Urban Outfitters 1Q15 Earnings Call Notes

Our Q1 results were on us

We have read commentary about weather and port delays impacting performance, but our Q1 results are mostly the by-product of how we pleased her with our product and creative offers. Throughout the quarter, many areas showed solid to very strong growth; however, a few merchandise categories were not as well received and impacted the result, most notably dresses and accessories

We’re making changes

We have adjusted the team and the strategy and look for improvement in the back half of the year and continued expansion of accessories in the future.

Consumers still want to touch and feel product at brick and mortar

And while the digital experience is more important than ever, that does not mean we are resting on our previous success in stores. The largest part of consumer commerce still occurs in stores. Our customers still want to touch and feel our product, be inspired by our spaces and interact with our delightful associates. We know how important the store experience has been to shaping our brand, and we have a best-in-class experience that is compelling and very profitable

Things got better in May

It’s also important to realize that the Q1 shortfall in planned sales happened almost entirely in the last two weeks of April. This is when the Easter shift and the change in the catalog drop date combined to negatively impact sales more than anticipated. Newly received product and the catalog drop in early May have improved Anthropologie sales so far this month.

DTC channel will likely be half of our sales within a couple of years

Three years ago, I predicted that in five years the direct-to-consumer channel would account for half of URBN retail sales. That prediction was met with some skepticism. What we now see is that the trend toward greater DTC penetration is not just continuing but is actually accelerating. If my prediction is wrong, it’s only off by a year or two.

Slowing new store openings in favor of digital

we are accelerating our investments in virtual capabilities; we are slowing the number of new retail stores we open in the North American market. We have said consistently, that from a store location perspective, we believe both of our larger brands will be fully penetrated in the North American market when they each have 200 stores to 250 stores.

May of to stronger start

May is off to a very strong start. That being said, we believe – it’s hard to tell whether that is going to be more a result of the shift in marketing or the acceptance of the product offer.

Men may be migrating DTC faster

our information is, is that, the men seem to be migrating to direct to the consumer channel a little bit faster than the women and that’s not surprising because for many men it’s actually a chore to go shopping