Urban Outfitters, Inc., a lifestyle and services company headquartered in Philadelphia, announced that it achieved “record” sales during the 2019 holiday season. However, analysts were not impressed with the results, as the company’s flagship brand performed below expectations and there were concerns about lower fourth-quarter margins.
During the two-month period ending on December 31, 2019, Urban Outfitters reported a 2.9% increase in net sales compared to the previous year. This growth was primarily driven by a 3% increase in comparable retail sales, with the digital channel playing a significant role.
Among Urban Outfitters’ brands, Free People experienced the highest growth in retail sales during the holiday season, with an 8% increase. Anthropologie Group also saw a 5% increase in sales. However, the company’s namesake brand, Urban Outfitters, saw a 1% decrease.
Although Free People had strong full-price sales, both Anthropologie and Urban Outfitters increased their promotional activities during the holiday period. This decision will have a more significant impact on the company’s fourth-quarter margins than anticipated. As a result, shares of Urban Outfitters plummeted more than 9% in the extended session on Thursday.
Moreover, the wholesale segment also faced a decline in sales during the holiday season. Sales in this segment decreased by 9%, with Free People experiencing a larger-than-expected decline of 11%.
For the entire year, Urban Outfitters, Inc. reported a 0.5% increase in net sales, with comparable retail segment net sales rising by 1%. While total retail segment sales for the 11-month period saw an increase of 1%, the wholesale segment experienced a 5% decrease.
Throughout the fiscal year, Urban Outfitters opened 25 new retail locations across its brand portfolio but also closed seven stores.
In conclusion, although Urban Outfitters achieved record holiday sales, analysts were not impressed due to the weaker performance of the Urban Outfitters brand and concerns about lower fourth-quarter margins. The company will need to address these issues to regain investor confidence and drive future growth.