Urban Outfitters 2Q17 Earnings Call Notes

Urban Outfitters’ (URBN) CEO Richard Hayne on Q2 2017 Results

Little impact from the Brexit vote

“Urban’s European business also experienced strong comp gains with seemingly little impact on the business from the Brexit vote”

There’s an abundance of exciting fashion happening

“Over the past several years, the complaint lack of fashion has become common in the marketplace. I spoke to the subject on our conference call in March of this year. I actually said, I’m not predicting exactly want to change in fashion will occur, but that I saw more fashion excitement in spring than I’ve seen in quite a few years. I’ll repeat those comments again as we move into fall. Except I believe the change is now upon us and our customers are adapting to new looks and silhouettes as we speak. As in all such cycles some customers and brands adopt newness faster than others. But the fact is, there is currently an abundant of exciting fashion happening and this is very good for our brands for URBN and for our industry as a whole.”

Once a fashion trend starts not much changes it

“some brands and some customers adopt at different rate, but I think it’s particularly — the fashion changes particularly kind of Urban, but I think that the other brands have lots of fashion as well and to the degree they maybe a little slower and adopting it. I think that they well adopted, I mean this is the fashion change that’s happening and my experience is once it starts to happen, there is not much that stops it.”

Shouldn’t get too negative on stores, there are just too many

“I do believe that we shouldn’t get too negative on stores I think that there is no question, there are too many stores in North American and we start to see some of those stores going away, our competitors are closing stores at a reasonable rate and of course they were just the Macy’s announcement of closing stores. So I think that you will continue to see a lot of stores close and go away and I think that’s a positive thing for the industry and a positive thing for all the people including the ones that are closing the stores. But I don’t think it’s a problem with stores per say, I think the stores concepts are still valid, what I see happening overtime is just fewer stores but probably the store is larger and delivering more of a unique experience and which complements their direct consumer business and I think that that will be the winning combination.”

August relatively consistent to Q2

“Hey Simeon, I think from a macro level, from URBN level we think that the sales are going to relatively consistent or are relatively consistent August to date with the total Q2 results”

Trish Donnelly

Quoting social media growth trends

” Another area where we’re seeing tremendous customer growth and audience engagement is in social medial. Our Instagram followers exceeded the 5 million mark during the quarter, increasing 65% over the prior year and we’re now capturing over 200,000 new followers a month. In addition to our national Instagram accounts, our stores manage their local accounts, which accrued almost 700,000 followers and over 19 million likes in the quarter. Snapchat is important in our consumers’ life and we’re also seeing fast growth here with viewership increasing 25% month over month.”

David McCreight

inventory opportunities by being faster to market, using more predictive tools

“it’s true throughout the quarter there were opportunities for us to have different inventory levels that may have had impacted some of our apparel demand but mostly the inventory level opportunity was in how we distorted the products and the opportunities in learning and where the customers are moving more forward. As Dick alluded to earlier all of URBN will be focusing on how to be faster speed to market, use more predictive tools or resources and overtime lower inventories in total for the organization.”

We’re seeing some interesting movement in Denim

“Dick alluded to we had double-digit success in dresses. We too are excited about the fashion changes and think Anthropologie’s customer will adapt the fashion moves, in a different way and at a different pace than the other two brand customer sets, but we’re seeing some really interesting movement in Denim, woven continue to show some nice highlights and we’re seeing just a lot of interesting reads. That being said we’re expecting and anticipate it to continue to lag the performance of [indiscernible] categories for fall, holiday’s time period. But continue to learn each season.”

Seeing a lot of brands coming to us wanting to partner because they see credibility

“What we do see Neely is a lot of brands now coming to us and wanting to partner because they see the credibility that it has given some of our partners, so I think that yes we’ll continue to do this, we’ll continue to expand it. But we’ll extremely selective in who we’re doing with.”