News Feature | August 21, 2013

Urban Outfitters' Profits Soar In Tough Retail Climate

By Sam Lewis, associate editor
Follow Me On Twitter @TheSJLewis

Urban Outfitters

Apparel retailer reports earnings up 25 percent in second quarter

Philadelphia-based clothing retailer Urban Outfitters released sales figures and earnings for the second quarter of 2013 on Monday. All of its brands — Urban Outfitters, Free People, BHLDN, Terrain, and Anthropologie — reported strong growth despite the downward trend in sales by many retailers throughout the second quarter.

Urban Outfitters says its net income climbed to $76.4 million for the quarter ending on July 31. In the same quarter last year, the retailer reported net income of $61.3 million. Same store sales, a key factor in financial performance of retailers, for Urban Outfitters rose 9 percent this quarter, versus the same time last year. Urban Outfitters includes direct sales to customers, online, and catalog sales in its same store sales. Revenue jumped from $676.3 million in 2012 to $758.5 million this year stating gains in both retail and wholesale portions of its business.

Richard Jaffe of Stifel Nicolaus says that Urban Outfitters has performed exceptionally well in a difficult retail climate. “On-trend” merchandise is given credit as key to the company’s success. The results are “evidence that the customer is willing to buy if the merchandise is attractive,” he penned in a note for Urban Outfitters. CEO of the company, Richard Haynes, agrees, giving credit to Urban Outfitters’ strong products, additions of new stores, better marketing efforts in direct-to-consumer retail, and improved margins as the key points to its success.

But yet, the company wants more. Urban Outfitters would like to raise annual growth to around 20 percent, and increase its online sales from around 20 percent of total sales to half of them. To do this, the company plans to spend more on technology and direct-to-consumer sales. This strategy will bode well for the company as it will eliminate the overhead of land lord and tenant fees of future retail locations and strengthen the company’s workforce in warehouse locations.

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