Urban Outfitters counting on college campuses to boost sales

Urban Outfitters (NASDAQ:URBN) showed signs of financial progress but reported lower earnings than expected in the second quarter. The shortcomings can be attributed to difficulties within the Urban Outfitters brand, which were somewhat mitigated by results form its stronger brands, Anthropologie and Free People.

Brand sales at Urban Outfitters fell 2.4 percent to $328.6 million while Anthropologie's sales were up 8.9 percent to $347.7 million and Free People's sales were up 32 percent to $128.3 million, reported Zacks. Net sales for the company increased 5.2 percent to $752.1 million in the retail segment and 35 percent to $59.1 million in the wholesale segment.

Despite numbers, Ted Marlow, CEO, Urban Outfitters Group, said the brand would not pull back from its presence near college campuses, reported Women's Wear Daily.

During a call with investors, Marlow responded to an analyst's question with: "My answer is a very strong 'no way' would I think of closing any of the 33 locations that are adjacent to college campuses. I think that is a real defining piece of real estate for us."

"I think it challenges us to stay true to our brand's position and it still represents enormous opportunity for the business going forward," Marlow added. "In fact, we would have interest in finding other locations. There are some locations that we haven't tapped, college campus-related, and we are interested in finding real estate to tell our story there."

Beyond the college campus, Urban Outfitters opened a new concept store last spring in Brooklyn. Space Ninety 8 included a marketplace for 40 local designers to feature goods.

In the second quarter, gross margin fell to 37.4 percent of revenues from 39.3 percent in the same period last year. The company attributed the slip to an underperformance on the part of its Urban Outfitters brand.

However, the brand still seems to register well with teens using social media. It made the list of 500 Fastest Growing Brands on social scrapbooking site Pinterest.

During the quarter call, the company set forth three initiatives, reported the Business Insider. First, raise average prices and improve designs. Second, cut back on promotions to clear out unpopular inventory. Finally, offer customers better in-store and online visuals to enhance the shopping experience.

For more:
-See this Seeking Alpha transcript
-See this Women's Wear Daily article (subscription)
-See this Zacks article
-See this Business Insider article

Related stories:
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Urban Outfitters opens new concept store, Space Ninety 8
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L.L. Bean has record year, plans $100 million expansion

 

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