Urban Outfitters sales flat as retail business struggles

By

Obi Anyanwu

Published
May 17, 2017

Urban Outfitters follows its record fourth quarter sales performance with flat sales in the first quarter. Total company net sales were flat at $761 million, and missed analysts’ estimates.
 

The wholesale and direct-to-consumer channels posted double-digit growth in the quarter, but were offset by negative retail store comparable net sales that fell 3.1%.

The company’s namesake brand posted a 3.1% decrease in comparable retail net sales and Anthropologie fell as well by 4.4%. Free People comparable retail net sales increased 1.5%, but could not offset the decline.

"During the first quarter we continued to see strong double-digit growth from our direct-to-consumer channel and our wholesale business," said Richard A. Hayne, Chief Executive Officer. “We believe we have significant opportunity to continue to grow both of these channels at all of our brands.”

In addition to growing its direct-to-consumer and wholesale channels, the company announced in April that its leadership will undergo an overhaul in order to streamline each brand, help each brand work efficiently, and provide shoppers with a more “compelling shopping experience.”

Though the company will incur costs of $8 million to implement the new strategies, it expects $25 million in future savings.
 
Net income fell to $11.9 million, or $0.10 per diluted share, compared to net income of $29.6 million, or $0.25 per diluted share, in the prior first quarter.
 
Gross profit decreased 284 basis points driven by higher markdowns due to under-performing women’s apparel and accessories at Urban Outfitters and Anthropologie, SG&A expenses increased by 102 basis points, and total inventory was flat at $359 million. In addition, consumer retail segment inventory decreased 3.3%.