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Urban Outfitters Is Finally Getting People to Shop In-Store as Profits Triple

For the first quarter in four years, Free People, Anthropologie and Urban Outfitters all reported positive comparable store sales.
Photo: @urbanoutfitters/Instagram

Photo: @urbanoutfitters/Instagram

It's a great day for investors in Urban Outfitters, Inc. After a tumultuous few years, all of the Philadephia-based company's brands — Anthropologie, Free People and Urban Outfitters — seem to be back on the right track in fiscal 2019, with profits up a whopping 280 percent for the first quarter. The news, announced Tuesday afternoon, far surpassed all expectations.

Overall net sales for Urban Outfitters, Inc. increased 12 percent, while comparable retail sales increased 10 percent. By brand, comparable retail sales increased 15 percent at Free People, 10 percent at Anthropologie Group, and 8 percent at Urban Outfitters. It marked the first quarter in four years that all three brands reported positive comparable store sales. Overall store traffic increased slightly, the company said during an earnings call, suggesting its success can be largely attributed to more conversion by shoppers. Somehow, they're getting those millennials to spend more money, though digital sales outpaced in-store sales in terms of growth.

Free People has long been URBN's cash cow: The brand has a strong wholesale business and recently expanded its activewear and denim categories. Its activewear brand, called movement, saw a 41-percent wholesale sales jump, while denim wholesale sales jumped 200 percent.

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Much of Anthropologie's success last quarter can be attributed to its home category, which expanded its distribution through wholesale partnerships, including one with Nordstrom that will continue to roll out to more locations. In the earnings call, the brand's president of apparel and accessories Hillary Super outlined how it's fixing those categories as well. "She is emotionally invested in our brand, and we are part of the story of her life. Although we have disappointed her somewhat in recent seasons, she has been patiently and passionately waiting for us to capture her heart again," said Super of the Anthro customer. Her team plans to do that by creating a "more collaborative team culture" and accelerating lead times to 12 weeks or less for nearly 50 percent of product. They're also improving fit and offering more occasion-specific options including "more desk-to-dinner options as well as loungewear."

The company had less to say about Urban Outfitters, focusing mostly on its success with social media engagement. "Urban's eight million Instagram followers are a tribute to the strength of the brand and the skill of the marketing team. Excellent marketing is certainly one of the driving forces behind positive comps," said CEO Richard Hayne.

Hayne seemed optimistic about the company's future, suggesting that a number of factors have converged to make this a good time for growth. "With fashion trends strong, the economy healthy and consumer sentiment at a 14-year high and our teams executing exceptionally well, we believe the time is perfect to invest for growth," he concluded.

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