Urban Outfitters’ Q3 profit falls amid ongoing problems at namesake brand

Urban Outfitters’ reported a steep decline in the third quarter even as its total sales rose. 

Earnings totaled $55.6 million, or 56 cents a share, in the quarter Oct. 31, compared with $77.5 million, or 70 cents a share, in the year-ago period. Analysts had expected earnings of 57 cents a share. 

Sales rose 1.4% to $987 million, less than the $1 billion analysts were expecting. The increase was helped by the company’s latest initiative, rental subscription service, Nuuly, which launched last summer.

Same-store sales increased 3%, driven by growth in the digital channel, partially offset by negative retail store sales. By brand, comp net sales increased 9% at Free People, 4% at the Anthropologie Group and were flat at Urban Outfitters. Wholesale segment net sales decreased 7%.

The retailer has been challenged by falling sales at its Urban Outfitters division. The brand has been criticized for fashion missteps. 

“The apparel offering [at. Urban Outfitters] did improve compared to the prior two quarters, but it was not compelling enough to offset the last two quarters,” company CEO Richard Hayne said on the company’s quarterly call with analysts. “Before Urban can deliver, the apparel offering will need to be closer to the fashion’s bull’s eye.”

At the end of the third quarter, Urban Outfitters operated 249 namesake stores in the United States, Canada and Europe and websites; 231 Anthropologie Group stores in the United States, Canada and Europe, catalogs and websites; 143 Free People stores in the United States, Canada and Europe, catalogs and websites, 11 food and beverage restaurants, five Urban Outfitters franchisee-owned stores, one Anthropologie Group franchisee-owned store and one Free People franchisee-owned store. Free People, Anthropologie Group and Urban Outfitters wholesale sell their products through approximately 2,200 department and specialty stores worldwide.