Shoppers with their Urban Outfitters shopping bags in Soho, New York
Richard Levine | Corbis | Getty Images
Urban Outfitters’ shares fell on Tuesday after the clothing retailer reported disappointing holiday sales and announced that its current chief executive is due to leave at the end of the month.
Its shares fell about 11% in the after-hours, ending the day with an increase of almost 6%.
Urban Outfitters, which also owns the Anthropologie and Free People brands, said current CEO Trish Donnelly will leave, starting January 31, to look for another career opportunity. She has appointed Sheila Harrington, current CEO of Free People, as CEO of Urban Outfitters, and she will continue to oversee the Free People banner.
During the two-month period ended December 31, Urban said that the company’s total sales fell 8.4% from the previous year, while same-store sales fell 9% due to the decline in store traffic due to the Covid pandemic. Same-store sales track revenue both online and in stores that have been open for at least 12 months.
Its online sales grew by double digits, the company said, but that was not enough to make up for losses in its stores. Urban said sales increased 1% at Free People, fell 8% at Urban Outfitters and fell 12% at Anthropologie.
In a virtual presentation at the annual ICR conference on Tuesday afternoon, CFO Frank Conforti explained that the company kept its inventories light during the holidays, especially in stores, to avoid having to discount excess merchandise in the season. But that strategy may have backfired and hit store sales, said Conforti. “This may be the first time that we have experienced the negative impact due to our product model,” he said.
Urban is also in the process of building another warehouse in Kansas, he said, in order to meet the spike in demand that is occurring online, and will open a temporary warehouse in the meantime to help him with digital orders.
The company noted that its same-store sales across the portfolio “recovered well” in January. However, she expects profits to be squeezed during the fourth quarter due, in part, to the increase in delivery and logistics expenses due to the increase taking place online.
For the eleven-month period ended December 31, Urban said his total net sales fell 14.3%, while same-store sales fell 12% overall.
Also on Tuesday, Urban appointed Gabrielle Conforti, its current head of merchandising, president of Urban’s North America division. Emma Wisden, currently managing director of Urban’s Europe division, will conduct Urban’s wholesale business, the company said.
Urban Outfitters’ shares have risen nearly 15% in the past 12 months, since the market closed on Tuesday.