Dive Brief:
- Urban Outfitters Inc. logged a record quarterly sales of $1.27 billion, a 7.5% increase, beating last quarter’s record of $1.11 billion, the company announced in its earnings results Tuesday.
- The boost was primarily attributed to higher initial markups and lower merchandise markdowns at all three retail brands, which include Urban Outfitters, Anthropologie and Free People. The segment saw a net sales growth of 5.9% in both brick-and-mortar and digital channels.
- Urban Outfitters Inc.’s clothing rental service Nuuly saw increased sales by $27 million, driven by an 85% increase in subscribers compared to the same quarter last year.
Dive Insight:
Despite its retail growth, the company’s banner brand Urban Outfitters saw sales decrease 14.1%. Meanwhile the Anthropologie Group and the Free People Group increased sales by 10.6% and 26.9%, respectively.
Urban Outfitters’ brand sales decrease was due to negative performance in North America and Europe, the company said.
“We did see improvement in North America's women's and men's apparel in the back-to-school season versus last year, but we still know we can execute better, and we will need more time to drive the overall improvement we want,” Frank Conforti, COO and co-president of Urban Outfitters Inc. said in an earnings call with analysts.
The company’s wholesale segment also presented a challenge, with a 5.2% decrease, driven by the Free People Group’s decrease of about 6.5%, due to decreased sales to department stores. Urban Outfitters brand increased its wholesale sales by $0.5 million, which represents an improvement from the first quarter’s drop of 11%.
Richard Hayne, president and CEO of Urban Outfitters Inc., told analysts on the call that some of the company’s largest wholesale partners “continue to write smaller orders as they seek to operate with leaner inventory levels.”
Company leaders expect Nuuly, which launched in 2019, to exceed 200,000 subscribers by the end of the year, and they expect it to reach profitability later this year. Earlier this year Nuuly inked a partnership with plus-size brand Eloquii to offer its products through its rental service.
Urban Outfitters Inc.’s total inventory was down 16%, and CFO Melanie Marein-Efron said in the call that it had made progress on controlling its inventory-to-sales ratio. The company hopes to reach pre-pandemic levels for most brands by the end of the 2024 fiscal year, she said.
