Steven Madden Ltd.

05/08/2026 | Press release | Distributed by Public on 05/08/2026 13:16

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations for the three months ended March 31, 2026 should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
All references in this Quarterly Report to "we," "our," "us," and the "Company" refer to Steven Madden, Ltd. and its subsidiaries unless the context indicates otherwise.
This Quarterly Report contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, among others, statements regarding revenue and earnings guidance, plans, strategies, objectives, expectations, and intentions. You can identify forward-looking statements by words such as: "may," "will," "expect," "believe," "should," "anticipate," "project," "predict," "plan," "intend," or "estimate," and similar expressions, or the negative of these expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent our current beliefs, expectations, and assumptions regarding anticipated events and trends affecting our business, and industry based on information available as of the time such statements are made. We caution investors that such forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy, and some of which may be outside of our control. Our actual results and financial condition may differ materially from those indicated in these forward-looking statements. As such, investors should not rely upon them. Important risk factors include:
•our ability to accurately anticipate fashion trends and promptly respond to consumer demand;
•our ability to compete effectively in a highly competitive market;
•our ability to adapt to our business model to rapid changes in the retail industry;
•our dependence on the hiring and retention of key personnel;
•our ability to successfully implement growth strategies and integrate acquired businesses;
•changes in trade policies, additional tariffs on product imported to the United States, retaliatory trade actions taken by other countries, and resulting trade wars;
•supply chain disruptions to product delivery systems and logistics, and our ability to properly manage inventory;
•geopolitical tensions in the regions in which we operate and any related challenging macroeconomic conditions globally that may materially adversely affect our customers, vendors, and partners, and the duration and extent to which these factors may impact our future business and operations, results of operations, and financial condition;
•our reliance on independent manufacturers to produce and deliver products in a timely manner or to meet our quality standards if we experience a supply chain disruption and we are unable to secure an alternative source of raw materials or end products;
•our dependence on one or more of our significant customers;
•quarterly fluctuations of our financial results;
•extreme or unseasonable weather conditions in locations where we or our customers and suppliers are located;
•fluctuation of our stock price if our operating results are inconsistent with our forecasts or those of analysts who follow us;
•our exposure to risks related to integrating the operations, systems, processes, reporting, supply chains, and personnel of Kurt Geiger into our business;
•our exposure to risks associated with increased indebtedness used to finance the acquisition of Kurt Geiger, including related debt service requirements;
•our ability to manage risks associated with substantial goodwill and intangible assets recorded from the acquisition of Kurt Geiger, which could subsequently become impaired upon adverse changes to the business environment in which we operate;
•disruption of our information technology systems or e-commerce platforms;
•cybersecurity risks and costs of defending against, mitigating, and responding to data security threats and breaches impacting the Company;
•our ability to effectively implement artificial intelligence and data-driven technologies across our operations, and the risks that such technologies may not perform as expected, may be subject to regulatory constraints, or may increase operational, legal, or cybersecurity risks;
•litigation or other legal proceedings could divert management resources and result in costs;
•legal, regulatory, political, and economic risks that may affect our operations in international markets;
•exposure to foreign exchange rate fluctuations;
•our ability to adequately protect our trademarks and other intellectual property rights;
•changes in economic conditions;
•additional tax liabilities resulting from audits by various taxing authorities;
•changes in U.S. and foreign tax laws that could have an adverse effect on our financial results;
•the loss of a significant license;
•the actions of our licensees and diminished brand integrity;
•failure of our manufacturers, the manufacturers used by our licensees, or our licensees themselves to use acceptable labor practices or to otherwise comply with local laws and other standards;
•our ability to maintain effective internal control over our financial reporting; and
•other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission (the "SEC").
These risks and uncertainties, along with the risk factors discussed under Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q and, in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2025, should be considered in evaluating any forward-looking statements contained in this report. We do not undertake, and disclaim, any obligation to publicly update any forward-looking statement, including without limitation, any guidance regarding revenue or earnings, whether as a result of new information, future developments, or otherwise.
Business Overview
($ in thousands, except for store count and per share data)
Steven Madden, Ltd. and its subsidiaries design, source, and market fashion-forward branded and private label footwear, accessories, and apparel. We distribute our products through the wholesale channel to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, the United Kingdom, Europe, Canada, and Mexico. Additionally, we operate in other international markets through our joint ventures in South Africa, the Middle East, Israel, Australia, various countries in Europe, Latin America, and certain countries in Asia, and through special distribution arrangements in various European countries, North Africa, South and Central America, and various countries within the Asia-Pacific region. We also distribute our products through our direct-to-consumer channel, which includes company-operated retail stores, third-party concessions in international markets, and e-commerce platforms, in the United States, the United Kingdom, Canada, Mexico, South Africa, the Middle East, Israel, various countries in Europe, Latin America, and the Asia-Pacific region.
Our product offerings include a diverse range of contemporary styles, designed to establish or capitalize on market trends, complemented by core product offerings. We are recognized for our design creativity and ability to deliver trend-right products with high quality at accessible price points, efficiently and with speed-to-market.
The Company's reportable operating segments consist of the following:
•Wholesale Footwear. This segment designs, sources, and markets our brands and sells our products, consisting of footwear, to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, the United Kingdom, Europe, Canada, Mexico, and through our joint ventures and international distributor network.
•Wholesale Accessories/Apparel. This segment designs, sources, and markets our brands and sells our products, primarily consisting of handbags and apparel, to department stores, mass merchants, off-price retailers, online retailers, specialty retailers, independent stores, and clubs throughout the United States, the United Kingdom, Europe, Canada, Mexico, and through our joint ventures and international distributor network.
•Direct-to-Consumer. This segment engages in the sale of footwear, handbags, apparel, and other accessories through Steve Madden, Kurt Geiger London, Dolce Vita, and Carvela full-price retail stores, Steve Madden, Kurt Geiger
London, and Carvela outlet stores, directly-operated e-commerce platforms, directly-operated concessions in international markets, and also operates third-party concessions in luxury and premium department stores primarily in the United Kingdom. We operate retail locations in regional malls and shopping centers, as well as high streets in various cities across the United States, the United Kingdom, Europe, Canada, and Mexico, as well as through our joint ventures in international markets.
•Licensing. This segment engages in the licensing of the Steve Madden®, Kurt Geiger®, and Betsey Johnson® trademarks for use in the sale of select apparel, accessories, and home categories as well as various other non-core products.
Corporate does not constitute a reportable segment and includes costs not directly attributable to the reportable operating segments. These expenses are primarily related to corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cybersecurity, and other shared services.
Macroeconomic Conditions and Industry Trends
Our business operations - and the broader industry - continued to be influenced in the first quarter of 2026 by a dynamic and uncertain macroeconomic environment, requiring ongoing agility across our sourcing, supply chain, and go-to-market strategies.
During the first quarter of 2026, there were significant legal developments affecting certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). On February 20, 2026, the United States Supreme Court ruled that such tariffs were not authorized, and on March 4, 2026, the U.S. Court of International Trade directed U.S. Customs and Border Protection ("CBP") to refund amounts previously collected, including applicable interest.
Following the Supreme Court ruling, the current administration implemented a new global 10% tariff under Section 122 of the Trade Act of 1974 and initiated additional trade actions, including investigations under Section 301 of the Trade Act of 1974, that may result in further tariffs. While the elimination of IEEPA tariffs is expected to have a favorable impact on gross margin, the imposition of additional tariffs, including those under Section 122 and potential measures arising from Section 301 actions, has partially offset and may continue to offset such benefits and could adversely affect our financial results.
Accordingly, the timing and magnitude of tariff-related impacts remain uncertain and will depend on future developments in global trade policy, including the imposition of new tariffs or changes to existing measures. With this evolving global trade environment, we have continued to maintain diversified sourcing strategies, selectively adjust pricing, and further emphasize cost management initiatives.
Interest rates in the United States and certain international markets have moderated from prior peaks, but remain elevated relative to historical levels, continuing to influence consumer borrowing costs and discretionary spending patterns. Consumer demand has shown mixed trends across channels and regions, reflecting ongoing sensitivity to pricing, inflationary pressures, and broader economic uncertainty. Foreign currency volatility and concerns around global economic growth have also continued to impact consumer sentiment.
Geopolitical developments remain an important backdrop. Ongoing conflicts in Ukraine and the Middle East, including heightened tensions involving Iran, as well as broader strategic tensions between the United States and China, have contributed to continued volatility and uncertainty in global markets. These conditions have affected, and may continue to affect, supply chains, trade flows, input costs, and global business operations.
At the same time, structural changes in the retail landscape continue to shape industry dynamics. Consumers increasingly favor omnichannel and direct-to-consumer shopping experiences, with heightened expectations around convenience, personalization, and digital engagement. These trends reinforce the importance of our continued investments in e-commerce capabilities, data analytics, and consumer experience. Wholesale partners have also remained focused on disciplined inventory management and cautious purchasing behavior in response to the ongoing macroeconomic uncertainty.
While the macroeconomic environment continues to evolve, some things remain the same, including our steadfast commitment to executing the following key strategic initiatives, which are aimed at driving long-term growth and creating shareholder value:
•Win with product. Utilizing our proven model - which combines talented design teams, a test-and react strategy, and industry-leading speed-to-market capability - to create trend-right product assortments across footwear, accessories, and apparel categories that resonate with our consumers.
•Invest in marketing. Continue investing in full-funnel marketing to deepen our connection with consumers.
•Expand in international markets. Expanding our international businesses in the Americas (ex. U.S.), EMEA, and APAC regions remains our largest long-term growth initiative.
•Grow non-footwear categories. Expanding our product offerings across various categories outside of footwear, including handbags, accessories, and apparel.
•Expand Direct-to-Consumer led by digital. Expanding our direct-to-consumer business with a focus on growing our digital business, including optimizing site functionality, personalization, and digital marketing, to enhance our consumers overall shopping experience.
•Strengthen the core U.S. wholesale footwear business. Continue leveraging product innovation and speed to market to grow our diversified business across all tiers of distribution.
•Operational Efficiency. Streamlining operations, tightly managing costs, and maintaining a disciplined inventory management approach are ongoing and aimed at enhancing overall profitability.
•Sustainability Focus. Committing to our corporate social responsibility initiatives, as we work to minimize the negative impacts we have on the environment and maximize the positive impacts we have on our people and our communities.
Dividends
On May 5, 2026, our Board of Directors approved a quarterly dividend of $0.21 per share payable on June 19, 2026 to stockholders of record as of the close of business on June 8, 2026.
Key Highlights
Total revenue for the quarter ended March 31, 2026 increased 18.0% to $653,096, compared to $553,534 in the same period of last year driven by the acquisition of Kurt Geiger. During the quarter ended March 31, 2026, we recorded a benefit of $55,090 to costs of sales related to the IEEPA tariff refund on goods imported into the United States and sold in 2025. Net income attributable to Steven Madden, Ltd. was $71,822 in the first quarter of 2026, compared to net income of $40,423 in the same period of last year. Our effective tax rate for the first quarter of 2026 was 24.7%, compared to 24.1% in the same period of last year. Diluted income per share was $1.00 per share on 71,876 diluted weighted average shares outstanding, compared to diluted earnings per share of $0.57 per share on 71,055 diluted weighted average shares outstanding in the first quarter of the prior year.
Our inventory turnover (calculated on a trailing four quarter average) for the quarter ended March 31, 2026 was 3.4 times, compared to 5.3 times at March 31, 2025. Excluding the Kurt Geiger business, our inventory turnover for the quarter ended March 31, 2026 was 4.7 times. Our total Company accounts receivable average collection days decreased to 62 days in the first quarter of 2026, compared to 73 days in the first quarter of 2025. As of March 31, 2026, we had $77,157 in cash and cash equivalents, and total stockholders' equity of $947,248. Working capital was $577,532 as of March 31, 2026, compared to $491,459 as of March 31, 2025.
Amid a dynamic and uncertain operating environment, we remain focused on disciplined execution of our strategic priorities: delivering trend-right product, deepening connections with our consumers, expanding our international businesses, growing our non-footwear categories, expanding our direct-to-consumer business led by digital, strengthening our core U.S. wholesale business, and efficiently managing our inventory and expenses. At the same time, we are maintaining a strong focus on cost control and operational efficiency. We also remain committed to advancing our corporate social responsibility initiatives to create long-term value for our stakeholders, minimize the negative impacts on the environment, and maximize the positive impacts on our people and our communities.
Results of Operations
The following tables set forth information on operations for the periods indicated:
Three Months Ended March 31,
(in thousands, except for number of stores) 2026 2025
CONSOLIDATED:
Net sales $ 649,660 99.5 % $ 551,382 99.6 %
Licensing income 3,436 0.5 % 2,152 0.4 %
Total revenue 653,096 100.0 % 553,534 100.0 %
Cost of sales (exclusive of depreciation and amortization)
295,676 45.3 % 327,267 59.1 %
Gross profit 357,420 54.7 % 226,267 40.9 %
Operating expenses 258,293 39.5 % 177,263 32.0 %
Change in valuation of contingent payment liability 385 0.1 % (4,495) (0.8 %)
Income from operations 98,742 15.1 % 53,499 9.7 %
Interest and other (expense) / income - net (3,605) (0.6 %) 829 0.1 %
Income before provision for income taxes $ 95,137 14.6 % $ 54,328 9.8 %
Income attributable to Steven Madden, Ltd. $ 71,822 11.0 % $ 40,423 7.3 %
BY SEGMENT:
WHOLESALE FOOTWEAR SEGMENT:
Total revenue $ 278,866 100.0 % $ 296,145 100.0 %
Cost of sales (exclusive of depreciation and amortization)
142,856 51.2 % 187,454 63.3 %
Gross profit 136,010 48.8 % 108,691 36.7 %
Operating expenses 55,635 20.0 % 45,603 15.4 %
Income from operations $ 80,375 28.8 % $ 63,088 21.3 %
WHOLESALE ACCESSORIES/APPAREL SEGMENT:
Total revenue $ 164,781 100.0 % $ 143,173 100.0 %
Cost of sales (exclusive of depreciation and amortization)
82,611 50.1 % 95,124 66.4 %
Gross profit 82,170 49.9 % 48,049 33.6 %
Operating expenses 37,840 23.0 % 30,132 21.0 %
Change in valuation of contingent payment liability 385 0.2 % (4,495) (3.1 %)
Income from operations $ 43,945 26.7 % $ 22,412 15.7 %
DIRECT-TO-CONSUMER SEGMENT:
Total revenue $ 206,013 100.0 % $ 112,064 100.0 %
Cost of sales (exclusive of depreciation and amortization)
70,209 34.1 % 44,689 39.9 %
Gross profit 135,804 65.9 % 67,375 60.1 %
Operating expenses 137,388 66.7 % 73,603 65.7 %
(Loss) from operations $ (1,584) (0.8 %) $ (6,228) (5.6 %)
Number of stores 395 319
LICENSING SEGMENT:
Licensing income $ 3,436 100.0 % $ 2,152 100.0 %
Gross profit 3,436 100.0 % 2,152 100.0 %
Operating expenses 259 7.5 % 327 15.2 %
Income from operations $ 3,177 92.5 % $ 1,825 84.8 %
CORPORATE:
Operating expenses 27,171 - % $ 27,598 - %
Loss from operations $ (27,171) - % $ (27,598) - %
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Consolidated
Total revenue for the three months ended March 31, 2026 increased 18.0% to $653,096, compared to $553,534 in the comparable period in the prior year, due to incremental revenue from the acquisition of Kurt Geiger.
Gross profit for the three months ended March 31, 2026 was $357,420, or 54.7% of total revenue, compared to $226,267, or 40.9% of total revenue, in the comparable period in the prior year. The increase in gross profit as a percentage of total revenue was primarily driven by a benefit of $55,090 recognized in cost of sales related to the expected recovery of previously incurred IEEPA tariffs on inventory sold in the prior year, the addition of Kurt Geiger, higher average selling prices, and a lower penetration of the private label business. The comparable period in the prior year included a charge of $280 related to purchase accounting fair value adjustments of inventory from acquired businesses.
Operating expenses for the three months ended March 31, 2026 were $258,293, or 39.5% of total revenue, compared to $177,263, or 32.0% of total revenue, in the comparable period in the prior year. The increase in operating expenses as a percentage of total revenue was primarily attributable to the acquisition of Kurt Geiger, as well as higher incentive compensation and warehouse expenses. The current-year period also included charges of $1,163 related to certain severances and termination benefits, $840 related to legal costs as a result of litigation settlements and earnout-related litigations, and $261 related to acquisition costs and the formation of international joint ventures. The comparable period in the prior year included charges of $3,187 of acquisition costs and the formation of international joint ventures, $2,421 related to certain severances and termination benefits, and $1,188 related to legal costs as a result of litigation settlements.
In the three months ended March 31, 2026, we recorded an expense of $385 related to the change in valuation of contingent payment liabilities. In the comparable period in the prior year, we recorded a benefit of $4,495 related to the change in valuation of contingent payment liabilities.
Income from operations for the three months ended March 31, 2026 was $98,742, or 15.1% of total revenue, compared to $53,499, or 9.7% of total revenue, in the comparable period in the prior year. The effective tax rate for the three months ended March 31, 2026 was 24.7%, compared to 24.1% in the comparable period in the prior year. The difference between the Company's effective tax rates was primarily due to an increase in pre-tax income in jurisdictions with higher tax rates.
Net income attributable to Steven Madden, Ltd. for the three months ended March 31, 2026 was $71,822, compared to $40,423 in the comparable period in the prior year.
Wholesale Footwear Segment
Revenue from the Wholesale Footwear segment for the three months ended March 31, 2026 was $278,866, or 42.7% of total revenue, compared to $296,145, or 53.5% of total revenue, in the comparable period in the prior year. The decrease of 5.8% was primarily driven by a decline in the private label business, partially offset by incremental revenue from the acquisition of Kurt Geiger.
Gross profit for the three months ended March 31, 2026 was $136,010, or 48.8% of Wholesale Footwear revenue, compared to $108,691, or 36.7% of Wholesale Footwear revenue, in the comparable period in the prior year. The increase in gross profit as a percentage of revenue was primarily driven by a benefit of $28,270 recognized in cost of sales related to the expected recovery of previously incurred IEEPA tariffs on inventory sold in the prior year, higher average selling prices, and a lower penetration of the private label business.
Operating expenses for the three months ended March 31, 2026 were $55,635, or 20.0% of Wholesale Footwear revenue, compared to $45,603, or 15.4% of Wholesale Footwear revenue, in the comparable period in the prior year. The increase in operating expenses as a percentage of Wholesale Footwear revenue primarily reflects higher incentive compensation and warehouse expenses, the deleveraging of operating expenses on a lower revenue base, and the acquisition of Kurt Geiger. The current-year period also included charges of $600 related to certain severances and termination benefits, and $35 related to acquisition costs and the formation of international joint ventures. The comparable period in the prior year included $644 related to certain severances and termination benefits, and $72 of acquisition costs related to the formation of international joint ventures.
Income from operations for the three months ended March 31, 2026 totaled $80,375, or 28.8% of Wholesale Footwear revenue, compared to $63,088, or 21.3% of Wholesale Footwear revenue, in the comparable period in the prior year.
Wholesale Accessories/Apparel Segment
Revenue from the Wholesale Accessories/Apparel segment for the three months ended March 31, 2026 was $164,781, or 25.2% of total revenue, compared to $143,173, or 25.9% of total revenue, in the comparable period in the prior year. The increase of 15.1% was due to incremental revenue from the acquisition of Kurt Geiger.
Gross profit for the three months ended March 31, 2026 was $82,170, or 49.9% of Wholesale Accessories/Apparel revenue, compared to $48,049, or 33.6% of Wholesale Accessories/Apparel revenue, in the comparable period in the prior year. The increase in gross profit as a percentage of revenue was primarily driven by a benefit of $16,185 recognized in cost of sales related to the expected recovery of previously incurred IEEPA tariffs on inventory sold in the prior year, higher average selling prices, a mix benefit from the addition of Kurt Geiger, and a lower penetration of the private label business. The comparable period in the prior year included a charge of $280 related to the purchase accounting fair value adjustments of inventory from acquired businesses.
Operating expenses for the three months ended March 31, 2026 were $37,840, or 23.0% of Wholesale Accessories/Apparel revenue, compared to $30,132, or 21.0% of Wholesale Accessories/Apparel revenue, in the comparable period in the prior year. The increase in operating expenses as a percentage of Wholesale Accessories/Apparel revenue was primarily attributable to the acquisition of Kurt Geiger, as well as higher warehouse expenses and incentive compensation. The current-year period also included charges of $347 related to certain severances and termination benefits, and $308 related to legal costs as a result of earnout-related litigation. The comparable period in the prior year included charges of $743 related to certain severances and termination benefits, and $549 related to legal costs as a result of earnout-related litigation.
In the three months ended March 31, 2026, we recorded a charge of $385 related to the change in valuation of contingent payment liabilities. In the comparable period of 2025, we recorded a benefit of $4,495 related to the change in valuation of contingent payment liabilities.
Income from operations for the Wholesale Accessories/Apparel segment for the three months ended March 31, 2026 was $43,945, or 26.7% of Wholesale Accessories/Apparel revenue, compared to $22,412, or 15.7% of Wholesale Accessories/Apparel revenue, in the comparable period in the prior year.
Direct-to-Consumer Segment
Revenue from the Direct-to-Consumer segment for the three months ended March 31, 2026 was $206,013, or 31.5% of total revenue, compared to $112,064, or 20.2% of total revenue, in the comparable period in the prior year. The increase of 83.8% was driven by incremental revenue from the acquisition of Kurt Geiger and a strong performance of the Steve Madden full-price business in the United States. As of March 31, 2026, we operated 387 brick-and-mortar stores, eight e-commerce websites, and 162 concessions in international markets. This includes 73 company-operated brick-and-mortar retail stores, three e-commerce websites, and 65 concessions related to the Kurt Geiger business. As of March 31, 2025, we operated 314 brick-and-mortar stores, five e-commerce websites, and 61 concessions in international markets.
Gross profit for the three months ended March 31, 2026 was $135,804, or 65.9% of Direct-to-Consumer revenue, compared to $67,375, or 60.1% of Direct-to-Consumer revenue, in the comparable period in the prior year. The increase in gross profit as a percentage of revenue was primarily driven by a benefit of $10,635 recognized in cost of sales related to the expected recovery of previously incurred IEEPA tariffs on inventory sold in the prior year, as well as a mix benefit from the addition of Kurt Geiger.
Operating expenses for the three months ended March 31, 2026 were $137,388, or 66.7% of Direct-to-Consumer revenue, compared to $73,603, or 65.7% of Direct-to-Consumer revenue, in the comparable period in the prior year. The increase in operating expenses as a percentage of revenue was primarily attributable to higher incentive compensation and logistics expenses. The current-year period included charges of $532 related to legal costs as a result of litigation settlements, $227 related to acquisition costs and the formation of joint ventures, and $57 related to certain severances and termination benefits. The comparable period in the prior year included charges of $639 related to legal costs as a result of litigation settlements, $469 of acquisition costs related to the formation of international joint ventures, and $301 related to certain severances and termination benefits.
Loss from operations for the three months ended March 31, 2026 was $1,584, or 0.8% of Direct-to-Consumer revenue, compared to $6,228, or 5.6% of Direct-to-Consumer revenue, in the comparable period in the prior year.
Licensing Segment
Royalty income from the Licensing segment for the three months ended March 31, 2026 was $3,436, or 0.5% of total revenue, compared to $2,152, or 0.4% of total revenue, in the comparable period in the prior year. Operating expenses for the three months ended March 31, 2026 were $259, compared to $327 in the comparable period in the prior year. Income from operations for the three months ended March 31, 2026 was $3,177, compared to $1,825 in the comparable period in the prior year.
Corporate
Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments. These expenses primarily related to corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cybersecurity, and other shared services. Corporate operating expenses for the three months ended March 31, 2026 were $27,171 or 4.2% of total revenue, compared to $27,598 or 5.0% of total revenue, in the comparable period in the prior year. The comparable period in the prior year included charges of $2,614 related to acquisition costs and $686 related to certain severances and termination benefits.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flows from operations, cash, cash equivalents and borrowing capacity under our Credit Agreement. Cash and cash equivalents totaled $77,157 and $112,423 at March 31, 2026 and December 31, 2025, respectively, and of the total cash and cash equivalents as of March 31, 2026, $72,066, or approximately 93%, was held at our foreign subsidiaries, and of the total cash and cash equivalents as of December 31, 2025, $93,859, or approximately 83%, was held at our foreign subsidiaries.
As of March 31, 2026, we had working capital of $577,532, cash and cash equivalents of $77,157, and $3,024 in letters of credit outstanding.
Acquisition of Kurt Geiger and Credit Agreement
On May 6, 2025 (the "Acquisition Date"), the Company, through its wholly owned subsidiary, SML UK Holding Ltd, completed the acquisition of the entire issued share capital of Mercury Acquisitions Topco Limited ("MATL") for an aggregate preliminary purchase price of $403,348, pursuant to the terms of the sale and purchase deed. We funded the cash consideration and the payment of transaction-related expenses through borrowings under the Credit Agreement and cash on hand.
On May 6, 2025, we entered into an Amended and Restated Credit Agreement (the "Credit Agreement") with various lenders and Citizens Bank, as administrative agent (in such capacity, the "Agent"), which provides for a term loan facility in the amount of $300,000 and a revolving credit facility in the amount of $250,000. The Credit Agreement amends and restates in its entirety the previous Credit Agreement, dated as of July 22, 2020, among the Company, the various lenders party thereto and Citizens Bank, as administrative agent. The Company also has used, and intends to continue to use, the revolving credit facility for general corporate purposes.
The Credit Agreement provides for a term loan facility and a revolving credit facility scheduled to mature on May 6, 2030. We may from time to time increase the revolving commitments and/or request incremental term loans in an aggregate principal amount of up to $275,000 if certain conditions are satisfied, including (i) the absence of any default under the Credit Agreement, and (ii) obtaining the consent of the lenders participating in each such increase.
At March 31, 2026, the total outstanding borrowings under our Credit Agreement in the form of cash borrowings and standby letters of credit were $292,000 and $3,024, respectively.
We believe that based on our current financial position and available cash and cash equivalents, we will meet all our financial commitments and operating needs for at least the next twelve months. In addition, our $250,000 asset-based revolving credit facility provides us with additional liquidity and flexibility on a long-term basis.
IEEPA Tariff Refund
As of March 31, 2026, the Company recognized a receivable of $90,192 related to the expected refund of tariffs previously paid under the IEEPA, following recent legal developments, including a ruling by the United States Supreme Court and subsequent actions by the U.S. Court of International Trade directing the refund of such tariffs, including applicable interest. While the Company believes recovery is probable, the timing of cash receipts is dependent upon the execution of the refund process by U.S. Customs and Border Protection and the U.S. Treasury Department.
Cash Flows
A summary of our cash provided by and used in operating, investing, and financing activities was as follows:
Operating Activities
Cash used in operating activities was $55,337 for the three months ended March 31, 2026, compared to $18,832 in the same period of the prior year. The increase in cash used in operations was primarily driven by unfavorable changes in working capital, partially offset by an increase in net income.
Investing Activities
Cash used in investing activities was $5,901 for the three months ended March 31, 2026, which consisted of capital expenditures for leasehold improvements, new stores, and systems enhancements.
Financing Activities
Cash provided by financing activities was $26,419 for the three months ended March 31, 2026, which primarily consisted of net transaction-related borrowings of $52,000, partially offset by dividends paid of $15,290, and net settlements of stock awards of $7,367.
Contractual and Other Obligations
Firm Commitments
Our contractual obligations as of March 31, 2026 were as follows:
Payment due by period
Contractual Obligations Total Remainder of 2026 2027-2028 2029-2030 2031 and after
Operating lease obligations(1)
$ 295,129 $ 56,529 $ 113,102 $ 62,255 $ 63,243
Purchase obligations(2)
419,374 419,374 - - -
Future minimum royalty and advertising payments(3)
34,500 4,500 12,000 12,000 6,000
Employment Agreements(4)
49,963 7,667 18,862 15,688 7,746
Total $ 798,966 $ 488,070 $ 143,964 $ 89,943 $ 76,989
(1) Refer to Note 5 - Leases to the Condensed Consolidated Financial Statements included in this Quarterly Report for further information.
(2) Substantially all our products are produced by independent manufacturers at overseas locations, the majority of which are located in China, with a growing percentage located in Cambodia, Vietnam, Mexico, Brazil, India, Bangladesh, and various other countries in Asia, Europe, and Africa. We have not entered into any long-term manufacturing or supply contracts with any of these foreign manufacturers. We believe that a sufficient number of alternative sources exist outside of the United States for the manufacture of our products. Purchases are made primarily in United States dollars.
(3) Future minimum royalty and advertising payments represent our obligation in connection with our license agreement. Refer to Note 12 - Commitments, Contingencies, and Other to the Condensed Consolidated Financial Statements included in this Quarterly Report for further information.
(4) We have employment agreements with our Founder and Creative and Design Chief, Steven Madden, and certain executive officers, which provide for the payment of compensation. In addition, some of these employment agreements provide for incentive compensation based on various performance criteria and some provide for discretionary bonuses as well as other benefits, including stock-based compensation.
Off-Balance Sheet Arrangements
In addition to the commitments included in the Contractual Obligations table above, we have letters of credit of $3,024 outstanding as of March 31, 2026 related to the purchase of inventory and certain lease obligations. These letters of credit expire at various dates through 2030.
We do not maintain any other off-balance sheet arrangements, transactions, obligations, or other relationships with unconsolidated entities that would be expected to have a material current or future effect on our Condensed Consolidated Financial Statements. Refer to Note 12 - Commitments, Contingencies, and Other to the Condensed Consolidated Financial Statements included in this Quarterly Report for further information.
Dividends
On May 5, 2026, our Board of Directors approved a quarterly cash dividend. The quarterly dividend of $0.21 per share is payable on June 19, 2026 to stockholders of record as of the close of business on June 8, 2026.
Future quarterly cash dividend payments are subject to the discretion of our Board of Directors and contingent upon future earnings, our financial condition, capital requirements, general business conditions, and other factors. Therefore, we can give no assurance that dividends will be paid to holders of our common stock in the future.
Critical Accounting Policies and the Use of Estimates
There have been no material changes to our critical accounting policies and the use of estimates from the disclosures reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission on March 2, 2026.
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