Sourcing Upheaval Is Giving Mass Retailers a Reason to Bypass Shoe Wholesalers

Shoe firms manufacturing private label lines for mass discounters could see challenges ahead.

For the better part of 2025, U.S. President Donald Trump’s trade policies and reciprocal tariffs have had shoe firms zigging and zagging as they navigated uncertainties connected to duties on imports. And while late summer saw many countries reach an agreement with the U.S. on parameters for reciprocal trade agreements, the last one to do so was China. In that deal, Trump promised not to raise tariffs at least through November 2026.

For retailers with private label lines, they usually work with a vendor who then deals with the upstream sourcing and supply chain process. But retailers who have the connections can work directly with factories too.

Private label in the mass distribution channel — think discounters — is undergoing change and challenge. That was evident in management meetings that Telsey Advisory Group (TAG) had with Steven Madden Ltd. this week. According to TAG’s chief investment officer Dana Telsey, “In the current costing environment given tariff pressures, some mass customers are opting to go straight to the factories.”

Telsey noted that in the lowest priced channel, Madden can’t compete on price, but what the shoe firm can do is inject fashion intelligence garnered from trends that are working in other channels. That, in turn, leads to better margins.

“Management has seen customers go direct in the past before ultimately returning for the fashion input, and therefore, this business could return again in this cycle,” Telsey said.

Still, until that happens, the expectation is that Steven Madden’s private label business that generated $415 million in Fiscal Year 2024 could see a $100 million hit in the two year through Fiscal Year 2026.

Telsey noted that as for Steve Madden the brand, “the brand heat is palpable.” Excitement is surrounding the brand as consumers are showing “renewed interest in tall shaft and casual boots.” Fashion sneakers will still be an important category, although market share has “begun to plateau.”

Telsey added that while Steve Madden was able to win with fashion sneakers, “boots and dressier styled categories are more advantageous terrain for the brand rather than competing against $80 Sambas and Adidas’ enormous marketing budget.”

For the third quarter ended Sept. 30, the shoe firm posted a net income decline of 62.9 percent to $20.5 million, or 29 cents a diluted share, on revenue that was up 6.9 percent to $667.9 million. Wholesale footwear revenue fell 10.9 percent, or 16.7 percent when excluding the Kurt Geiger brand, the $360 million deal that the company completed in May 2025.