Urban Outfitters, which has a portfolio of apparel and lifestyle brands including Anthropologie, Free People, FP Movement, BHLDN and Terrain, has shared strong financial results for the three months ending 31 July 2023.
Speaking on a call with investors, CEO Richard Hayne said the results were “outstanding”, surpassing the group’s optimistic expectations. He said: “Four of our five brands posts record second quarter revenues. The Anthropologie, Free People and FP Movement brands produced double-digit sales growth in stores and online, with FP Movement leading the way with comp sales of plus 57%.”
Key highlights from Urban Outfitters Q2 results
- net sales hit a record $1.27bn
- net income was $104.1m
- retail sales increased 5.9%
- wholesale net sales decreased by 5.2%
- resale and rental sales on Nuuly increased by $2.7m
Urban Outfitters says that its total inventory decreased by $110m or 15.9% due to improved inventory control thanks to a “more reliable supply chain” as well as lower wholesale sales.
Earlier this year, Urban Outfitters announced that it has engaged AI software platform provider o9 Solutions to scale its digital transformation journey with the selection of a next-generation merchandise planning solution.
On the call with investors, Urban Outfitters’ CFO Melanie Marein-Efron said: “An improved supply chain is allowing us to bring in product closer to demand. As a result of well-controlled inventory and a healthier supply chain, we believe that there could be lower markdowns in the third quarter compared to the prior year’s third quarter.”
Sales at Nuuly, the group’s resale and rental platform, which launched in 2021, increased by $55.6m overall, which Urban Outfitters said was driven by an 85% increase in the number of active subscribers on the platform. It says that year-on-year revenues almost doubled in Q2.
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Looking forward, Marein-Efron said that growth on the Nuuly platform and retail segments is likely to be partially offset by a sales decline in the group’s wholesale segment.
Co-president and COO Frank Conforti, also on the call, added that the group estimated that the total number of active subscribers on the platform could exceed 200,000 by the end of the year. He added: “In addition to strong revenue numbers, Nuuly continues to make fast and steady strides towards profitability and we continue to believe Nuuly will record its first profitable quarter later this year.”
Hayne added that Q2’s strong sales had continued into the start of Q3 and said that the group was confident about its prospects for the remainder of 2024. He said: “We have four brands that are executing at rarefied levels and gaining market share. In addition to top-line growth, we have significant margin recapture as demonstrated by our performance in the first two quarters.