Urban Outfitters Releases Mixed Fourth Quarter Results – Sourcing Journal
Urban Outfitters Inc. managed sales gains across most of its stores and digital channels in the fourth quarter, but saw profits fall after it took discounts to reduce inventory.
Net income for the period ended Jan. 31 fell to $31.5 million, or $0.34 per share, from $40.95 million, or $0.42 per share, in the year-ago period company stated in its latest financial report published on Tuesday.
Total revenue increased 3.9 percent to a record $1.38 billion.
Retail segment net sales increased 2 percent, while comparable sales increased 3 percent, partially offset by a negative 1 percent impact from currency translation. This increase was driven by positive mid-single-digit growth in in-store sales and positive low-single-digit growth in digital sales.
By brand, comparable sales increased 15 percent at Free People Group and 9 percent at Anthropologie Group and decreased 10 percent at Urban Outfitters. This gap in sales between the groups has existed for some time, with the more affluent clients of Anthropologie and Free People continuing to spend while the younger crowd at Urban Outfitters retreated.
Across the industry, retailers have seen consumers pull back on discretionary items over the last six months as inflation and concerns about the economy hit them.
In the wholesale segment, net sales fell 7 percent, with Free People Group down 13 percent, while Urban Outfitters’ wholesale sales were up $3 million. In the Nuuly segment, net revenue increased $25.5 million, driven by a 149 percent increase in subscribers through the end of the fourth quarter versus the end of the prior year quarter.
“We are pleased to report record fourth-quarter sales driven by the strength of the Anthropologie, Free People and Nuuly brands,” Chief Executive Officer Richard A. Hayne said in a statement. “We enter the spring sales season with an improved inventory position, which bodes well for the opportunity for merchandise margins in fiscal 2024.”
In the fourth quarter, the gross profit rate declined 68 basis points compared to the same period last year. That decline was primarily due to store impairments of $5.5 million, or 39 basis points, in the most recent quarter, the company said. Gross profit increased 1.4 percent to $372.3 million from $367.3 million.
Merchandise margins in the retail segment were slightly lower as improved initial markups were offset by higher markdowns at the Urban Outfitters and Free People Group brands. A decline in the wholesale segment’s gross profit rate also contributed to the decline in the company’s gross profit as a whole, driven by increased sales discounts to clear out excess merchandise.
The gross margin rate of the Nuuly segment improved due to operational leverage from significant subscriber growth.
For the full year, the company earned $159.7 million compared to $310.62 million in 2021.
Total net sales increased by 5.4 percent in 2022 compared to the previous year. Total sales and comparable retail segment sales increased 4 percent.
“The relative portion of Retail segment sales attributable to in-store and digital channels has changed in large part due to last year’s temporary global store closures and occupancy restrictions due to the COVID-19 pandemic,” the company said in its statement . “With these constraints absent year-to-date, retail segment comparable revenue increased due to high single-digit positive growth in retail sales due to increased in-store traffic and low single-digit positive growth in digital channel sales.”
The Company’s portfolio includes brands Anthropologie, BHLDN, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues.
https://sourcingjournal.com/topics/retail/urban-outfitters-mixed-fourth-quarter-figures-free-people-markdowns-420743/ Urban Outfitters Releases Mixed Fourth Quarter Results – Sourcing Journal