Free People, Urban Outfitters's Golden Child, Continues Its Winning Streak

This brand is on fiiiiiire. (Sung to the tune of "Girl on Fire" by Alicia Keys)
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Eliza Brooke
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This brand is on fiiiiiire. (Sung to the tune of "Girl on Fire" by Alicia Keys)
The kids dig this. Photo: Free People

The kids dig this. Photo: Free People

Festival wear may have reached comically overdone heights, but don't for one second think fringe has jumped the shark: As Free People proved when Urban Outfitters Inc.'s second quarter results came out on Monday afternoon, shoppers are thirstier than ever for its particular brand of bohemian

While Anthropologie and Urban Outfitters saw comparable retail sales grow by 6 percent and drop by 10 percent, respectively, Free People leapt ahead by 21 percent for the three months ending July 31. In total, the brand brought in $128 million; that stacks up against $97 million the year prior. Free People still accounts for a minority of Urban Outfitters' business — with significantly more storefronts, Urban and Anthropologie raked in $328 and $347 million in net sales each for the quarter — but its rapid growth drove the company to a record $811 million in sales overall, up 7 percent from last year.

Free People is angling to capitalize on its domestic popularity both by opening new locations and by expanding its product categories, COO David Hayne said on the company's earnings call Monday afternoon. Back in May, Free People relaunched its activewear line, focusing on surf, yoga and dance clothing, and a few weeks ago it released footwear, which contributed heavily to sales growth in the second quarter. Expect to see some larger store spaces to accommodate and showcase that wider product assortment.

As for the stores, Free People has opened seven new stores in the last half year, bringing its total in the U.S. and Canada to 97. That will reach 102 by year's end, compared to Urban Outfitters's 233 stores in the States and abroad. As Free People is relatively new to international, the brand will grow its presence through retail partnerships, Hayne said. 

Of course, not all was bright and sunny on the company's earnings call. As we noted, Urban Outfitters is still struggling to right its sinking sales (sad trombone sound). Still, a 10 percent drop in comparable retail sales is somewhat better than the 12 percent dip it saw last quarter, and the company's execs said that they believe they are starting to see progress for the brand, having backed away from "incessant" promotional activity.

With brands as tied to pop culture as Urban Outfitters Inc.'s are — Urban's hipsters, Free People's Coachella girls — it does make you wonder if any of them are really that sustainable in the long term. Which is all to say, Free People had better milk its moment for all it's worth.