Urban Outfitters continues to drive excellent results with the Anthropologie and Free People brands, while namesake brand Urban Outfitters remains challenged. Anthropologie posted comparable-store sales (comps) growth of +12%, Free People comps were up +19%, and Urban Outfitters comps declined -14%. FP Movement led with a +45% increase in comps. Comps in both physical stores and online were primarily the result of higher traffic and transactions. Versus 2019, on a comp basis, Anthropologie is up +40%, Free People is up +104%, and Urban is down -20%. As shown in the table below, sales per store and sales per square foot are spectacular for Anthropologie and Free People. Given the gains at Anthro and Free People, company-wide profits and free cash flow of $388M and $309M were near record levels.
On the brand’s customers, Urban Outfitters CEO Dick Hayne said, “We believe they, as a group, are in good shape. They're not as exuberant as they were when first coming out of the pandemic. They don't have as many weddings and events to attend. They are less apt to move and have recently refurbished their living spaces. So demand for categories like dressier footwear and home furnishings are trending softer. But they do enjoy a secure job and are earning more money than ever. They tend to be optimistic, want the latest fashion, and are willing to spend some of those extra earnings to enjoy them. Their mood and financial conditions create an environment conducive to our brand's success.” In other words, for this college-educated younger female consumer, student loan payments, the higher cost of living expenses, and prioritizing spending on "fun versus stuff" are not inhibiting the company's ability to produce outsized revenue growth (A dynamic is also true for Abercrombie & Fitch and retail in general).
As it relates to the Urban Outfitters brand, a new leader has been appointed: Shea Jensen, a 32-year veteran of Nordstrom. On stabilizing the brand, management said that they set back-to-school as the period where they could see a change in trend based upon Jansen’s new merchandise plan. However, they did acknowledge that they were losing sales to SHEIN and other lower price-point companies. Below we show how the visitor mix via Experian Mosaic has changed from 2018 for Urban Outfitters locations in the Placer platform. In contrast to Abercrombie, Influenced by Influencer is down and ironically, Steadfast Conventionalists (defined as “conventional Gen X families living suburban and city lifestyles”--not the customer segment generally associated with Urban Outfitters) is up the most. By contrast, the segment more regularly associated with Urban Outfitters like Urban Edge (defined as “lively, up-and-coming singles living big city lifestyles located within top MSA markets”) is down the most.
On Anthropologie, President Frank Conforti said, “As we enter fiscal year 2025, the Anthropologie consumer remains optimistic and continues to respond positively to a broad range of occasion and casual categories. The teams transitioned into spring early in January, and the customer is responding well to the fashion newness. The home category continued to see strength in the gift and entertainment category, which was partially offset by a decline in furniture and decor. During the quarter, the team's execution of the brand strategy to target a slightly younger customer continued to gain traction.”
On Free People, which has a larger U.S. wholesale business ($200M), sales increased 8% after five quarters of declines, which signals that its customers have now adjusted inventory to the pace of sell-out--a positive signal about department stores. On FP Movement, Hayne commented, “Last year, FP Movement's 38 stand-alone stores far surpassed our performance expectations, with average sales per square foot exceeding those at the average Free People locations. We believe this provides an opportunity to open many additional stores and increase the size of new stores to approximately 2,600 gross square feet or 30% larger than the current fleet average. Our data confirms that opening new brick-and-mortar location not only augments brand recognition, but also lifts digital sales in the surrounding ZIP codes. In fiscal 2025 (the twelve-month period ending January 2025), the team plans to open an additional 25 FP Movement stores...We believe that Movement has the highest store count opportunity of all Urban Outfitter portfolio brands, both in North America and globally.”
