Urban Outfitters sees flat sales amid flat fashion environment

Dive Brief:

Urban Outfitters Monday said that fashion trends—or the lack of them—have brought muted sales to its Urban Outfitters, Anthropologie, Free People, BHLDN, and Terrain brands. The retailer's fourth quarter net sales for the entire company were $1.01 billion, flat year over year, while same-store sales, including web sales, fell 2%.
Free People continues to be the winner among the retail company’s brands, with Q4 same-store and web sales growing 2%, while the same sales fell 2% at Anthropologie and 3% at Urban Outfitters.
Despite flat sales, Urban Outfitter’s results managed to beat expectations; Q4 profit was $72.9 million, or 61 cents per share, compared to $80.3 million, or 60 cents per share year over year, while analysts surveyed by Thomson Reuters had expected 56 cents per share.

Dive Insight:

On a conference call with analysts Monday, Urban Outfitters founder-CEO Richard Hayne put his finger on a problem vexing many apparel retailers these days: there’s no real reason for women to fill their closets with new clothes.

“The last major fashion shift was 10 years ago when the skinny bottom returned to popularity,” he said. “Since then we’ve had all varieties of skinny: low-rise, high-rise, color, black, white, and print. Washed, sanded, sliced, and destroyed. Yoga and active, leggings, jeggings, and stretch. …Today, the customer has a closet full of various skinny bottoms and she has many many long tops and sweaters to go over them. Without a fashion need to drive her purchases, the customer can easily defer her apparel spend.”

The antidote for the situation for retailers, he also said, is a “major fashion shift.”

“I’m not predicting exactly when that change will come, but I’m certain it will,” he said.

But it seems like Urban Outfitters isn't waiting too long for a fashion shift. The retailer has experimented with alternative store formats including a concept store in Brooklyn, NY, that showcases local artisans wares, art, and a rooftop bar. The company is also investing more in its non-apparel offerings at its Anthropologie brand and home-and-garden line Terrain—and then, there's always that pizza chain purchase.