Shares of Steve Madden (SHOO) plummeted 9% on Thursday after Jefferies downgraded the stock to Underperform. The firm also slashed its price target to $30, citing persistent pressures in the company's wholesale business. Roughly 70% of Steve Madden's sales come from wholesale accounts. This decline signals growing concerns about future earnings.

Jefferies analysts are worried about the impact of retailers bypassing wholesalers, opting for direct sourcing or private-label programs. They anticipate this will limit Steve Madden's pricing power and weigh on margins. The brokerage lowered its 2026 wholesale revenue estimate by $250 million, and reduced its EPS forecast to $2 from the consensus $2.40.

With limited direct-to-consumer exposure, Steve Madden has few options to offset these wholesale headwinds. Jefferies believes the stock could fall further if order reductions intensify. Investors should watch how the company navigates these challenges and if it needs to adjust its pricing strategy to maintain wholesale volumes.

This downgrade reflects broader trends in the retail sector, where brands are grappling with shifting distribution models. The footwear industry is particularly susceptible to these pressures, making Steve Madden's strategic decisions critical for its long-term performance. The company’s heavy reliance on wholesale channels makes it vulnerable.