Steve Madden’s shoe empire is only ‘halfway’ in the Middle East
Steve Madden, founder and design chief of the namesake US shoe empire, said his brand has only “halfway penetrated the Middle East” and sees opportunity for more growth in the region.
There are 40 Steve Madden stores in the GCC, including 18 in the UAE, 11 in Saudi Arabia, and two to three in each of the other countries in the Gulf.
“The Middle East is very important,” said Mr Madden in Dubai at an event to celebrate the brand’s 30th anniversary. “There are parts of the Middle East that we have not penetrated.” There are plans to open 12 more in the coming year through the brand’s franchise operator Landmark Group.
“The bulk of the growth is going to be coming in Saudi Arabia,” Dinesh Shahani, chief operating officer of Landmark Group’s Shoemart International, told The National. “The upside potential is to add 20 stores over the next two, three years there.”
There are a total of 227 Steve Madden retail stores, including eight online stores, in the US and internationally.
Mr Madden founded the footwear brand in New York in 1990 with an investment of $1,100 (Dh4,440), selling shoes from the boot of his car. Three years later, his company opened its first store and became a publicly traded company on the Nasdaq.
Despite Mr Madden serving a 30-month stint in prison in 2002 for stock manipulation and securities fraud and being forced to resign as chief executive, the company has grown exponentially since then – with $1.65 billion in net sales last year.
Now there are new challenges – including the effect of China tariffs and a need to adapt to a changing retail environment due to e-commerce.
“Right now we have a supply chain challenge,” Mr Madden said at the event in Dubai Mall on Sunday. “We make shoes all over the world – we make shoes in Europe, Mexico, Brazil but we make a lot of shoes in China.”
About 85 per cent of the company’s shoes are produced in China, a number it hopes to shrink to the 60s, according to its third quarter earnings call last month.
Chief executive Edward Rosenfeld said then that tariffs have resulted in the retailer moving some production out of China, working with suppliers to gain price concessions and raising selling prices. For consumers, that means higher prices for footwear in the “mid-single digits on average going into spring”, Mr Rosenfeld said.
Steve Madden estimates a negative impact of $0.02 per share due to Mr Trump’s fourth set of tariffs, in addition to the $0.05 per share loss from the third set of US tariffs.
As for the effect of e-commerce, the brand’s biggest store worldwide at 370 square metres in the Dubai Mall is proof that “we still think stores are important”, Mr Madden said.
“But certainly, people are shopping from their phones,” he said. “What you have to be clever about is how stores look in the future, how you truly become omni-channel, which is something we’re working on.”
Mr Shahani of Landmark Group said the average Steve Madden store in the region was 110 to 120 square metres, but the new ones will all be more than 185 square metres.
“You have to be careful. You can’t just open stores blindly anywhere,” Mr Shahani said. “There will be a tendency to open fewer stores, but bigger and better stores – stores that offer a better experience.”
Steve Madden is the fastest growing brand in the franchise portfolio of Landmark, which operates more than 2,300 outlets in the Middle East and Indian subcontinent.