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Urban Outfitters spends more to attract customers online and in stores

May 20, 2016 01:41 PM
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With online sales outpacing sales in its retail store locations, apparel retailer Urban Outfitters Inc. is spending more money to get to know its shoppers better.

Urban Outfitters, No. 39 in the Internet Retailer 2016 Top 500 Guide, increased marketing efforts for customer acquisition and retention, as well as for technology used to support omnichannel initiatives, chief financial officer Frank Conforti told analysts on the retailer’s Q1 2017 call Wednesday. Those efforts drove the 9.4% increase in selling, general and administration expenses to $211.4 million from $193.3 million in Q1 of fiscal 2016.

Urban Outfitters does not break out online sales in its earnings reports but includes them as part of its direct-to-consumer sales. CEO Richard Hayne told analysts those sales grew by double digits year over year, outpacing sales performance in the retailer’s bricks-and-mortar locations. The retailer’s brands include Anthropologie Group, Free People, Urban Outfitters and Vetri Family restaurants, acquired in fiscal Q1 2017.

“We believe it is important to continue to invest in larger assortments and a higher penetration of proprietary products in all categories,” he told analysts on the call, according to a transcript from Seeking Alpha. “That may mean our own designs, our own production, but it also may mean collaborations with third-party brands that are exclusive to our stores,” Hayne said.

Urban Outfitters will continue to invest in technology and marketing to support the rapidly growing and changing direct-to-consumer channel, to better know and understand its customers, and make operations more efficient, Hayne said. The technology focus, as Hayne noted in March, includes improvements related to checkout, payments, search, inventory visibility and speed on the retailer’s web platforms.

For the first quarter of fiscal 2017 ended April 30, Urban Outfitters reported:

  • Net sales of $762.6 million, up 3.2% from $739.0 million last year.
  • Retail sales of $700.2 million, up 2.2% from $685.0 million
  • Wholesale sales of $62.4 million, up 15.6% from $54.0 million.
  • A comparable retail net sales gain of 1% including online.
  • Net income of $29.6 million, down 9.8% from $32.8 million.
 

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