ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.
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, Europe, Canada, Mexico, South Africa, the Middle East, Israel, 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 UK. 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 ® , Betsey Johnson ® , and Kurt Geiger ® 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.
Recent Developments
Australia Joint Venture. In January 2025, the Company acquired a 50.1% controlling financial interest in the newly formed entity, SM Fashion Australia Pty Ltd. This joint venture was formed to expand the distribution of our products across Australia and New Zealand through wholesale and direct-to-consumer channels. The results of this joint venture are included within the Wholesale Footwear, Wholesale Accessories/Apparel, and Direct-to-Consumer segments.
Malaysia Joint Venture. In January 2025, the Company acquired an additional 2.0% equity interest in SM Distribution Malaysia Sdn. Bhd. SM Distribution Malaysia Sdn. Bhd was originally formed in July 2022, at which time we held a 49.0% non-controlling interest in the entity. The Company now holds a 51.0% controlling financial interest in the entity. SM Distribution Malaysia Sdn. Bhd engages in the distribution of our products across Malaysia through the direct-to-consumer channel. The results of this joint venture are included within the Direct-to-Consumer segment.
Acquisition of Kurt Geiger. In May 2025, the Company completed its previously announced acquisition of the entire issued share capital of Mercury Acquisitions Topco Limited (“MATL”) for a preliminary purchase price of $403,348.
MATL is the ultimate parent company of the Kurt Geiger business (“Kurt Geiger”), which operates primarily in the United Kingdom (the “UK”), U.S., and Europe. Kurt Geiger designs and sells footwear and accessories under its own brands – including Kurt Geiger London, KG Kurt Geiger, and Carvela – through its direct-to-consumer channel, which consists of directly-operated retail stores and e-commerce, as well as through the wholesale channel, and operates third-party concessions in luxury and premium department stores primarily in the UK. Kurt Geiger was founded in 1963 and is headquartered in London, UK.
Greater China Joint Venture. In August 2025, the Company acquired a 50% controlling financial interest in the newly formed entity, MG Distribution Hong Kong Limited. This joint venture was formed to expand the distribution of the Company’s products across China, Hong Kong, and Macau. The results of this joint venture are included within the Direct-to-Consumer segment.
For additional information about these acquisitions and joint ventures, refer to Note 4 – Acquisitions, Purchases and Sales of Joint Ventures, and Divestitures to the consolidated financial statements included in this Form 10-K.
Macroeconomic Conditions and Industry Trends
Our business operations – and the broader industry – were shaped throughout 2025 by a complex and evolving macroeconomic environment, requiring continued flexibility across our sourcing, supply chain, and go-to-market strategies.
Following the inauguration of the current administration in January 2025, new tariff measures were announced or threatened on imports from key sourcing markets, including China, Cambodia, Vietnam, and Brazil. Although some previously announced tariff initiatives were postponed or adjusted, the absence of clarity around future trade policy remained, prompting many multinational businesses, including us, to maintain flexible supplier networks, selectively adjust pricing strategies, and intensify cost-containment efforts.
While interest rates have recently come down in the United States and key international markets, they have remained high relative to prior years, continuing to impact credit conditions and consumer discretionary spending. Furthermore, continued foreign currency volatility, elevated global trade tensions, and recession fears continue to impact consumer sentiment.
Geopolitical tensions remain influential. The conflicts in the Middle East and Ukraine persist and tensions with China and other countries remain elevated. These headwinds have contributed to continued economic uncertainty, inflationary pressures, foreign currency volatility, disruptions in global supply chains, deteriorating trade relations, and declining consumer confidence. These factors contributed to broader market volatility and may continue to adversely impact our global business operations.
Structural change remains a key theme in the retail landscape. Consumers increasingly favor omnichannel and direct-to-consumer shopping experiences, placing greater emphasis on digital engagement, personalized marketing, and seamless integration between online and physical channels. This shift underscores the strategic importance of our investments in e-commerce platforms, data analytics capabilities, and customer experience enhancements. Traditional wholesale channels also evolved, with retail partners placing increased focus on inventory planning and discipline in these uncertain times.
While the macroeconomic environment is ever-evolving, we remain steadfast in our 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
Our Board of Directors approved a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock which was paid on March 21, 2025, June 20, 2025, September 23, 2025 and December 26, 2025. The aggregate cash dividends paid for the year ended December 31, 2025 was $60,962.
On February 24, 2026, our Board of Directors approved a quarterly cash dividend of $0.21 per share payable on March 20, 2026 to stockholders of record as of the close of business on March 11, 2026.
2025 Highlights
Total revenue for 2025 was $2,534,109, an increase of 11.0% as compared to 2024 driven by the acquisition of the Kurt Geiger business. Net income attributable to Steven Madden, Ltd. was $44,661 in 2025 compared to $169,390 in 2024. Our effective tax rate for 2025 was 36.9% compared to 23.7% in 2024. Diluted earnings per share in 2025 was $0.63 per share on 71,181 diluted weighted average shares outstanding compared to $2.35 per share on 71,963 diluted weighted average shares outstanding in 2024.
As of December 31, 2025, we had 399 brick-and-mortar retail stores and seven e-commerce platforms in operation, compared to 291 brick-and-mortar retail stores and five e-commerce platforms as of December 31, 2024. The Company operated 133 concessions in international markets as of December 31, 2025, up from 42 concessions at the end of 2024. Through the acquisition of Kurt Geiger, we added 31 Kurt Geiger London full-price stores and 17 outlet stores, 14 Carvela full-price stores and 12 outlet stores, two e-commerce platforms, and 72 concessions.
Our inventory turnover (calculated on a trailing four quarter average) was 3.8 times for both the years ended December 31, 2025 and 2024. Excluding the Kurt Geiger business, our inventory turnover for the year ended December 31, 2025 was 5.0 times. Our total Company accounts receivable average collection days were 54 days in 2025 compared to 72 days in 2024. As of December 31, 2025, we had $112,423 in cash, cash equivalents, and total stockholders’ equity of $903,982. Working capital was $474,992 as of December 31, 2025, compared to $480,974 as of December 31, 2024.
Amid a dynamic operating environment, we remain focused on executing 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 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:
Years Ended December 31,
(in thousands, except for number of stores)
CONSOLIDATED:
Net sales
Commission and licensing fee income
Total revenue
Cost of sales (exclusive of depreciation and amortization)
Gross profit
Operating expenses
Change in valuation of contingent payment liability
Impairment of intangibles
Income from operations
Gain on derivative
Interest and other (expense) / income – net
Income before provision for income taxes
Net income attributable to Steven Madden, Ltd.
BY SEGMENT:
WHOLESALE FOOTWEAR SEGMENT:
Total Revenue
Cost of sales (exclusive of depreciation and amortization)
Gross profit
Operating expenses
Change in valuation of contingent payment liability
Income from operations
WHOLESALE ACCESSORIES/APPAREL SEGMENT:
Total Revenue
Cost of sales (exclusive of depreciation and amortization)
Gross profit
Operating expenses
Change in valuation of contingent payment liability
Impairment of intangibles
Income from operations
DIRECT-TO-CONSUMER SEGMENT:
Total Revenue
Cost of sales (exclusive of depreciation and amortization)
Gross profit
Operating expenses
Change in valuation of contingent payment liability
Impairment of intangibles
(Loss) / income from operations
Number of stores
LICENSING SEGMENT:
Licensing fee income
Gross profit
Operating expenses
Income from operations
CORPORATE:
Operating expenses
Loss from operations
The following section discusses our results of operations for 2025 and 2024 and year-to-year comparisons between those periods. Discussions of 2023 and year-to-year comparisons between 2024 and 2023 are not included in this Annual Report on Form 10-K and can be found within Part II, Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K filed with the SEC on March 3, 2025.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Consolidated
Total revenue for the year ended December 31, 2025 increased 11.0% to $2,534,109 compared to $2,282,927 in 2024, primarily attributable to incremental revenue from the acquisition of Kurt Geiger, partially offset by a decline in the organic business primarily attributable to tariff-related impacts.
Gross profit in 2025 was $1,049,469, or 41.4% of total revenue, as compared to $936,932, or 41.0% of total revenue, in the prior year. The increase in gross profit as a percentage of total revenue was driven by a greater mix of the higher-margin direct-to-consumer business, primarily related to the acquisition of Kurt Geiger, partially offset by tariff-related impacts. Gross profit in both years also included $30,891 and $435, respectively, related to purchase accounting fair value adjustments of inventory from acquired businesses.
Operating expenses in 2025, were $967,978, or 38.2% of total revenue, as compared to $698,936, or 30.6% of total revenue, in 2024. The increase in operating expenses as a percentage of total revenue was primarily attributable to the acquisition of Kurt Geiger and certain Kurt Geiger acquisition-related transaction costs. The current year included $38,819 of compensation expense as a result of acquisition-related sellers proceeds which were reallocated from institutional sellers to management sellers in excess of their respective pre-acquisition equity ownership. The current year also included charges of $13,317 related to acquisition costs and the formation of joint ventures, $7,344 related to legal costs as a result of litigation settlements, and $4,030 related to certain severances and termination benefits. The prior year included charges of $6,378 related to acquisition costs and the formation of joint ventures and the reorganization of foreign entities, $3,377 related to legal costs as a result of litigation settlements, $3,199 related to a loss on the divestiture of a business, and $326 of working capital adjustments in connection with the Almost Famous acquisition.
In 2025, we recorded impairment of intangibles of $6,300 and a benefit of $5,580 related to the change in valuation of contingent payment liabilities. In 2024, we recorded impairment of intangibles of $10,335 and a charge of $2,722 related to the change in valuation of contingent payment liabilities.
Income from operations in 2025 decreased to $80,771, or 3.2% of total revenue, as compared to $224,939, or 9.9% of total revenue, in 2024. The effective tax rate for 2025 was 36.9% compared to 23.7% in 2024. The difference between the Company’s effective tax rates was primarily due to non-deductible expenses related to the acquisition of the Kurt Geiger business.
Net income attributable to Steven Madden, Ltd. in 2025 was $44,661 compared to $169,390 in 2024.
Wholesale Footwear Segment
Revenue from the Wholesale Footwear segment for the year ended December 31, 2025 was $1,035,190, or 40.9% of total revenue, as compared to $1,059,440, or 46.4% of total revenue, in 2024. The decrease of 2.3% was primarily driven by tariff-related impacts on our off-price and mass merchant businesses, partially offset by incremental revenue from the acquisition of Kurt Geiger.
Gross profit in 2025 was $346,570, or 33.5% of Wholesale Footwear revenue, compared to $366,601, or 34.6% of Wholesale Footwear revenue, in 2024. The decrease in gross profit as a percentage of revenue was primarily driven by the impact of tariffs on goods imported into the United States. Gross profit in the current-year also included $4,650 related to the purchase accounting fair value adjustments of inventory in connection with the Kurt Geiger acquisition.
Operating expenses in 2025, were $192,244, or 18.6% of Wholesale Footwear revenue, as compared to $175,389, or 16.6% of Wholesale Footwear revenue, in 2024. The increase in operating expenses as a percentage of Wholesale Footwear revenue primarily reflects the deleveraging of operating expenses on a lower revenue base and our continued investment in marketing and advertising. The current-year included charges of $1,592 related to legal costs as a result of litigation settlements, $1,438 related to certain severances and termination benefits, and $97 related to acquisition costs and the formation of joint ventures. The prior year included charges of $1,161 related to legal costs as a result of litigation settlements, and $387 related to certain severances and termination benefits, and $278 related to acquisition costs and the formation of joint ventures.
In 2025, we recorded a benefit of $259 related to the change in valuation of a contingent payment liability.
Income from operations in 2025 was $154,585, or 14.9% of Wholesale Footwear revenue, compared to $191,212, or 18.0% of Wholesale Footwear revenue, in 2024.
Wholesale Accessories/Apparel Segment
Revenue from the Wholesale Accessories/Apparel segment for the year ended December 31, 2025 was $640,662, or 25.3% of total revenue, compared to $662,673, or 29.0% of total revenue, in 2024. The decrease of 3.3% was primarily driven by tariff-related impacts and a decline in our off-price business, partially offset by incremental revenue from the acquisition of Kurt Geiger.
Gross profit in 2025 was $196,232, or 30.6% of Wholesale Accessories/Apparel revenue, compared to $212,997, or 32.1% of Wholesale Accessories/Apparel revenue, in 2024. The decrease in gross profit as a percentage of revenue was driven by the impact of tariffs on goods imported into the United States. Gross profit in both years also included $6,603 and $435, respectively, related to the purchase accounting fair value adjustments of inventory from acquired businesses.
Operating expenses in 2025 were $137,183, or 21.4% of Wholesale Accessories/Apparel revenue, as compared to $111,206, or 16.8% of Wholesale Accessories/Apparel revenue, in 2024. The increase in operating expenses as a percentage of Wholesale Accessories/Apparel revenue was primarily attributable to the deleveraging of operating expenses on a lower revenue base, and our continued investment in marketing and advertising. The current year included charges of $3,372 related to legal costs as a result of litigation settlements, $449 related to certain severances and termination benefits, and $355 related to acquisition costs and the formation of joint ventures. The comparable prior year included charges of $1,335 related to legal costs as a result of litigation settlements and earnout-related litigation, $1,180 related to certain severances and termination benefits, $677 related to acquisition costs and the formation of joint ventures, and $326 related to working capital adjustments in connection with the Almost Famous acquisition.
In 2025, we recorded impairment of intangibles of $6,300 and a benefit of $4,415 related to the change in valuation of contingent payment liabilities. In 2024, we recorded impairment of intangibles of $8,635 and a charge of $2,722 related to the change in valuation of contingent payment liabilities.
Income from operations in 2025 was $57,164, or 8.9% of Wholesale Accessories/Apparel revenue, compared to $90,434, or 13.6% of Wholesale Accessories/Apparel revenue, in 2024.
Direct-to-Consumer Segment
Revenue from the Direct-to-Consumer segment for the year ended December 31, 2025 was $845,666, or 33.4% of total revenue, as compared to $550,153, or 24.1% of total revenue, in 2024. The increase of 53.7% was driven by incremental revenue from the acquisition of Kurt Geiger. We had a total of 399 brick-and-mortar stores as compared to 291 brick-and-mortar stores as of December 31, 2024. We also had seven e-commerce platforms. We operated a total of 133 concessions in international markets as of December 31, 2025, up from 42 concessions at the end of 2024. Through the acquisition of Kurt Geiger, we added 31 Kurt Geiger London full-price stores and 17 outlet stores, 14 Carvela full-price stores and 12 outlet stores, two e-commerce platforms, and 72 concessions.
Gross profit in 2025 was $494,076, or 58.4% of Direct-to-Consumer revenue, compared to $346,673, or 63.0% of Direct-to-Consumer revenue, in 2024. The decrease in gross profit as a percentage of revenue was primarily due to a purchase accounting fair value adjustment of inventory of $19,638 in connection with acquired businesses, the impact of tariffs on goods imported into the United States, and the addition of the relatively lower gross margin concessions business in connection with the acquisition of Kurt Geiger.
Operating expenses in 2025 were $529,378, or 62.6% of Direct-to-Consumer revenue, as compared to $314,003, or 57.1% of Direct-to-Consumer revenue, in 2024. The increase in operating expenses as a percentage of revenue was primarily attributable to acquisition-related transaction costs in connection with the acquisition of Kurt Geiger. The current year included $38,819 of compensation expense as a result of acquisition-related sellers proceeds which were reallocated from institutional sellers to management sellers in excess of their respective pre-acquisition equity ownership. The current year also included charges of $9,312 related to acquisition costs in connection with the Kurt Geiger acquisition and the formation of joint ventures, $1,453 related to legal costs as a result of litigation settlements, and $1,384 related to certain severances and termination benefits. The comparable prior year included charges of $5,090 related to acquisition costs and the formation of joint ventures, $3,199 related to a loss on the divestiture of a business, and $515 related to legal costs as a result of litigation settlements.
In 2025, we recorded a benefit of $906 related to the change in valuation of a contingent payment liability. In 2024, we recorded the impairment of intangibles of $1,700.
Loss from operations in 2025 was $34,396, or 4.1% of Direct-to-Consumer revenue compared to income from operations of $30,970, or 5.6% of Direct-to-Consumer revenue, in 2024.
Licensing Segment
Royalty income from the Licensing segment for the year ended December 31, 2025 was $12,591, or 0.5% of total revenue, compared to $10,661, or 0.5% of total revenue, in 2024. Operating expenses were $1,976 in 2025 compared to $1,600 in 2024. Income from operations in 2025 was $10,615 compared to $9,061 in 2024.
Corporate
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. Corporate operating expenses were $107,197 for the year ended December 31, 2025 compared to $96,738 in 2024.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flows from operations, cash, cash equivalents, short-term investments, and availability under our third-party credit facilities. Cash, cash equivalents, and short-term investments totaled $112,423 and $203,408 as of December 31, 2025 and December 31, 2024, respectively. Of the total cash and cash equivalents, as of December 31, 2025, $93,859, or approximately 83%, was held in our foreign subsidiaries. Of the total cash, cash equivalents, and short-term investments as of December 31, 2024, $119,569, or approximately 59%, was held in our foreign subsidiaries.
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 December 31, 2025, the total outstanding borrowings under our Credit Agreement in the form of cash borrowings and standby letters of credit were $240,000 and $2,200, respectively.
During 2025, the Company made voluntary early repayments of $60,000 on its term loan facility. These repayments were made using available cash on hand and were not contractually required. These repayments reflect the Company’s liquidity position and commitment to reducing leverage and interest expense over time.
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.
Cash Flows
A summary of our cash provided by and used in operating, investing, and financing activities was as follows.
Operating Activities
Cash provided by operating activities totaled $162,199 for the year ended December 31, 2025, compared to $198,096 in the prior year. The decrease was primarily driven by lower net income and unfavorable changes in working capital, partially offset by the timing of accounts receivable collections and changes in inventory levels.
Investing Activities
Cash used in investing activities was $400,919 for the year ended December 31, 2025, which consisted of $371,554 related to the acquisition of the Kurt Geiger business (net of cash acquired), capital expenditures of $42,658 for leasehold improvements, new stores, and systems enhancements and $260 primarily related to the acquisitions of joint ventures. This was partially offset by $13,553 related to proceeds from the sales of short-term investments.
Financing Activities
Cash provided by financing activities was $157,146 for the year ended December 31, 2025, which primarily consisted of net transaction-related borrowings of $240,000, partially offset by dividends paid of $60,962, financing costs paid of $8,955 in connection with the Credit Agreement, and net settlements of stock awards of $13,523.
Contractual and Other Obligations
Firm Commitments
Our contractual obligations as of December 31, 2025 were as follows:
Payment due by period
(in thousands)
Total
2031 and after
Operating lease obligations (1)
Purchase obligations (2)
Future minimum royalty (3)
Employment agreements (4)
Total
(1) Refer to Note 13 – Leases to the consolidated financial statements included in this Annual Report on Form 10-K 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 licenses agreement. Refer to Note 15 – Commitments, Contingencies, and Other to the consolidated financial statements included in this Annual Report on Form 10-K 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 $2,703 outstanding as of December 31, 2025 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 consolidated financial statements. Refer to Note 15 – Commitments, Contingencies, and Other to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.
Dividends
In February 2025, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on March 21, 2025, to stockholders of record as of the close of business on March 12, 2025. We paid total cash dividends for the three months ended March 31, 2025 of $15,186.
In May 2025, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on June 20, 2025, to stockholders of record as of the close of business on June 9, 2025. We paid total cash dividends for the three months ended June 30, 2025 of $15,250.
In July 2025, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on September 23, 2025, to stockholders of record as of the close of business on September 12, 2025. We paid total cash dividends for the three months ended September 30, 2025 of $15,256.
In November 2025, our Board of Directors declared a quarterly cash dividend of $0.21 per share on our outstanding shares of common stock. The dividend was paid on December 26, 2025, to stockholders of record as of the close of business on December 15, 2025. We paid total cash dividends for the three months ended December 31, 2025 of $15,270.
On February 24, 2026, our Board of Directors approved a quarterly cash dividend. The quarterly dividend of $0.21 per share is payable on March 20, 2026 to stockholders of record as of the close of business on March 11, 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
Management believes the following critical accounting estimates are the most significantly affected by judgments and assumptions used in the preparation of our consolidated financial statements: allowances for doubtful accounts; markdowns and chargeback allowances, co-op advertising allowances, customer returns; inventory valuation; the valuation of goodwill and other intangible assets; and contingent payment liabilities. Our estimates are made based upon historical factors, current and future circumstances and market conditions, and the experience and judgment of management. Assumptions and estimates are evaluated on an ongoing basis, and we may employ outside experts to assist in the valuation process of our intangible assets and goodwill.
Allowances for doubtful accounts. A vast majority of our customers’ receivable balances are protected under our factoring and collection agency agreements with Rosenthal & Rosenthal, Inc. (“Rosenthal”) and CIT Group/Commercial Services, Inc. (“CIT”), described in Note 17 – Factoring Agreements to the consolidated financial statements included in this Form 10-K. Under this agreement, Rosenthal assumes the credit risk resulting from a customer’s financial inability to make payment of credit-approved receivables. We also use risk insurance, letters of credit, and put agreements to mitigate credit risk for a significant portion of the receivables not covered under our Rosenthal and CIT agreements. The balance of receivables not covered under our factoring and insurance agreements is reduced by an allowance for amounts that may be uncollectible in the future.
The estimated allowance for doubtful accounts is based on an analysis of the aging of accounts receivable, assessments of collectability based on historical trends, the financial condition of our customers, and an evaluation of economic conditions. Differences in management’s estimation of the above factors could impact our results of operations and financial position. The balances of allowances for doubtful accounts are generally correlated with our revenues from wholesale customers whose receivables are not covered under our factoring and insurance agreements, and actual losses have historically been within our expectations and in line with the allowances we have established. The balances and activity in the allowances for doubtful accounts are presented in Note 19 – Valuation and Qualifying Accounts to the consolidated financial statements included in this Form 10-K. A hypothetical 5% increase in our allowance for doubtful accounts as of December 31, 2025 would have an immaterial impact on our operating expenses.
Markdowns, chargebacks, co-op advertising, and customer returns. As described in Note 2 – Summary of Significant Accounting Policies to the consolidated financial statements included in this Form 10-K, we provide variable consideration to our wholesale customers to maximize sales of our product on the retail floor, in the form of markdowns and chargeback allowances, co-op advertising allowances, and return reserves related to the current period sales.
a. Markdowns and chargeback allowances. We evaluate anticipated customer markdowns and chargeback allowances by reviewing several performance indicators for our major customers. These performance indicators, which include inventory levels on the retail floors, sell through rates to the end consumer, and gross margin levels, are analyzed by management to estimate the amount of customer allowances. We also discuss product performance with our retail partners on an ongoing basis to gather more intelligence to inform our estimation process. Differences in management’s estimation of the above factors from period to period could impact our results of operations and financial position. The levels of markdown and chargeback allowances are generally correlated with our revenues to wholesale customers. A hypothetical 5% increase in the reserve balance for markdowns and chargeback allowances as of December 31, 2025 would have decreased our 2025 revenue by approximately $1,450.
b. Co-op advertising allowances. Under our co-op advertising programs, we agree to reimburse the retailer for a portion of the costs incurred by the retailer to advertise and promote some of our products. We estimate the costs of co-op advertising programs based on the terms of the agreements with our customers. Differences in management’s estimation of the co-op advertising activity at our customers and the resulting amount of the reserve for these allowances from period to period could impact our results of operations and financial position. The level of co-op advertising support is generally correlated with our revenues to wholesale customers. A hypothetical 5% increase in the reserve balance for co-op advertising allowances as of December 31, 2025 would have an immaterial impact on our 2025 revenue.
c. Return reserve. Our Direct-to-Consumer segment accepts unworn returns within 30 days from the date of a sale, or 30 days from the date of delivery for online orders. We estimate a return reserve in the Direct-to-Consumer segment by establishing a return rate using historical returns data. The rate is then applied to eligible revenues recorded in the current period to calculate the reserve. We do not accept returns as a normal business practice in our wholesale segments, except for our Blondo®, Dolce Vita®, and Kurt Geiger® product lines. We estimate such returns based on historical experience and current market conditions. The level of returns is generally correlated with our revenues. A hypothetical 5% increase in the return reserve as of December 31, 2025 would have an immaterial impact on our 2025 revenue.
The balances and activity in the markdown, chargeback, co-op advertising allowances, and return reserves are included in Note 19 – Valuation and Qualifying Accounts to the consolidated financial statements included in this Form 10-K.
Inventory valuation. Inventories are stated at the lower of cost or net realizable value, on a first-in, first-out basis. We review inventory on a regular basis for excess and slow-moving inventory. The review is based on an analysis of the age and styles of inventory on hand, historical sales of the same or similar products, and expected net realizable value through future
sales. The analysis includes a review of inventory quantities on hand at period-end in relation to year-to-date sales and projections for sales in the foreseeable future as well as subsequent sales and discussions with both traditional and off-price retailers. We consider quantities on hand in excess of estimated future sales to be at risk for market impairment. The estimated net realizable value is determined based on the estimate of selling prices of inventory through off-price and discount store channels, department stores, and our own direct-to-consumer channel. The likelihood of any material inventory write-down is dependent primarily on the expectation of future consumer demand for our products, which is influenced by consumer trends, economic and market conditions, and weather patterns for seasonal goods. A misinterpretation or misunderstanding of future consumer demand for our products due to these or any other factors could result in inventory valuation changes compared to the valuation determined to be appropriate as of the balance sheet date.
In general, our inventory obsolescence estimates have historically been within our expectations and in line with the reserves established, and although possible, significant variation is not expected in the future. A hypothetical 5% increase to inventory reserves as of December 31, 2025 would have decreased our 2025 gross profit by approximately $1,200.
Valuation of goodwill and other intangible assets . We estimate and record the fair value of purchased intangible assets at the time of their acquisition. The fair values of these intangible assets are estimated based on independent third-party appraisals that are reviewed and approved by us. Goodwill and other intangible assets deemed to have indefinite useful lives are not amortized. These assets are tested for impairment at least annually, on the first day of the third quarter, or more frequently if impairment indicators are present. Intangible assets with finite lives are amortized over their estimated useful lives and tested for impairment if indicators are present.
Our annual impairment assessment of goodwill and other indefinite-lived intangible assets is generally performed using a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit or intangible asset is less than its carrying amount. Performance of the qualitative impairment assessment requires judgment in identifying and considering the significance of relevant events and circumstances including external factors, such as macroeconomic and industry conditions, and the legal and regulatory environment, as well as entity-specific factors, such as actual and planned financial performance, that could impact the fair value of our reporting units and indefinite-lived intangible assets. The results of our most recent quantitative tests are also considered in performing the qualitative assessment.
If the results of the annual qualitative assessment conclude that it is not more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset exceeds its carrying value, or if interim indicators of impairment are identified, a quantitative impairment test is performed.
A quantitative impairment test involves comparing the fair value of a reporting unit or intangible asset with its carrying value. If the fair value is less than the carrying value, an impairment loss is recorded for an amount equal to the excess of the carrying value over the fair value. For goodwill, the impairment loss is limited to the amount of the respective reporting unit’s allocated goodwill. Determination of the fair value of a reporting unit or indefinite-lived intangible asset is subjective in nature and involves the use of significant estimates and assumptions including consideration of external factors, such as macroeconomic and industry conditions, and the legal and regulatory environment, as well as entity-specific factors such as actual and planned financial performance. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the amount of any such charge. Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions. These approaches use significant estimates and assumptions, including projected future cash flows, discount rates, growth rates, and determination of appropriate market comparisons. It is possible that our conclusions regarding impairment of goodwill or other intangible assets could change in future periods if, for example, our businesses do not perform as projected or overall economic conditions in future periods vary from current assumptions.
Our annual impairment tests were last performed as of July 1, 2025, using a quantitative impairment test as described above, the results of which concluded that the fair values of its reporting units exceeded their carrying values and the fair values of its reporting units and indefinite-lived intangible assets exceeded their respective carrying values. No goodwill or intangible asset impairment charges were recorded as a result of our annual impairment tests during any of the years presented in this Form 10-K.
See Note 7 – Goodwill and Other Intangible Assets to the consolidated financial statements included in this Form 10-K for further details.
Contingent payment liabilities. We have completed acquisitions that may require us to make contingent payments to the sellers based on the future financial performance of the acquired businesses over a period from one to five years. The fair values of the contingent payment liabilities are estimated using the present values of management's projections of the financial results of the acquired businesses. Failure to correctly project the financial results of the acquired businesses could materially impact our results of operations and financial position. See Note 4 – Acquisitions, Purchases and Sales of Joint Ventures, and Divestitures and Note 5 – Fair Value Measurements to the consolidated financial statements included in this Form 10-K for further details.
