Shoppers with Urban Outfitters shopping bags in Soho, New York
Richard Levine | Corbis | Getty Images
Shares of Urban Outfitters collapsed on Tuesday after the clothing retailer reported disappointing sales and announced that its current CEO will be leaving at the end of the month.
Its shares fell by about 11% in trading after the program, after closing the day by almost 6%.
Urban Outfitters, which also owns the Anthropologie and Free People brands, said that current CEO Trish Donnelly will leave on January 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 ended Dec. 31, Urban said the company’s total sales fell 8.4 percent from a year earlier, while sales at the same store fell 9 percent due to declining store traffic. due to the Covid pandemic. Sales from the same store track revenue both online and in stores that have been open for at least 12 months.
Its online sales rose double-digit, the company said, but that was not enough to offset losses in its stores. Urban said sales were up 1% at Free People, down 8% at Urban Outfitters and 12% at Anthropologie.
In a virtual presentation at the ICR annual conference on Tuesday afternoon, CFO Frank Conforti explained that the company kept its light inventories over the holidays, especially in stores, to avoid having to cut excess merchandise in season. But that strategy may have backfired and hit store sales, Conforti said. “This may be the first time we have experienced the negative impact due to our product model,” he said.
Urban is also building another warehouse in Kansas, he said, in order to meet the growing demand it faces online and will open a temporary warehouse in the meantime to help it with digital orders.
The company noted that its sales in the same store in the portfolio “returned nicely” in January. However, profits are expected to be pressed during the fourth quarter due in part to increased delivery and logistics costs due to the growth it is experiencing online.
For the eleven-month period ended December 31, Urban said its total net sales fell 14.3%, while sales in the same store fell 12% overall.
Also on Tuesday, Urban appointed Gabrielle Conforti, its current chief commercial officer, as president of Urban’s North American division. Emma Wisden, the current CEO of Urban’s Europe division, will lead Urban’s wholesale business, the company said.
Urban Outfitters shares have risen nearly 15 percent in the past 12 months since Tuesday’s market close.