Dive Brief:

• Urban Outfitters — whose brands include Anthropologie, Free People, namesake Urban Outfitters and apparel rental site Nuuly — said that Q4 retail sales rose 24.1% year over year, or 15.4% compared to two years ago, to $1.26 billion. Retail comps rose 14% compared to 2019.

• Wholesale sales fell 22% compared to the period two years ago, mostly because Free People has made a point of reducing sales through promotional partners. The company in a press release warned that gross margin could contract more than expected, largely due to higher freight costs.

• The company also announced the arrival of former Club Monaco CEO Francis Pierrel as president of the Urban Outfitters brand, reporting to Sheila Harrington, who is global chief executive officer of Urban Outfitters and the Free People Group. He also previously served as the president of stores and e-commerce for Ralph Lauren in North America. 

Dive Insight:

After a strong holiday period, Urban Outfitters enjoyed momentum into the new year, but analysts on Thursday noted that ebbed as January progressed.

On Jan. 11, the retailer reported that total company sales during the holiday period rose 14.6% compared to 2019, and BMO Capital Markets analysts calculate that January sales rose 11.5% over two years, according to a Feb. 10 research note.

"[Urban Outfitters] was an outlier in delivering a stronger start to the year, but there was a deceleration since [early January], likely driven by worsening store traffic," BMO analysts Daniel Stroller and Simeon Siegel said in emailed comments.

Shipping costs and, according to William Blair analysts, the company's own promotional levels at Urban Outfitters and Anthropologie, are weighing on margins. William Blair analysts estimate that gross margin could decline 60 basis points compared to 2019, while BMO analysts expect as much as a 75 basis point contraction.

In a statement, company CEO Richard Hayne said that Pierrel's arrival "will greatly benefit the Urban Outfitters brand," calling him a "seasoned omnichannel retail executive with deep experience in managing iconic brands across all channels — e-commerce, stores, and wholesale." 

Revenue from the company's Nuuly business, which includes apparel rental and resale, grew 160% year over year, and William Blair analysts noted a $17 million revenue contribution in the fourth quarter, a 36% increase from the previous quarter.

Urban Outfitters' physical footprint continues to widen. Last year the company opened 56 new stores (29 Free People stores, including 18 FP Movement stores; 17 Urban Outfitters stores; nine Anthropologie stores and one restaurant), and closed 18. Two franchisee-owned stores, one Urban Outfitters and one Anthropologie, also opened last year, per the release.