Urban Outfitters Falls Short During Crucial Holiday Shopping Season

Company shares fell nearly 10 percent on disappointing sales in the nameplate brand.

By Kellie Ell on January 9, 2020

Count Urban Outfitters among the specialty retailers to struggle this holiday season.

The teen retailer — which falls under the Urban Outfitters Inc. umbrella along with Anthropologie, Free People and a food-and-beverage business — announced holiday sales Thursday after the bell, causing the firm’s stock to plunge nearly 10 percent in afterhours trading.

For the two-month period ending Dec. 30, the larger company’s overall sales increased 2.9 percent year-over-year. Comparable sales at its retail segment increased 3 percent in the same period with growth across the company digital channels offsetting losses at its stores.

By brand, there were some notable differences. Free People and Anthropologie were the biggest winners, with comps increasing 8 percent and 5 percent respectively. Free People’s strong performance was attributed to less promotional activity.

But Urban Outfitters, the company’s largest brand, continued to struggle. Comp sales during the November-December shopping season — a crucial time period for retailers — fell 1 percent at Urban Outfitters. Both Urban Outfitters and Anthropologie had increased promotional activity this holiday season, causing further declines, according to a statement. The company also said it spent more on logistics and delivery expenses in order to meet customer expectations.

But investors were not satisfied. Shares of Urban Outfitters, which closed down 2.8 percent Thursday to $27.69 a share, are down more than 15 percent year-over-year.

The retailer’s problems seem largely concentrated in the Urban brand. Last quarter sales at Urban fell to $374 million, down from $379 million a year earlier. But Richard A. Hayne, chief executive officer of Urban Outfitters, assured investors during the company’s November conference call that the brand would gain momentum during the coming holiday season.

And it would start by fixing fashion misses in women’s apparel.

“Before Urban can deliver, the apparel offering will need to be closer to the fashion bull’s-eye,” Hayne said on the call with analysts. “The apparel offering [at Urban Outfitters] did improve compared to the prior two quarters, but it was not compelling enough to offset the last two quarters.”

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