Profit and same-store sales slide at Urban Outfitters

Urban Outfitters' profit and sales fell in the second quarter even as it topped Wall Street expectations.



Urban Outfitters said it earned $49.91 million, or 44 cents a share, in the quarter, down from $76.91 million, or 66 cents a share, in the year-ago period, as the retailer Analysts had expected the company to earn $0.37 per share, amid heavy discounting.



Total net sales fell 2% to $873 million, from $891 million a year ago. Analysts had expected sales of $862 million.



"While Wall Street cheers Urban Outfitters for not doing quite so badly as forecast, the reality is that this is a lousy set of results," commented Anthony Riva, analyst at GlobalData Retail. "Not only are the numbers sequentially worse than a pretty dire first quarter, but they also show that many of the initiatives put into play remain a long way from delivering."



Comparable retail segment net sales, which includes the direct to consumer segment, fell 4.9%, the worst drop in seven years according to Bloomberg. The company attributed to "negative retail store sales," offset in part by continued sales growth in direct-to-consumer sales.



Same-store sales fell 4% at Anthropologie and 7.9% at Urban Outfitters. A bright spot was Free People, where same-store sales increased 2.0%.



"The blunt truth is that both Urban Outfitters and Anthropologie are firmly off pitch, especially when it comes to apparel," Riva said. "Bluntly put, their collections are decidedly odd and all too frequently look like an art installation rather than saleable merchandise. As much as this wins some fans, it also deters and confuses many more mainstream shoppers." (For more, click here.)



Urban Outfitters CEO Richard Haynes stated that while the chain was disappointed in its second quarter performance, it has a number of initiatives underway. These include speed to customer, international growth, wholesale expansion and digital investments.