Steven Madden, Ltd.

Good day and thank you for standing by. Welcome to the second quarter 2025 Steve Madden Limited Learnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Danielle McCoy, VP of Corporate Development and Investor Relations. Please go ahead.

Thanks, Stephen, and good morning, everyone. Thank you for joining our second quarter 2025 earnings call and webcast. Before we begin, I'd like to remind you that our remarks that follow, including answers to your questions, contain statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risk that could cause actual results to materially differ from those expressed or implied by such forward-looking statements. These risks include, among others, matters that we have described in our press release issued earlier today and filings that we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. The financial results discussed on today's call are on an adjusted basis unless otherwise noted. A reconciliation to the most directly comparable gap, financial measure, and other associated disclosures are contained in our earnings release. Joining me on the call today is Ed Rosenfeld, Chairman and Chief Executive Officer, and Zane Mazzuzzi, Chief Financial Officer and Executive Vice President of Operations. With that, I'll turn the call over to you, Ed.

Thanks, Danielle. Good morning, everyone, and thank you for joining us to review Steve Madden's second quarter 2025 results. As anticipated, the second quarter was extremely challenging. driven largely by the impact of new tariffs on goods imported into the United States. As we highlighted on the last earnings call, our team moved swiftly to adapt to the changing landscape, sharply diversifying our sourcing out of China, negotiating meaningful discounts with suppliers, and implementing surgical price increases. That said, wholesale customers canceled orders and reduced open to buys. Shipment delays led to lost sales and pushed deliveries to later periods. and organic gross margins declined due to the significant increase in our landed costs, resulting in substantial pressure on both revenue and earnings. Since the last call, our team has remained focused on mitigating near-term impacts while positioning the company for long-term growth. We've continued to move forward with our sourcing diversification efforts, although due to the agreement reached with the Chinese government to temporarily reduce the new tariff on Chinese imports from 145% to 30%, We have moved certain production for fall back to China, where we felt it would be difficult to ensure on-time delivery, appropriate product quality, and or reasonable pricing in an alternative country. For fall 2025, we currently expect to source approximately 30% of our U.S. imports from China, down from 71% for the full year 2024. We are also selectively raising prices to wholesale customers and consumers. So far, we've been pleased overall with consumer acceptance of the price increases, particularly on new fashion, but it's still early. We will continue to monitor the elasticity of demand carefully and react accordingly. While these short-term mitigating actions are important, our team's primary focus remains on positioning the company for long-term growth by executing our strategy to deepen consumer connections through the combination of compelling product and effective marketing. Our design teams are delivering strong assortments and we're seeing positive consumer response to new fashion offerings, particularly in the dress shoe and boot categories across both DTC and wholesale channels, including very strong performance in the Nordstrom anniversary event. And we are amplifying these assortments with marketing campaigns and initiatives designed to drive sustained brand heat and cultural relevance. In the flagship brand, We are capitalizing on Steve's appearance on fashion podcast, The Cutting Room Floor, which sparked viral interest on TikTok by continuing to rebalance our marketing spend across the funnel, increasing our investment in top and mid-funnel tactics, and diversify our spend by channel, expanding our investment in YouTube, Pinterest, and Snapchat. And these efforts are driving results with measurable increases in awareness and consideration for the brand with our key Gen Z and millennial consumers. Another key priority is integrating our new acquisition, Kirk Geiger, which closed May 6th. The Kirk Geiger London brand continues to have strong momentum, and we are more confident than ever in its potential to be a significant driver of growth for the company in the years ahead. The integration is proceeding smoothly, and our teams are making strong progress on work streams related to revenue synergies, including expanding Kirk Geiger in international markets through the Steve Madden Network and growing Steve Madden in the UK through the Kirk Geiger platform, as well as cost savings opportunities in areas like freight and logistics. So in sum, our financial performance in the second quarter was not up to our usual standards as we grappled with the impact of tariffs. And we know the path forward will continue to be bumpy in the near term. But as we look out further, we believe our core strengths, powerful brands, a robust balance sheet, and a proven business model, supplemented by a powerful new growth engine in Kirk Geiger, positioned us well to navigate the current disruption and deliver sustainable growth over time. And now I'll turn it over to Zeen to review our second quarter 2025 financial results in more detail.

Thanks, Ed, and good morning, everyone. In the second quarter, our consolidated revenue was $559 million, a 6.8% increase compared to the second quarter of 2024. Excluding the newly acquired Kurt Geiger, consolidated revenue decreased 10%. Our wholesale revenue was $360.6 million, down 6.4% compared to Q2 2024. Excluding Kurt Geiger, our wholesale revenue decreased 12.8%. Wholesale footwear revenue was $220.1 million, a 7.1% decrease from the comparable period in 2024. or down 11.7%, excluding Kurt Geiger. Wholesale accessories and apparel revenue was $140.4 million, down 5.3% compared to the second quarter in the prior year, or down 14.6%, excluding Kurt Geiger. The majority of the organic decline in wholesale revenue can be attributed to order cancellations, lost orders due to delivery delays or pricing, shipments moved out to the following quarter, and other impacts related to this disruption from tariffs. And our direct-to-consumer segment revenue increased 43.3% to 195.5 million. Excluding Kirk Geiger, our direct-to-consumer revenue decreased 3%, with declines in both the brick-and-mortar and e-commerce channels. We saw negative impacts to DTC revenue in the quarter from canceled and delayed deliveries due to tariff-related disruption as well as systems migration we completed in the quarter. Looking ahead to the third quarter, we expect a continued impact from tariff-related disruption, but the systems implementations are behind us and should not have a further impact. We ended the quarter with 392 company-operated brick-and-mortar retail stores, including 98 outlets, as well as seven e-commerce websites, and 130 company-operated concessions in international market. This includes 73 company-operated brick-and-mortar retail stores, including 27 outlets, as well as two e-commerce websites and 72 concessions related to Kurt Geiger. Our licensing royalty income was $2.9 million in the quarter compared to $1.8 million in the second quarter of 2024. Consolidated gross margin was 41.9% in the quarter, compared to 41.5% in the comparable period of 2024. The impact of tariffs, net of supplier discounts, resulted in 230 basis points of pressure to gross margin. This was offset by a significantly greater mix of higher margin DTC business compared to the prior year, due mostly to the acquisition of Kurt Geiger, and a mixed shift to DTC in the existing business. Wholesale gross margin was 31% compared to 33.1% in the second quarter of 2024, due primarily to pressure from tariffs. Direct-to-consumer gross margin was 61.3% compared to 64.3% in the comparable period in 2024, due primarily to the addition of Gehrgeiger, which had lower DTC margin in the quarter than the existing business, driven by the concessions business as well as pressure from tariffs. Operating expenses were $211.6 million or 37.9% of revenue in the quarter compared to $162.8 million or 31.1% of revenue in the second quarter of 2024. Operating income for the quarter was $22.6 million or 4% of revenue compared to $54.5 million or 10.4% of revenue in the comparable period in the prior year. The effective tax rate for the quarter was 25.6% compared to 23.4% in the second quarter of 2024. Finally, net income attributable to Steve Madden Limited for the quarter was 13.9 million or 20 cents per diluted share compared to 41.2 million or 57 cents per diluted share in the second quarter of 2024. Moving to the balance sheet, our financial foundation remained strong. As of June 30, 2025, we had $293.5 million of outstanding debt and $111.9 million in cash, cash equivalents, and short-term investments for a net debt of $181.6 million. Inventory was $437 million compared to $241.6 million in the second quarter of 2024, excluding Kurt Geiger, Inventory increased 1% compared to the same period last year. Our CapEx in the second quarter was $7.7 million. And during the second quarter, the company did not repurchase any shares of its common stock in the open market. The company's board of directors approved a quarterly cash dividend of $0.21 per share. The dividend will be payable on September 23, 2025 to stockholders of record as of the closing Due to the continued uncertainty related to the impact of new tariffs on goods imported into the United States, we will not be providing 2025 financial guidance at this time. Now, I would like to turn the call over to the operator for questions. Stephen?

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Paul Lejouis of Citi. Your line is now open.

Hey, thanks, guys. I'm curious if you can talk about which channels of wholesale where to see the significant order cancellations that impact the 2Q, and how is that ordering behavior change as we've gotten a little bit more clarity on the tariff front? I think you mentioned some shipment timing. So if you can maybe just talk about that a little bit more. And then also on gross margin pressure in the core business in the second quarter that you saw as a result of higher tariffs, can you frame maybe what you expect in 3Q and 4Q relative to the 2Q pressure?

Thanks. Okay, great. Good morning.

So in terms of the channel's that saw the pressure from the tariff-related disruption. It was really very concentrated in the value price channels, so specifically the mass channel and the off-price channel. And I can tell you, actually, that nearly, if you look at the wholesale revenue shortfall in the organic business versus last year, approximately 95% of that shortfall came from off-price and mass. So I think that really illustrates the story there. In terms of how that's looking going forward, I think we're going to see continued pressure on those channels going forward. It should get better. There was a complete pause for a period there, and both those channels are now once again taking in goods and placing forward orders. But you will see an impact in Q3 as well. In terms of the gross margin pressure from tariffs, again, we articulated that was about 230 basis points. That's not the gross. That's the net after we got the supplier discounts for Q2. Look, we're not providing guidance going forward, so we're not going to be specific there, but I think that you're still going to see a significant impact, certainly in Q3. Hopefully by Q4, that number will start to get smaller.

Does 3Q mark the weakest point in terms of the tax impact on gross margin?

Is that 3Q? Again, I'm not going to try to get specific, and there's so many moving parts here, but certainly I don't think it will get better.

Got it. Thank you. Thanks.

Thank you. Our next question comes from the line of Aubrey Tienelo of BNP Paribas. Your line is now open.

Hey, good morning. Thanks for taking the questions. I wanted to go back to your comments on price and just if you could maybe comment a little bit on just the consumer response to price increases, what you're seeing in terms of elasticity maybe by product category. And I think last quarter you mentioned price increases on average about 10%. Is that still the way we should think about it given the change in tariffs?

Yes. We are still looking at average price increases of 10%. Again, that's not a one-size-fits-all number. We're looking at this on a style level. But in average, we're looking at prices up about 10%. So far, I think we've been pretty pleased with the consumer acceptance of the price increases that we flowed through. It's been pretty much what we expected, that we've seen very little resistance on new fashion items, and particularly in the categories that are really trending, like dress shoes and our summer boots that have been performing very well for us. And I would say where we think there's less ability to take price was in the sandal category and in fashion sneakers. But, you know, I do want to caution you that it's still early because, you know, we started to layer in these prices in May, but on new deliveries in May. Now, that's really at the end of the season. And then, you know, and then you go into sort of a markdown period. So we really won't know uh you know i think we'll know a lot more i should say once we get fully into the fall season and you've got all the new deliveries in fall at the higher prices and and also you know you'll have our competitors will have their products out at we believe higher prices and we'll see what the consumer does then got it and then and maybe on kurt tiger you've called it out as being on a journey to being a billion dollar brand

Now that you've owned it for a few months, can you talk about some of the things you've learned and how you're thinking about that path to potentially getting to a billion in revenue from Kirk Dyer?

Yeah, look, I mean, I think that we feel better than ever after having spent more time really digging into the business here, working with the team. It's a very strong team. And we just believe that the brand has tremendous runway. You know, the U.S. business has been such an incredible growth story for them over the last several years, but it's just scratching the surface of what it can be. And frankly, there's still relatively low brand awareness. So one of the things that we really have to do in the coming years in the United States is to build that brand awareness. I think that retail stores will be an important part of that. You know, they've opened now six retail stores in the U.S. that are performing very well. So I think that'll – and they're beautiful stores and really communicate – You know, it's really the best expression of what the brand is about. And I think communicates to the consumer what the Kurt Geiger lifestyle is about. So that'll be a part of the story. Obviously, there'll be some marketing investment. You know, I think we'll focus on full price stores initially. But clearly, I think there's an outlet store opportunity that should be big and profitable over time. You know, they've got a very good wholesale business. in the United States with limited partners. And they've built a big business with just a handful of partners. And so I think there's some nice opportunity to grow that as well. And then, of course, the digital business is – I probably should have said that first because that's, you know, extremely important and has extremely strong momentum. And so we're going to continue to fuel that. So that's the U.S. story, I think. But there's also a huge opportunity around the world, because obviously they've got a very strong business in their home market of the UK, but relatively early stages of their growth in the rest of the world. And we've talked about Europe as being a huge opportunity for them. They're positioned in the key distribution points. image accounts in most of the key European markets, and the brand is seeing very strong demand. So we know it resonates, but there's a big opportunity now to expand the distribution, thoughtfully, of course, and really start to build that business. And then we've talked about they're having a lot of success in Mexico, for instance, but there's tremendous opportunity The rest of Central and South America, I should say. And then Asia is really untapped. So just tons of runway really all over the world with the spread.

Great. Thanks so much. Thank you.

Thank you. Our next question comes from the line of Marnie Shapiro of the Retail Tracker. Your line is now open.

Hey, guys. Thanks, and thanks for all the information. And I was wondering if you could just talk about a couple of quick things. The apparel business, I know it's a smaller part of the business, but you have an improving footprint in several stores and the product flow has been consistent and very good. So I'm curious if you could talk a little bit about that. And then also just touching back on the boot business, you had a strong boot business in spring. I was curious if it held through summer and as we sort of turn the corner to back to school, what are you seeing as far as boots versus sneakers and just, you know, your instinct as to where the business is going for back to school.

Sure. Yeah, no, I appreciate your comments about Steve Madden Apparel because we're proud of the progress that we're making there. That was one of the few businesses that was up for us in the quarter. So even in this tough environment, we had a nice revenue growth in Steve Madden Apparel. As you pointed out, we've, you know, been growing slowly expanding the distribution there and keeping it in premium distribution, the regular price distribution, but expanding the footprint there, expanding our assortments within existing doors. And most importantly, the product is selling through and the team is doing a great job. So excited about the path that we're on there. And then you asked about boots. And yeah, that was really a highlight for us, has been a highlight for us this year. spring and summer is the performance of boots. You know, it's really not such a seasonal category anymore. You know, girls are wearing a lot of boots, you know, with dresses and shorts and skirts and at this time of year. And, you know, I think we've really nailed that. It's a bigger play for us in our DTC channels than in wholesale because some of the wholesale partners haven't fully gotten on board with the way consumers are shopping right now. But it's been very successful for us. These are primarily tall-shaft boots. Western, Moto, et cetera, have been very good for us. And so we feel good about boots going forward. And to your point, we've seen more energy in that category. That's been on the upswing, whereas the fashion sneaker category has softened a bit. That makes sense.

And then could you just follow up? I think you said it was the off-price and the mass business that was slowing down. And I think you mentioned very briefly, one of you guys mentioned briefly some cancellations. Were the cancellations coming out of the mass area? And is it their customer or is it just their caution or price increases that they can't take? I'm curious what they're saying and seeing versus what the department stores are seeing.

I would say there were cancellations across stores. Although, again, you know, the biggest issues were in mass and off price. Particularly in Q2, I just want to point out with the mass channel, because we do that, a lot of the business that we do in those channels on an FOB basis, where our customers are bringing the goods in and they are the important record and therefore they are responsible for the tariff. certainly when we were looking at 145% tariffs out of China, they were canceling a lot of merchandise. So that was a lot of what you're seeing there.

Okay, thank you.

Thank you. Our next question comes from the line of Sam Poser of Williams Trading. Your line is now open.

Hey, everybody. Thank you for taking my question. Good morning. I just want to follow up on that last question. You talked about, you know, what, 95% of the downdraft was from those channels. Were there channels that were up in the quarter, and if so, what, within wholesale? Or brands that were up, like Steve Madden, the core Steve Madden business, or Dolce, and so on?

I think pretty – oh, Betsy Johnson was up in the quarter. They were really outperforming. There, the team's doing a great job with the product there. Other than that, I think the key brands and channels were down in the quarter.

And moving on to the sourcing, you were moving some product to Brazil, and now Brazil looks like an absolute headache. So how are you thinking about the shifting of sourcing? Because I thought Brazil and Mexico were going to become a much larger part, but now it looks like a 50% tariff might put a kibosh on some of that in Brazil. So I was wondering where you're going with that. Yeah, to your point, we were focused on moving a lot of product to Brazil.

We're going to have to wait and see what happens. I think that that really goes not just for Brazil, but for a lot of the countries that we work with. So we've tried to create a more diversified sourcing footprint. But there's obviously a lot of uncertainty still about where the ultimate tariff rates will land by country. And so we're going to have to wait and see what happens and then react accordingly. That's all we can do.

And I know you're not guiding, but when we look, it sounds to me like from a wholesale perspective, excluding Kurt Geiger, it looks like the back half of the year, Q3 will look similar to Q2 and Q, you know, maybe slightly less worse. And then there could be, I mean, how are you sort of thinking about it? I mean, I know you don't want to give us guidance, but how are you sort of thinking about the responses that you're seeing and so on right now, more on the wholesale side of things?

Well, yes, we're not giving guidance, but I think you should assume that there will be continued impact from the tariff-related disruption.

I think that's all, as much as we're going to say about that. And have you seen it hit the consumers yet? Or is this more like nervousness from your wholesale partners ahead of what they're nervous about with consumers, if that makes sense?

Overall, I think the consumer is basically hanging in there. I would say it's not the most robust consumer spending environment for fashion I've ever seen, but it's okay.

And then lastly, within your DTC business, ex-Kurt Geiger, can you talk about maybe a variance between what the store comps were and your e-commerce comps were in the DTC business? Did the stores outperform e-commerce, or did e-commerce from a year-over-year outperform? E-commerce was... e-commerce was quite a bit better than stores. For the core, Steve Madden, excluding Kurt Geiger. Correct. Thank you very much. Thanks, Tim.

Thank you. Our next question comes from the line of Corey Tarlow of Jefferies. Your line is now open.

Great. Thanks, and good morning. Just had a question for you on inventory. Is there any way to dimensionalize what was AUR versus units and the Kirk Geiger acquisition, just so we can have a bit of a more color and dimensionalization of what that up significantly number, what that number kind of dissects into? Thank you.

Yeah. Look, if you back out Kirk Iger, the inventory was only up 1% versus the Q2 of last year. And keep in mind, there's a couple of things impacting that. One is the tariffs that we pay, those inflate the inventory value or increase the inventory value. And then also, there's an impact in transit from longer transit times. and um there's really two pieces to that uh one is as we diversify you know the transit times for our sourcing the transit times from cambodia for instance are longer than the transit times from china uh and then also they're just because of the overall disruption there's uh sort of apples to apples increase in transit time so china to china is a little bit about three days longer and so does cambodia than it was a year ago so those are really the the two reasons uh If you back those out, our inventory year over year, excluding Kirk Iger, is really right in line with the revenue decline.

Okay. That's really helpful. I was wondering, could we also just run through a similar exercise with the OPEX as well? Because that was also up quite substantially, and it would be good to get a bit more color as to kind of what drove that. Yeah, excluding Kirk Iger, OpEx was up a little less than 3%. Okay. That's very helpful. Thank you very much. Really appreciate all the color. Thanks.

Thank you. Our next question comes from the line of Janine Stichter of BTIG. Your line is now open.

Hey, good morning. You have Ethan Saggy on for Janine. For my first question, I was just wondering on Kurt Geiger, could you provide some more color on how the brand has performed since the acquisition closed as well as the current margin profile for the brand and where China sourcing sits today compared to the 80% number you gave last call?

Yeah, yeah, the brand, the brand continues to perform. As I mentioned, we continue to see very strong growth, you know, double digit, strong double digit growth in digital, particularly in the US, very strong performance and momentum there. As I mentioned, the new stores that they've opened are performing extremely well ahead of where we expected them to be and on track to drive very strong four-wall profitability. And then the brand is comping positively in the home market of the UK and its existing footprint. So I continue to feel very good about the momentum there. In terms of the margin profile, Again, look, we're not providing guidance, but what we've said, just to remind you, is that last year the business had EBIT margins of about 9.3%. That was in the year prior to our acquisition of them. We do expect that number to come down a bit this year because of pressure from tariffs. But obviously, over time, we think we can, you know, this will be, you know,

double digit and then profitability.

Got it. And then on the China sourcing, just where it sits today compared to the 80 percent number you gave last call.

Oh, yeah. I'm sorry. Yeah. So I think that they're in the low 60s currently out of China.

Got it. Thanks so much.

Thank you. Our next question comes from the line of Anna Andreeva of Piper Sandler, your line is now open.

Great. Thanks so much. Good morning, guys. To Zain, just a follow-up on DTC on systems implementation. Did you say what that impact was to the second quarter? And curious, what are you guys seeing in the DTC business quarter to date? And then to Ed, you've talked about getting back to double-digit margins in the past. Can you just talk about how we should think about that path of a margin recapture and just any time frame that you guys could provide. Thanks so much.

Sure. Yeah, I'll take those. So in DTC, yeah, we did do a – we completed an ERP implementation in their DTC business and also a new POS in Q2. And I think the team did a great job, but as always, there's going to be a little bit of disruption. There were certain – Related to sort of moving inventory around, and we were limited in what we could do from an allocation standpoint for a period. Couldn't do the fulfilling e-commerce orders from stores from a certain point. What we call send sales, where we take an order in a store and send it from another store. At any rate, we were limited for a period of time. We estimate that hit us about 110 basis points of comp in the quarter, something like that. And then we also had inventory disruptions from tariffs in the quarter. That was probably another 160 basis points or so because we canceled orders or had delayed orders because of the tariff disruption. So, you know, that did impact DTC in the quarter. But the good news is the system stuff is completely behind us and we don't expect that to impact us going forward. And we have seen, you know, a a slight improvement in July versus Q2 in terms of comp quarter to date. In terms of getting the overall margins, EBIT margins back to double digits, look, there's no way we could provide any kind of timeframes right now with all the uncertainty until we understand what the tariff regime is and can react to that, you know, we can't provide any color around that. But as soon as we know what the rules of the game are, we'll be happy to tell you the path and the timing.

Okay, that's very helpful. Thank you. And just as a follow-up, do you think KG should be a higher margin business over time than the core business?

I certainly think there's an opportunity for it to be, yes.

All right, fair enough. Very helpful. Thank you, guys.

Thank you.

Thank you.

Our next question comes from the line of Tom Nickick of Needham. Your line is now open.

Hi, this is Matt Quigley on for Tom. Thanks for taking our question. Can you just talk a little bit more about how the international business performed in the quarter, excluding Kurt Geiger? You've seen any differences in performance by region. Thanks.

Yeah, we continue to see nice performance in our international business, excluding Kirk Iger. It was up about 8% in revenue or about 10% constant currency in the quarter. And we're on track to have high single-digit growth for the year in dollars, again, double digits in constant currency. And it's really, we're seeing growth across all of the three primary regions, so EMEA, APAC, and America's ex-U.S., all on track to see that kind of high single-digit type growth in U.S. dollars.

Got it. Thanks.

Thank you. Our next question comes from the line of Dana Telsey of Telsey Advisory Group. Your line is now open.

Hello. Hi, everyone. As you think about current trends, Ed, how was the Nordstrom anniversary sale? Is there any indicators from that? As I've always thought about it as a read forward to potential holiday and what you're seeing. And then when you think about the trends at Kurt Geiger and what you're seeing sell through there, how is it different or the same of what you're seeing with your brand? Thank you. And then I'll follow up.

Yeah, the Nordstrom anniversary event went very well for us. We're really excited about what we saw there. I think it was the best sell-through performance that we've had in that event in a number of years. And so that gives us a lot of optimism going forward about fall and the products that our design team is creating. In terms of Kirk Geiger's sell-through, again, continues to be very strong, as we said, overall. And it's just a brand with very good momentum. But we're seeing good, strong sell-through in Steve Madden and Dolce Vita and other brands as well.

Got it. And then on Kirk Geiger, the small portion that is in the U.S., are you increasing the prices a similar amount to what you're increasing for Steve Madden? And when does distribution of Kurt Geiger in any format, how do you see that expanding in the U.S. in terms of timing-wise? Is it this year, next year?

Yep. In terms of price increases, it's pretty similar to what we're doing in our other brands, maybe a little bit more in Kurt Geiger. I think we have a little bit more room there, and so we'll probably test going a little bit higher there. And then in terms of distribution, I think in the U.S., the big difference would be just opening more of our own retail stores in the coming years.

Thank you. Thank you.

Our next question comes from the line of Jay Soule of VBS. Your line is now open.

Hi, this is Natalie Colterman on for JSOLE. Thanks for taking our question. I wanted to ask about the amount of inventory you have on hand, especially for inventory coming from non-China. Do you have enough to last you through Q3 before the higher rates we're seeing from Cambodia, Vietnam, and other countries go into effect? Or when would you expect the higher rates to kind of start flowing through the P&L? Thank you.

Yeah, most of what we're going to deliver in Q3 would not be impacted. But as you know, we turn our inventory very quickly. And, you know, particularly in our wholesale business, you know, we turn our inventory in and around 10 times a year. And so we do, you know, feel these impacts from tariffs when they're implemented and earlier than others because we're bringing goods in and shipping them right out.

So just keep that in mind.

Great. Thank you.

Thank you. I am showing no further questions at this time. I would now like to turn it back to Ed for closing remarks.

Okay. Well, thanks so much for joining us today. We hope you all have a great day. We look forward to speaking with you on the next call.

All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.