Struggles Continue for Urban Outfitters
Urban Outfitters Inc. announced on Tuesday that it is conducting a thorough review of all aspects of its struggling namesake stores, following another quarter of declining same-store sales and a noted decrease in shopper enthusiasm.
During the earnings conference call for Urban Outfitters’ URBN brand, executives discussed the disappointing fourth-quarter results, which fell short of expectations. As a result, shares dropped significantly by 10.2% after hours.
Changing Shopper Behavior
CEO Dick Hayne acknowledged that while customers of the retailer remain generally positive, there has been a noticeable shift in their buying behavior. Hayne mentioned that customers are not as excited as they were when emerging from the pandemic, with fewer social events and a focus on renovating living spaces. This trend has led to softer demand for categories like apparel, footwear, and home furnishings.
Despite these changes, consumers are in good financial standing and are willing to spend on the latest fashion trends. Hayne highlighted that customers are optimistic and willing to invest their extra income in enjoying new products.
Outlook and Expectations
Urban Outfitters executives expressed optimism for the future, projecting “low-single-digit” same-store sales growth for the current first quarter and the upcoming fiscal year. This growth is expected to be supported by Anthropologie and Free People, which target affluent consumers less affected by inflation. Analysts on Wall Street anticipate a 2.8% same-store sales growth for the company in the coming year.
Urban Outfitters Faces Sales Struggles
Urban Outfitters recently announced that first-quarter same-store sales for their namesake chain are expected to mirror the decline seen in the fourth quarter. This decline, reported at 13.6%, is part of a trend where stores are finding it challenging to stay relevant to younger, budget-conscious customers facing increased prices on basic items.
Reshaping the Brand
To combat this downward trend, the company has brought in Shea Jensen, a seasoned professional from Nordstrom Inc., as the new president of Urban Outfitters in North America. The hope is that Jensen’s experience will play a key role in reviving the brand.
Markdowns and Adjustments
Despite these efforts, management revealed that Urban Outfitters had to implement more aggressive promotional strategies than initially planned to clear out excess inventory. This resulted in flat markdowns for the quarter, with higher than expected markdowns in January.
Financial Results
In the last quarter, Urban Outfitters fell short of analyst expectations with adjusted earnings per share coming in below estimates. Revenue, however, saw a 7.3% increase but still fell just short of projected figures.
Anthropologie’s Strategy
On a brighter note, Anthropologie has been seeing positive gains in same-store sales. Executives are focusing on updating their offerings, particularly in denim and dress selections, to appeal to a younger demographic under 40.
This shift towards modernization is part of the company’s broader strategy to adapt to changing consumer preferences and market dynamics.
