Despite Athletic Inventory Glut, Steve Madden Is Optimistic About Sneakers

In an overall tough quarter, Steve Madden executives were particularly optimistic about one buzzy category: Sneakers.

“The sneaker category has been down for us overall over the last few quarters, but we’re actually quite optimistic about sneakers going forward,” said CEO Edward Rosenfeld in a call with analysts discussing the companies first quarter results.

Overall, Steve Madden’s wholesale revenues declined 20.8 percent to $314.6 million in Q2. This included a 19.4 percent decrease in wholesale footwear revenue and a 24.6 percent decrease in wholesale accessories and apparel revenue. Steve Madden’s Q1 was similarly challenged due to weak orders from wholesale partners and tough comparisons to the prior year.

When it comes to the athletic footwear market, inventory excesses have strained major brands in recent months, as retailers slow down the pace of their orders to mitigate the surplus. According to a July note from Morgan Stanley analysts led by Alex Straton, inventory levels in U.S. channels for footwear and apparel are still elevated. In the sportswear category, these high levels could remain this way through the end of the the year and potentially into 2024.

“With channel inventory unhealthy, we think promotional pressures could broadly impact the respective players — even those with clean balance sheet inventory — because aggregate inventory levels are still high,” the note read.

Rosenfeld said he couldn’t gauge how much this excess sneaker inventory was impacting Steve Madden, but said he feels good about the brand’s new products in the category.

“We think that we’re actually going to be on the upswing in the fashion sneaker category moving forward,” he added.

Moving through the rest of the year, Rosenfeld said he expects to see “significant improvement” in the wholesale channel, despite cautious consumers. He added that Q3 is 98 percent booked, and Q4 is slightly less than half booked.

The brand also had good early reads for fall products in the recent Nordstrom anniversary sale, especially in its Re-booted channel, which sells pre-worn shoes. Overall, strengthening the core U.S. wholesale footwear business is a top priority for the brand.

“I’m confident that with our strong brands, proven business model and multiple significant growth opportunities, we are well positioned to drive top and bottom line gains for years to come,” Rosenfeld said.