Urban Outfitters 3Q15 Earnings Call Notes

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Urban Outfitters’ (URBN) CEO Richard Hayne on Q3 2016 Results

October was weakest comp and trend has worsened in first half of November

“As noted above, October was the weakest sales comp in the third quarter and this negative trend has worsened into the first half of November. As of quarter to date, this negative trend is consistent across each of our brands and most prevalent in source.”

Consumers lack enthusiasm for apparel and accessories because of a lack of newness

“In general, sales of apparel and accessories have been slower, while home intimates, shoes, and beauty have been more robust. I believe our customers current lack of enthusiasm for the apparel and accessories categories. This is primarily due to a lack of fashion newness. We currently have a number of new fashion bright spots in our apparel offering. But whether or not these trends become more mainstream is uncertain. Having been in this situation before, my experience tells me the best course of action is to keep inventories lean, continue to expand and know that new trends will emerge soon”

Getting into the restaurant business?

“This morning we announced an agreement to acquire substantially all of the Vetri Family group of restaurants which includes its award-winning Pizzeria Vetri. Most recently Food and Wine Magazine named Pizzeria Vetri the best pizza restaurant in America.”

Our analysis is that the lower traffic is because of the lack of newness in fashion

“We have seen lower traffic as I said in my prepared remarks that you could hear them. We’ve had lower traffic throughout the quarter and traffic got a little bit worse in October. I think that from our analysis the primary thing driving is a lack of newness in fashion. I think the current fashion look is getting a little long in the tooth and I wouldn’t be surprised that we start to see some signs of it changing a little bit more radically than it have let’s say over the last four or five years. ”

We don’t think the lack of traffic is a precursor of a recession environment

“what we have seen outside of the apparel and accessory areas and why I don’t believe that it is the lack of traffic is let’s a precursor of recession area environment as we seen real strength in a number of our categories.”