Urban’s third-quarter profits tallied $88.9 million, up 15.8 percent from a year ago and ahead 59.7 percent from the same period in 2019. Diluted earnings per share came in at 89 cents, 5 cents ahead of the 84 cents analysts projected.
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But the company said comparable sales rose 14 percent with what it described as “strong double-digit growth in digital channel sales, partially offset by midsingle-digit negative retail store sales primarily due to reduced store traffic.”
That cut in store traffic seems to have set off investors, who pushed shares of the company down 11.7 percent to $32.91 in after-hours trading despite the otherwise bullish report.
On a conference call with analysts, company executives said supply chain back-ups — which have vexed retailers across the spectrum — hurt sales during the quarter, but also led to a low markdown rate. Apparel inventories were lighter than the company wanted earlier in the quarter, but goods have been flowing better over the past several weeks.
Total sales for the three months ended Oct. 31 were $1.1 billion, up 16.7 percent from a year earlier and 14.6 percent compared with two years ago, before the pandemic. The Philadelphia firm’s largest business, Anthropologie Group, rose 20.3 percent to $431.4 million while the namesake Urban Outfitters division saw sales increase 5.5 percent to $415.9 million.
Pressed by analysts on the supply chain issues, chief executive officer Richard Hayne said the company was getting back into the groove.
By way of example, he said Anthropologie’s dress inventory was down by a percentage in the mid-double digits.
“Obviously that impacted their sales,” he said. “As we received more inventory at the end of the third quarter — and have received even more now — the dress inventory is back…and the comps have basically exploded. We’re seeing even high-double digit comps in the dress category.”
While Hayne did point to some risks to the overall picture — specifically, inflation — he said overall consumer demand would continue to stay strong through at least the first half.
“If you take a look at some of the surveys that are out there like the [University of Michigan’s Surveys of Consumers] you get an impression that we’re already in a recession,” the CEO said. “But I have to tell you, that’s not what we’re seeing at all. It couldn’t be more different. Our customers seem to be upbeat. They’re definitely in a mood to buy. It seems to be trading up not down and she wants to be in functions and with friends, doing the things that she used to do in her normal life.”
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