Large retailers are pushing back on Steve Madden’s (SHOO) double-digit price hikes, shifting towards more private-label options and direct-to-factory procurement, a problematic development that led Jefferies’ Corey Tarlowe to downgrade the stock to Underperform from Hold and cut its target price 23% to $30.
“We think SHOO’s price increases have reached a point where many of the company’s largest accounts—Walmart (WMT), Target (TGT), and TJ Maxx (TJX)—are pushing back directly on price, and in some cases, bypassing wholesalers entirely by going straight to factories,” Tarlowe says.
With ~70% of Steve Madden’s (SHOO) business tied to wholesale sales and a large portion concentrated in these three major retailers, Tarlowe sees a “material headwind” that is not fully reflected in the stock, resulting in a reduction to his FY26 wholesale revenue estimate by ~$250M from a base of ~$1.8B.
As large retailers move towards private-label brands and buying direct from the factory—what Tarlowe calls a “broader reevaluation of COGS management”—Steve ”Madden’s (SHOO) price increases are less likely to be accommodated, and order volumes may remain constrained until price points realign with demand.
This will result in multi-quarter pressure on margins and revenue for SHOO as orders slow and pricing concessions increase.
To counter higher costs from tariffs on items manufactured in China (comprising nearly 70% of all merchandise), Steve Madden (SHOO) raised prices by ~10% on most items last fall. The company subsequently employed aggressive efforts to shift production to Mexico, Brazil, Vietnam, and Cambodia, though still faces import tariffs of as much as 40%.
During the company’s most recent earnings call with analysts, management acknowledged the impact import tariffs were having on orders.
“In April and May, when new tariffs on Chinese imports reached 145%, wholesale customers cut back meaningfully on orders for the third quarter, and we shifted large amounts of production out of China midstream, which led to shipment delays,” CEO Edward Rosenfeld said on the call, attributing the “substantial” pressure on Q3 revenue and earnings to these factors.
Tarlowe cut his FY26 EPS forecast to $2.00 versus $2.40 consensus estimates with risks “skewed to the downside.”
The downgrade is furthering SHOO’s recent losses, with the stock down another 10% Thursday, bringing its three-day loss to 24%.