth for the rest of the year. So that’s – I’m just trying to figure out – that was a weird comment, so I was just trying to make sure I understood it.

Yes, I think you should assume that in the near-term, we won’t be growing profits and longer term, we expect to. That was the - what we were trying to...

Okay. So a couple – now I’ve got a bunch of other things. So one, what is the additional inventory that you have now with the acquisition of – the closed acquisition of Kurt Geiger?

I don’t have that number off the top of my head. We closed the deal 24 hours ago.

Well, okay. And then what is the sourcing mix for Kurt Geiger as of now?

Yes. Kurt Geiger is – about 80% out of China. So, I do want to remind folks that if you look at their business, in most recent fiscal year, only 35% of it was done in the United States. So, they are more insulated from tariff impacts than our existing business due to the much heavier penetration outside the U.S. But certainly, 80% sourcing out of China is an issue. And I can tell you that that is the number one priority for us now that we are closed. And as we start to integrate, that is job one. And we have got a, I think a pretty comprehensive plan and a team mobilized. And in fact, we are already engaged and moving the ball forward on that front. And you are going to see that number go down significantly for spring ‘26.

And then how long do you think it’s going to take to get your margins back to normal sort of given what you know as of today?

I am not going to speculate about that. I mean there is way too much uncertainty to – for me to put a line in the sand there.

And then lastly, on your – the product that you are selling, your private label product that you sell to them, is that where – I mean the big, the container shipments that they take, is that probably the biggest challenge for keeping that business to get those prices low enough for them to still be – how is that being handled, I guess?

Proud of that product as well, and we are – that’s also something we have been working on for the last couple of years with those customers, is finding alternative countries of production. I think – I would like to think that we are ahead of most of the folks that we compete with for that business. And so I actually think that this could create an opportunity for us over time. But no, we are on a good path there, and I am confident we will figure that out.

Thanks very much. Good luck.

Thanks Sam.

Thank you. Our next question comes from the line of Aubrey Tianello with BNP Paribas. Your line is now open.

Hey. Good morning. Thanks for taking the question. Ed, I wanted to follow-up on a point you made earlier about demand and just curious what you are seeing in terms of consumer behavior right now. Are you seeing consumers trying to make purchases before prices for goods go up? Just any thoughts on how you see consumers reacting to the changing environment?

Yes. So far, consumer demand is holding in there okay. As we mentioned, our DTC business was a little softer in April than in March, but that’s still okay, as I mentioned, ahead of where we were in the first couple of months of the year. So, in terms of how much of that is consumers trying to get ahead of price increases, that’s very hard for us to know. But as of now, consumer demand still looks okay. But it’s obviously something we are going to have to watch carefully. We are certainly well aware that consumer confidence has dipped sharply over the last few months.

Got it. And then just curious if there is any traction on the lobbying front in Washington. I think there was a letter from the FDRA to the White House last week, just wondering if there is – if any conversations are happening there in terms of potential exemptions for the industry that you are hearing about.

Well, I think, our lobbying group and our industry trade organization, FDRA, is doing a great job of trying to get our voice out there and make our position known. But there is – I don’t have any new information to share about developments on that front. So, we are hopeful, but we are not counting on that. We are running our business and operating as though we have to deal with what is in place currently.

Thank you. Our next question comes from the line of Tom Nikic with Needham. Your line is now open.

Hey guys. Thanks for taking my question. All the tariff questions seem to have been beaten to death, so I will ask you something else. Congrats on closing the Geiger acquisition yesterday. Can you – I know you talked about diversifying the sourcing mix as being an opportunity there. Can you talk about some of the other strategies to drive growth at Geiger and capitalize on some of the opportunities that you see there?

Yes. Look, if we start with the U.S., that’s been a tremendous growth business for them over the last several years. I think I have disclosed on the last call, they were – this is a business that was – Kurt Geiger London brand was less than $10 million in 2019 and did over $170 million last year. But we still think we are just scratching the surface of what that brand can be in the United States. They have got outstanding momentum in digital. Again, that was a business that was up almost 60% last year. And we think that we are going to continue to push hard there. I think there is a very meaningful store rollout opportunity. They have just opened over the last year, their first five stores in the U.S. The most recent one is in Aventura in Miami. They are doing very well, and – so, we think there is an opportunity, a big opportunity there. And then I think that we can continue to grow the wholesale business. The distribution there is really Nordstrom, Dillard and Bloomingdales primarily. They have very successful businesses with each of those and I think there is room for growth there. And then internationally, look, this is – they are, what I would characterize as the early stages of their expansion in Europe, but they are performing very well. They are positioned in all the right sort of image accounts and are seeing strong sell-throughs. And so we think there is a big opportunity there. They are doing great in Mexico, I think I have mentioned. And then I am really bullish. I think the other area of synergy we talked about, obviously, helping them with the sourcing. But I think the other big area of synergy is utilizing our Steve Madden international network to help them expand outside the U.S. And so, that’s going to be the other big priority in the near-term, is making those connections and helping them because this is a brand that I think has tremendous global reach and potential. So, that’s what we are really excited about. And I think there are some other synergy opportunities as well. We think they can really help to expand Steve Madden in the UK. They already operate two of our stores, but I think there is – we have a plan to roll out more stores and continue to expand our business there digitally with their help, etcetera. So, lot of exciting stuff that we are going to be working on there.

Alright. Sounds good. Thanks very much and best of luck navigating all the challenges this year.

Thanks Tom.

Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open.

Hi. Thinking about the near-term and the long-term, in the near-term, any more discussion around private label versus branded and the current performance and also international? And then thinking about the long-term, with the shift in sourcing in the countries that things are coming from, what could that mean for the business long-term? Are there opportunities that could emerge from that, that getting through this near-term mess, what does it mean for the long-term in terms of the complexion of the business, whether quantitative financially or qualitative opportunities? Thank you.

Yes. So, in terms of branded versus private label, we did disclose that in Q1, the branded business performed better. We grew in both wholesale footwear and wholesale accessories and apparel on the branded side, and we are down modestly on the private label side. In terms of international versus domestic, international performed better in Q1. And obviously, given tariffs, the outlook for international is better than for the U.S. in near-term. And obviously, in the context of tariffs, growing that international business becomes even more important. And so we were already focused on it, but we are even more focused on it today. If I understand your question correctly, you were asking about the opportunities that could be created by some of this turmoil and as we shift production, etcetera. I do think that, as I mentioned in the prepared remarks, many of our competitors, and particularly some of these private companies that are important competitors of ours, their China penetration is even higher than ours. And also they are not able to move as quickly as we are. So, I think that that actually could create an opportunity for us to take some share because we are able – we have moved, as I mentioned, over 95% of our shoes and accessories for fall 2025, outside of China. And so I think that, if some of these competitors are not able to deliver goods or can’t deliver as much that we will have an opportunity to take some share there. And that goes for even potentially taking some business that was historically done on a private label basis for certain retailers. And then the other thing is, we compete with a lot of folks that aren’t as well capitalized. And so, they may have to pull back on marketing or other growth investments and we won’t. And we will still be able to play offense where appropriate.

Thank you.

Thanks Dana.

Thank you. Our next question comes from the line of Corey Tarlowe with Jefferies. Your line is now open.

Great. Thanks. Ed, I wanted to get your perspective on the handbag category. I know that at least you had previously mentioned, I think it was on the last call that the category was backed up. Any updated thoughts there?

Yes. I think that’s still – I do think that’s still an issue. We mentioned on the last call, as you pointed out, that we expected some pressure there because there was some excess inventory in the channel at our price points, the price points that we focus on in Steve Madden, and that was going to constrain our shipping this year. And we still think that that’s a factor. And frankly, it will be now compounded a little bit by – the top line impact will be compounding a little bit by what we are – the disruption we are experiencing from tariffs.

Got it. And then you mentioned that, I guess in April, you talked about DTC trends. But I am just curious about if there is anything you can provide about color around wholesale and maybe around cancellations and what that has looked like versus historical averages or any context around that, because we have heard a lot of concern from investors around what inventory might look like going forward. So, I am curious what you might be able to tell us about what you have seen in terms of cancellations.

Yes. Well, first, I will start with the sell-through in April in wholesale has been good. It was really very similar to what we saw in March, which again was an improvement over what we saw in January and February. So, that piece we are pleased with. I can’t – I am not going to quantify cancellations for you, but we did indicate earlier in the call that, yes, we have seen cancellations for the reasons I articulated, both for – in the near-term, if you are talking about this quarter, most of those are related to the FOB customers, again, who are the importer of record in the transaction and have to pay the tariffs themselves. We have seen some cancellations there. And then going forward, there are going to be some cancellations due to customers that don’t want to take – don’t want to accept price increases or don’t want to accept the later deliveries that are required when we move the products from China to other countries.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Janine Stichter with BTIG. Your line is now open.

Hey. Good morning. And I just want to get your thoughts on the longer term outlook for China sourcing. We totally understand the need to move out as quickly as possible right now, but there are definitely trade-offs in terms of speed, skill, costs. So, if we get tariff rates moving lower, do you pivot back at some level or are you viewing this as a long-term move?

Yes. Obviously, we need to move as quickly as possible right now for the goods that we are bringing into the U.S., but we are maintaining a China sourcing capability because we are continuing to make for the rest of the world, for our international businesses in China. And so if we find ourselves in a situation where tariffs go away and there is a little bit more clarity and certainty that we can work in China again, then we will certainly be well positioned to pivot back, if that makes sense.

Perfect. Okay. And then maybe just on off-price, I think you had talked about that channels’ wholesale buys being a little bit weaker just as on their expectation that there would be some dislocation and better opportunistic buys. Are you still seeing that now? The inventory outlook is a little bit less clear with maybe not having enough on some level for the next few quarters, and then maybe we do get to a point where there is excess in the back half of the year.

Yes. I do continue to expect that to be a channel where there is somewhat reduced demand for what we do on the upfront – on an upfront basis. We talked about customers not accepting or certain customers being less willing to accept price increases, that would put off-price in that bucket. They are taking some price increases, but there is more resistance there. And again, I do think that they are expecting to have some excess inventory available to them as the year moves on.

Okay. Thanks so much.

Thank you. Our next question comes from the line of Sam Poser with Williams Trading. Your line is now open.

Thanks. I have got three follow-ups. One, besides pricing, what else – I think you might have said this before, what else are you doing to mitigate the tariffs?

Well, number one, we talked about how we are moving all the goods out of China. Number two, on the goods that are still coming from China in the near-term, we have negotiated factory cost concessions. And then number three is raising the prices.

Okay. Thanks. And then you mentioned, when you originally – when you announced the pending acquisition of Kurt Geiger, you talked about the sales. I mean are those sales expectations, whatever they were, now less than what they were when you told us before? I mean have they changed for this year anyway without asking what they are?

Yes. Look, we are not providing guidance, but I think you should assume that for both the existing business and for Kurt Geiger that we are looking at a more conservative revenue expectation.

Thanks. And then lastly, when you are getting the impact on a lot of the containers that get taken control of at the port, I guess and these retailers have to pay the duty. With that business shrinking, does that immediately sort of create – I believe that would create significant or more deleverage on your SG&A because there is virtually no SG&A against that, that – those kind of shipments. Is that the right way to think about it?

No, I don’t think it – I don’t see that...

If those container shipments become less a percentage of your business, that would increase SG&A as a percent because you have to – more handling and other costs that would go in, or is that all freight that would de-lever the distribution cost out of the gross margin. I am not sure which way it works.

It’s no different from the other business, Sam.

Alright. Thank you.

Thank you.

Thank you. This concludes the question-and-answer session. I would now like to turn it back to Ed Rosenfeld for closing remarks.

Great. Well, thanks so much everybody for joining us today. Hope you have a great day. We look forward to speaking with you on the next call.

Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.