Urban Outfitters Bullish While NRF Economist Signals Caution
● The stronger players in retail continue to feel good, while broader economic concerns linger.
While some companies are feeling pretty good heading into 2024 — witness Urban Outfitters Inc., which gave investors a bullish reading at the ICR Conference in Orlando — there's still more than a hint of caution in the consumer space.
The National Retail Federation's chief economist Jack Kleinhenz noted in his monthly economic review that consumers could be losing some steam after spending through inflation and higher borrowing costs last year.
“Those tailwinds are not necessarily sustainable,” Kleinhenz said. “Tighter credit conditions along with higher borrowing costs continue to be in place now that we've turned the page on the annual calendar, and employment reports confirm that the labor market expansion is slowing.”
Kleinhenz said: “The labor market looks set to cool further this year, which will impact consumer expectations for employment and wage growth, and, in turn, affect spending decisions.”
That splash of cold water comes as some of the stronger players in the industry have used the annaul ICR Conference as a chance to trumpet stronger outlooks after the holiday season, including Abercrombie & Fitch Co., American Eagle Outfitters
Inc., Lululemon Athletica Inc. and Urban Outfitters Inc.
On Tuesday, Frank Conforti, Urban Outfitters' co-president and chief operating officer, said the company was “happy and pleased with our results” over the holiday season.
Investors seemed to be feeling much the same and traded shares of Urban Outfitters up 7.7 percent to $38.68.
“We feel great about the consumer,” Conforti said. “For four of our five brands to be up double digits, I think consumer sentiment's in a good place. I think the labor market seems like it's in a good place. Inflation feels like it's coming down. So right now we feel really good about the consumer and we feel really good about going into the next year.”
The company — which operates the Anthropologie, Free People, FP Movement, Urban Outfitters and Nuuly businesses — said its sales increased a total of 10 percent during the November and December period, compared with a year earlier.
Comparable retail sales were up 20 percent at Free People and 14 percent at Anthropologie. But the report was not all positive, with the Urban Outfitters division comping down 13 percent.
To help right the flagship division, the company named Shea Jensen president of the Urban Outfitters brand, North America as of Feb. 5.
Jensen will be in charge of merchandising, marketing, digital and retail operations for the business in its home market.
She brings more than 30 years of retail experience to the role, having served in key leadership positions at Nordstrom. Most recently, she was president of Good American.