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On Thursday, Citi analyst Paul Lejuez increased the price target on Steven Madden stock (NASDAQ: NASDAQ:SHOO) to $26 from the previous $23, while keeping a Neutral rating on the company’s shares. The adjustment comes after Steven Madden’s first-quarter results surpassed market expectations, primarily due to stronger margins. According to InvestingPro data, the stock has shown significant momentum with a 12.11% return over the past week, while maintaining a healthy gross profit margin of 41%. Subsequently, the company’s shares saw a significant rise of 16% following the management’s announcement to reduce its U.S. imports from China to a mid-teens percentage by the end of the year, down from a prior goal of low-40%.
The revised strategy by Steven Madden is expected to mitigate the potential impact of substantial sales losses in the second half of the year due to any order cancellations from China, assuming that tariffs in the rest of the world do not increase substantially. This move also demonstrates the company’s supply chain’s unexpected adaptability.
Despite the positive developments, Citi’s analysis indicates that significant disruptions and margin pressures are anticipated. These are due to potential retail customer order cancellations as retailers adopt a more cautious approach to the second-half macroeconomic outlook, with an assumption of a double-digit decline in core business. Additionally, challenges such as lower margins and extended lead times are expected as production shifts to Vietnam and Cambodia. The company also faces demand uncertainties tied to plans for a 10% price increase.
In his commentary, Lejuez noted that Steven Madden is navigating through the current situation more effectively than previously feared. However, he also pointed out that there remains a high level of uncertainty as the company adjusts its sourcing base. This situation suggests a balanced risk/reward at the current stock price levels, implying that while there are positive aspects to the company’s strategy, potential risks still exist.
In other recent news, Steve Madden Limited reported its first-quarter earnings for 2025, showing a mixed financial performance. The company exceeded earnings per share (EPS) expectations, reporting an EPS of $0.60 compared to the forecasted $0.46. However, consolidated revenue reached $553.5 million, which was slightly below the anticipated $556.3 million. Despite the revenue shortfall, the company experienced significant investor optimism, reflected in a notable stock surge. Steve Madden also announced its strategic acquisition of Kurt Geiger, aimed at enhancing its international expansion efforts. Amid these developments, the company withdrew its previous 2025 financial guidance due to new U.S. tariffs, which present near-term challenges. Analysts from firms like Citi have discussed the company’s mitigation strategies, including reducing China sourcing and implementing price increases. The company’s focus on navigating current disruptions while maintaining growth initiatives remains a priority.
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