US fashion retailer Urban Outfitters says better decision-making and tighter inventory have helped the company cut its lead times, with scope for further improvement.
The company, which encompasses the Urban Outfitters, Anthropologie and Free People stores, booked record sales and a jump in earnings in its second quarter, as same store sales remained strong across all brands.
Go deeper with GlobalData
Net income reached US$92.8m from $49.9m last year, while gross profit rate increased by 180 basis points, primarily driven by lower markdowns at all three brands. Net sales grew 13.7% to a record $992m thanks to comparable retail segment sales growth of 13%, driven by strong, double-digit growth in the digital channel and positive retail store sales.
Speaking on the firm’s earnings call last week, CEO Richard Hayne told analysts the increased efficiency is down to “not only in figuring out what the right product mix and items are, but being able to replenish them more quickly.”
“We have less need for the week to supply that we used to carry,” he said. “Overall we have sufficient inventory and I do believe that the speed – the customer initiatives that the brand leaders have been working on over the last three years have paid off nicely.”
Urban Outfitters has managed to reduce its lead time by a month over the last three years and believes there is still room for improvement.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataChief sourcing officer Barbara Rozsas explained: “Essentially we have aligned with our cross-functional partners. We have better decision-making. We have platformed fabrics and we have had pre-development, which has definitely allowed us to reduce our lead times. In the last call, we announced that over the last three years, we have already saved a month out of our lead times and we believe that we have more upside.”
Despite ensuring tighter inventory, the company has seen its digital sales grow – in the second quarter this was double-digit. CFO Frank Conforti says this is down to more choice and convenience.
“Urban Outfitters has about 15% more choices online this year than they did last year and we find that the more choice [leads to] more sessions and more sales.” As well as more styles, more size options are being added too.
“We are also continuing to improve customer segmentation and personalisation and so we get the right messages to the right people and then during the quarter actually we have added more payment options like Apple Pay and Afterpay.”
