Weak store sales were the driver behind a disappointing quarter for Urban Outfitters Inc.
Urban Outfitters, No. 40 in the Internet Retailer 2017 Top 500, reported net revenue of $761.2 million during its fiscal first quarter of 2018, ended April 30, down 0.2% from $762.6 million.
“The sales shortfall in Q1 was wholly attributable to weaker-than-expected store channel performance in North America, where all three brands have encountered sluggish customer traffic and sales,” CEO Richard Hayne told analysts on Urban Outfitters’ Q1 earnings call, according to a transcript from Seeking Alpha. The retailer operates the Urban Outfitters, Anthropologie and Free People brands.
“I believe our brand delivered some of the best most creative store experiences in the world,” Hayne said. “However, it is clear that these experiences currently aren’t enough to overcome the decline in traffic and a tepid interest in apparel and stores.”
Hayne said Urban Outfitters’ best opportunity to grow its revenue is to reach more shoppers online. The numbers bear that out.
Chief financial officer Frank Conforti told analysts that direct-to-consumer sales, which are largely online, were up by double digits, “driven by increases in sessions and conversion rates which more than offset a decrease in average order value” during the first quarter, although he didn’t specify percentages.
“We believe the total digital sales could double within five years,” Hayne said. “We intend to accelerate the growth of our digital reach; by this I mean we will enlarge our audience, add [social media] followers, expand our social media presence and at the same time build our content including adding products, product categories, brands and services, along with more compelling images, video and more user-generated content. We’ll also continue to invest in better user experiences.”
For the first quarter of fiscal 2018 ended April 30, Urban Outfitters reported:
- Retail sales of $690.4 million, down 1.4% from $700.2 million last year.
- Wholesale sales of $70.8 million, up 13.6% from $62.4 million.
- A year-over-year comparable net retail sales decline of 3.1%.
- Net income of $11.9 million compared with $29.6 million.