From retail doorways to gross margin and even wholesale alternatives, Steve Madden Ltd.’s acquisition of Kurt Geiger is wanting like a prescient transfer to some Wall Avenue analysts.
BTIG’s Janine Stichter sees a “lengthy runway for retail development” at Geiger, notably within the U.S. She famous that the model has six retail shops within the U.S., which she stated are “performing nicely and showcasing robust four-wall profitability.”
One other alternative is within the wholesale channel throughout the U.S. Present U.S. wholesale accounts consists of Dillards, Bloomingdales and Nordstrom. She estimated that the overall variety of retail doorways within the wholesale channel doubtless is lower than 500, versus wholesale door counts by friends — for instance, Coach, Kate Spade, and Michael Kors — that span between 1,2000 to 2,000.
“Notably within the case of Michael Kors, there has additionally been shelf area donation, which we see persevering with as retailers decide to not restock the model onto the identical degree after clearing by way of extra stock all through ’25. As such, we see this as a chance for Kurt Geiger to realize shelf area,” Stichter wrote in a analysis word Thursday.
Madden’s administration had anticipated Geiger to be instantly accretive to earnings per share (EPS), initially within the vary of 10 cents in 2025. That was earlier than the corporate pulled its steerage estimates on account of tariff headwinds and the volatility within the macro-economic backdrop. Stichter met with administration just lately and believes that the preliminary accretion vary is near being achievable. She has a share value goal of $40.
For subsequent 12 months, presuming the model can re-accelerate income development to a low-double-digits % vary and recoup a considerable portion of working margin misplaced in 2025 on account of tariff headwinds, “we consider the model ought to account for over 40 cents in EPS,” the BTIG analyst stated. That might be achievable, she stated, because the main driver could possibly be the leveraging of promoting, normal and administrative bills as the corporate scales right into a $1 billion-plus enterprise.
“Searching long-term, we consider the Kurt Geiger model can account for $1.50-$1.70 in EPS based mostly on administration’s assumptions of $1 billion in income and a mid-teens % working margin.”
Analyst Sam Poser at Williams Buying and selling stated in a analysis word Thursday that he’s raised the value goal of Madden shares to $42 from $28, noting that “developments and channel combine shifting in Madden’s favor.”
“First, there’s a shift to ladies’s costume sneakers underway, that performs into the energy of the core Steve Madden model,” Poser stated, noting that Steve Madden’s “finest successes have usually come from decoding sneakers initially made by designer manufacturers.” He stated that most of the designer manufacturers — Manolo Blahnik, Cloe, Valentino and others — have new compelling sneakers, with the brand new costume sneakers and boots usually on decrease kitten or block heels, or are flats or western model boots.
Poser additionally thinks many retailers will allotted extra of their open-to-buy to the Steve Madden and Dolce Vita manufacturers. Additionally, he believes that Madden is nicely positioned to learn and achieve market share as different smaller non-public manufacturers increase costs on account of larger prices from tariffs as they don’t have the dimensions or manufacturing facility relationships that may match these of Madden.
He additionally expects Geiger’s professional forma Fiscal 12 months 2025 income to be $550 million, up 10 % year-over-year. Over the long term, Geiger had development alternatives within the U.S. that shall be “additive” to Madden over time.
“Latest checks point out that Kurt Geiger purses and sneakers are quietly gaining a following within the southern United States,” Poser stated. “Additional, there are indications that some city trend retailers are starting to point out curiosity in Kurt Geiger ladies’s and child’s sneakers. The ladies’s Kurt Geiger sneakers retail from $188 to $248, and child’s sneakers have a median retail of $70.”
Geiger total has a geographic income mis of fifty % within the U.Okay., 35 % within the U.S. and the steadiness from the remainder of the world. Sixty % of complete income is from purses and the steadiness of 40 % from footwear. “Excluding non-leather slides, Kurt Geiger ladies’s footwear costs vary from $125 to $450, and purses vary from $75 to $395,” the Williams Buying and selling analyst famous. That compares with Madden’s ladies’s footwear costs starting from $50 to $350, and purses between $49 to $179.
Madden in February inked a deal to amass the Kurt Geiger model for $360 million from Cinven. The transaction closed in Could. On the time, when Madden posted first quarter earnings, the corporate’s model continues to exhibit “excellent momentum,” including that its differentiated and elevated positioning available in the market makes it a “complementary addition” to the corporate. He cited strategic initiatives that embrace “increasing in worldwide markets, equipment classes and direct-to-consumer channels.”
Madden in July reported second quarter earnings that had been down on account of wholesale order cancellations and late shipments amid a backdrop of tariff uncertainties. On the time, there have been indications that costume sneakers and boot gross sales continued to realize traction.
Madded is slated to report third quarter earnings ends in early November.
