Urban Outfitters’ record holiday sales fail to impress analysts

By

Robin Driver

Published
Jan 10, 2020

Philadelphia-based lifestyle and services company Urban Outfitters, Inc. announced “record” sales for the 2019 holiday season on Thursday but disappointed analysts with the results of its flagship brand and warnings of weaker Q4 margins.

 
The company reported a year-over-year increase of 2.9% in net sales in the two-month period ended December 31, 2019. Comparable retail sales rose 3%, thanks largely to progress in the digital channel.
 
Retail comps growth was led by increases of 8% at Free People and 5% at Anthropologie Group, while the company’s namesake Urban Outfitters banner saw a 1% decrease.

Growth at Free People was driven by strong full-price sales, but both Anthropologie and Urban Outfitters increased their promotional activity during the holiday period, a fact which the company highlighted will put its fourth-quarter margins under greater pressure than originally anticipated.
 
This news, coupled with the declines at the Urban Outfitters brand, sent shares of the company plummeting more than 9% in the extended session on Thursday.
 
Furthermore, while sales growth in the company’s retail segment totaled 3%, the wholesale segment saw less positive results during the holiday period, posting a 9% decrease, dragged down by a larger-than-expected decline of 11% at Free People.
 
Year to date, Urban Outfitters, Inc. saw net sales rise 0.5%, with comparable retail segment net sales increasing 1%. Total retail segment sales for the 11-month period posted an increase of 1%, but the wholesale segment saw a 5% decrease.
 
Since the beginning of the fiscal year, the company has opened 25 new retail locations across its brand portfolio and closed seven.