Urban Outfitters’ Q1 Results Miss The Mark

Retailers are continuing to have a rough time with store closures and a renewed focus to integrating digital efforts into brick-and-mortar stores.

In Urban Outfitters’ latest earnings report, the clothing retailer is showing signs of possibly following in the same path as others like Macy’s and JCPenney.

Urban Outfitters’ CEO, Richard A. Haynes, commented on this rough period for the company during its Q1 earnings call. He said, “This is a difficult period for U.S. fashion apparel retailers. And URBN’s first quarter reflects that difficulty. Total retail segment comp sales registered a disappointing 3 percent decline, well below plan. This drove increased promotional activity and more margin pressure than we had anticipated. As in previous quarters, the company saw extreme variability in results by channel.”

With its earnings sitting at $0.13 per share, Urban Outfitters fell short of the predicted $0.16 per share. It also saw a slip in revenue estimates with $761 million for Q1 2017, whereas this time last year it was at $772 million. In addition to its earnings and revenue shortcomings, Urban Outfitters’ gross profit rate also saw a decrease of 284 basis points. The company is contributing this particular aspect to underperforming women’s apparel and accessories.

Haynes added, “In the quarter, demand for women’s apparel in stores was particularly weak. Besides the traffic problem, all brands had an assortment issue, execution in the dress category. Each brand planned as dress business down from the very robust spring ’16 level. The belief was that in spring ’17 some of those sales would migrate to other categories like bottoms or to the newer fashion looks of Onesie and Rockers. Thus, the brands planned, ordered and therefore sold fewer dresses during the period.”