Urban Outfitters Fails to Impress in Q2
● Fashion misses and too much of the same thing caused sales declines, executives say.
Urban Outfitters is working on its comeback.
The teen retailer, parent company to the Anthropologie Group, Free People, a food-and-beverage business, as well as its namesake brand, reported secondquarter earnings Tuesday after the bell, falling short on both top and bottom lines, but beating analyst expectations.
The company’s stock teetered between positive and negative during after-hours trading as a result.
“This quarter will not be remembered as one of URBN’s finest,” Richard Hayne, chief executive officer of the company, told analyst on the conference call that evening.
More precisely, sales decreased 3 percent to $962 million during the three-month period ending July 31. That’s down from $992 million the same time last year. By brand, sales declined at all three retailers during the second quarter, only increasing at the company’s food business. Earnings also fell compared with 2018’s results. Income for the quarter was $60.3 million, compared with $92.8 million the same time last year.
The declines were driven by misses in the women’s apparel business and what Trish Donnelly, chief executive officer of the Urban Outfitters Group, called “too much of the same idea.”
The one bright spot appeared to be
Free People, which had a comparable sales increase of 6 percent for the first six months of the year.
Hayne added that third-quarter to-date comp sales are positive along all three brands thanks to the strong momentum in back-to-school shopping and shoppers, who are reacting positively to the fall apparel assortment.
“What we know is that she is eager to spend when products are right,” Hayne said. “There’s a lot of fashion out there to drive comps. This is a very, very good time for fashion.”
He added that the only negatives in front of the company are political — trade wars and Brexit — but said that if the tariffs do go into effect, the company has the ability to raise prices only slightly.
“I don’t think anyone would notice,” Hayne said.
Meanwhile, company shares are down more than 46 percent year-over-year.
Urban Outfitters launched Nuuly, a monthly rental subscription service, this summer in an attempt to increase market share and drive sales. It was also an attempt to tap into the lucrative rental and resale apparel market, one that currently includes Rent the Runway, Bloomingdale’s, Amazon and Banana Republic, among others.