Steve Madden remains a big believer in brick-and-mortar retailing and he’s demonstrating that again this year.
“Our stores are my bread and butter. I go as often as possible. I like to see what people are gravitating toward, what they are wearing, and how they move through the store,” Madden, the founder, creative and design chief of the company bearing his name, told WWD. For the shoe guru, retail spectating, “is one of my favorite past times.”
Despite a tough global economy where retail sales are softening and most brands hesitate to green light serious store expansion, Madden and his team are bullish on store openings, particularly in the international arena where most of the brand’s brick-and-mortar growth is happening.
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“We are adding about 20 new stores each year, the bulk of which are happening in international markets,” said Josh Krepon, Madden’s president of U.S direct-to-consumer and global digital. Of those, “Most of our openings are weighted toward full price formats,” rather than outlets, Krepon added. Seventy-five percent of the fleet is full-price stores; 25 percent is outlets, most of which are in the U.S.
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Growing the retail fleet could help offset declines in the wholesale side of the business. Retailers, grappling with excess inventories and consumers reducing their spending on discretionary items, have been getting very conservative in their ordering, impacting Steve Madden and other brands dependent on their wholesale accounts for much of their business.
In the company’s first fiscal quarter, revenue decreased 17.1 percent to $463.8 million from $559.7 million in the same period of 2022, and net income was $36.7 million compared to $74.5 million in the year-ago period. Executives cited “a choppy retail environment, conservative order patterns from our wholesale customers, and difficult comparisons with the prior year, though results beat expectations. Wholesaling was down 19.3 percent, while direct-to-consumer, which included the brick-and-mortar and e-commerce operations, slipped 8.1 percent.
Currently, there are 235 Steve Madden stores operating. About half of the stores are in the U.S., half are abroad in Canada, Mexico, Europe, the Middle East and South Africa.
By the end of 2023 there will be 250 to 254 Steve Madden stores operating, with the international segment seen eventually overtaking the size of the U.S. fleet. Of the overseas stores, 14 are franchised.
Asked if the company has a vision for how many stores could ultimately operate, Krepon replied, “l don’t think we really put any number on it,” though he added, “In the U.S., we feel we are pretty right-sized. We have a pretty healthy fleet size in the U.S.,” where there are about 120 units.
Stores are roughly 2,000 square feet on average and include women’s and men’s footwear, representing about 75 percent of the merchandise, and handbags. Some stores also sell apparel.
“Retail is an important way to grow. It remains to this day an important strategic part of the company,” Krepon said. “Steve is still living in the stores and learning from customers and interacting with them.”
Among the upcoming openings this year: 270 Oxford Street in London in August; 1400 Wisconsin Avenue NW in Georgetown, Washington, D.C., in September; The Mall at Green Hills, Nashville in September; International Plaza in Tampa in October.
Madden recently relocated its SoHo store in Manhattan to 494 Broadway from 540 Broadway, enabling an updating of the space, and last year opened a year-round location at 95 Main Street in Southampton, New York. “I’ve been coming out here since 1989 and I love it,” said Madden of the Hamptons. “But I never wanted to open out East because I didn’t want to ever mix my happy place with a store. That said, the Hamptons are an international fashion center now and we need to be here.”
The Southampton store is bright and has a beachy feel, and was refreshed for the summer 2023 season to create more of a Steve Madden vibe. The front main area is light with pops of color and Madden’s famed big head girl posters were printed for this location. The side space was transformed into a Hamptons Clubhouse with a teal wall of shoes, a Pac-Man arcade, and a place to win some swag from the Steve Madden-branded claw machine. The store’s merchandising focuses on resort sandals, as well as platforms and cowboy boots.
“We don’t take a cookie-cutter approach,” Krepon said. “It’s bespoke by market.” The visual and store design are done in-house.
“When building out a new location the team takes design cues from the city itself. Details down to the color of the walls reflect the story of the city, while the format of the store caters to the local customer. It’s all done intentionally to ensure the product is the star of the show in a way that is recognizable to the store’s neighborhood,” said Krepon.
Regarding traffic in the stores, he said, “Right now we are trying to figure out what the new normal looks like. It may a little bit better, though it’s too early to say with any confidence that retailing will change in one direction or another, but we are in a good place to handle the headwinds.”
Asked what the company is doing to drive more traffic to the stores, Krepon replied, “It just comes down to product and merchandising, investing in our people, keeping our marketing investment steady, and being really focused on retail exclusives, with 25 to 50 percent of the store, depending on the season, offering styles not offered at wholesale.
“Our stores are profit centers,” Krepon said. “We’ve done a lot of work to get them to that point.”