Urban Outfitters 2Q15 Earnings Call Notes

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Store sales slow, dtc strong in August but too early to draw conclusions

“thus far in August, for all brands, our direct-to-consumer business has posted strong gains consistent with the second quarter, while our store sales have started out slower than what we planned and where we finished the second quarter. There are many factors that could be impacting our store performance and there is too little data at this time to draw any solid conclusions.’

Off their highs for anthropologie

“we are off our record highs, all-time record highs for Anthropologie and we believe that’s entirely due to a two primary factors in our core business. We clearly weren’t pleasing as well with our fashion and some of our initiatives around the speed the market”

Improved inventory management

“the inventory management at Urban has improved dramatically and one of the biggest problems the brand had over the last year and a half 18 months was poor inventory management. And we expect the inventories to continue to improve. The weeks of supply will continue to decrease slightly as we put more operational efficiencies into the mix and when that happens, we believe that we have an opportunity to decrease our markdowns even further.”

“Web as alpha” strategy

” we have built a very strong team that’s very new to the brand but showing really good drive and the whole idea of a larger format and “web-as-alpha” strategy is almost building new companies within there”

Big initiative to improve speed to market

“let me talk about speed to market that’s a subject about which I’m very passionate, everybody around the table is smiling. Yeah, I think we have an opportunity to bring product to market much faster than we do today. How we are going to do that? We are going to do that with number of factors.

One is read the trends quicker and react quicker to those trends, cut down the number of steps involved in going from design and the merchants to the production, and make all of the decisions along the way faster, that meaning adhere to a calendar that is set up.

And you would be surprised that the number of times that a decision has to be made and the person whose supposed to make the decision is either out of the — out of our offices, out of the country and maybe traveling for a few days, and that decision is one day can be a week off in production, so it’s that.”

Near sourcing is one way to accelerate production

And then finally, we are trying to accelerate the production by near sourcing, more production capabilities in the Americas and so when we combine all those things together, I’m convinced that we can take anywhere from six to eight weeks off of our normal turnaround time.’

Each larger brand has about 200-250 store capacity

“we said consistently Simeon, that the larger, the two larger brands currently, we think and have anywhere from 200 to 250 stores in North America, both of them are currently pushing 200, which would suggest that there are anywhere from none to 50 left.”