Urban Outfitters (URBN) shares tumble as 2020 holiday sales disappoint
Shoppers with their Urban Outfitters shopping bags in Soho in New York
Richard Levine | Corbis | Getty Images
Urban Outfitters’ shares fell Tuesday after the clothing retailer reported disappointing Christmas sales and announced that its current chief executive would leave later this month.
The stock fell roughly 11% after the close of trading, after rising nearly 6% on the day.
Urban Outfitters, which also owns the Anthropologie and Free People brands, said current CEO Trish Donnelly will be leaving effective Jan. 31 to pursue another career opportunity. She has named Sheila Harrington, the current CEO of Free People, as CEO of Urban Outfitters and will continue to oversee the Free People banner.
During the two-month period ending December 31, Urban announced that the company’s total sales were down 8.4% year over year, while sales in the same store had declined 9% due to the decline in business traffic due to the Covid pandemic. Sales in the same store tracks sales both online and in stores that have been open for at least 12 months.
Online sales rose double digits, the company said, but that wasn’t enough to make up for losses in stores. According to Urban, sales at Free People increased 1%, Urban Outfitters increased 8% and Anthropologie increased 12%.
In a virtual presentation at the annual ICR conference on Tuesday afternoon, CFO Frank Conforti said the company kept inventory levels low during the holidays, especially in stores, to avoid having to discount excess goods during the season. But that strategy could have backfired and hit store sales, Conforti said. “This may be the first time we’ve seen the negative impact of our product model,” he said.
Urban is also in the process of building another warehouse in Kansas to meet the peaks in online demand and will open a temporary warehouse in the meantime to help with digital orders.
The company found that sales in the same store across the portfolio “rebounded well” in January. However, earnings are expected to come under pressure in the fourth quarter, partly due to increased shipping and logistics costs due to the online surge.
For the eleven month period ending December 31, Urban announced that total sales were down 14.3%, while sales in the same store were down 12% overall.
Also on Tuesday, Urban named Gabrielle Conforti, her current chief merchandising officer, President of Urban’s North America division. Emma Wisden, the current General Manager of Urban’s Europe division, will lead Urban’s wholesale business.
Urban Outfitters’ shares were up nearly 15% over the past 12 months as of Tuesday’s close.