Urban Outfitters 4Q14 Earnings Call Notes

Pretty solid increase in sales

“Total company sales for the quarter increased by 12% to a fourth quarter record of $1 billion. This was our first ever $1 billion quarter, a nice milestone to hit with all of our brands delivering positive Retail segment comp sales. The total sales increase was driven by a 6% Retail segment comp, a $46 million increase in non-comparable sales, including the opening of seven net new stores and a 21% jump in Wholesale sales”

Urban brand is in much better position

“the Urban brand is in a much better position versus this time last year, but while progress has been made, we are still a work in progress with much more to come. We believe the brand can begin to deliver markdown improvement in the first quarter, but much, if not all this improvement could be offset by unfavorable IMU, which we believe will not start to show meaningful improvement until the second quarter.”

We are not simply a brand. We are attracting an audience.

“We are not simply a brand selling products. We are attracting an audience that wants to be part of our culture through our product offering, music, photography, and other creative outlets.”

Making improvement with customer engagement

“Another area in which we are making solid improvement is within customer engagement. Our direct-to-consumer business continues to see strong top line sales growth. Our improved marketing and creative is clearly resonating with our core customer, evident not only in the top line direct sales numbers but also in the type of engagement we’re seeing within our social channels. It is becoming more and more common to see six figure likes on our Instagram posts, with followers growing significantly year-over-year on a monthly basis.’

Digital marketing group changes have paid dividends

“Nowhere within the Urban brand have the creative changes been more apparent and more impactful than in the digital marketing group. With the new team leading the way, what had been mostly juvenile pop graphics and sale messaging gave way to compelling photographic imagery and content designed to engage the customer and drive full price selling. This change, coupled with improved product, has delivered double digit sales gains in web and mobile full-price selling.”

Strong environment for consumer spending

“with relatively inexpensive energy prices, little to no inflation, and a strong U.S. dollar, we see a positive environment in the United States for consumer spending.”

You don’t have to race to the bottom on price when you have brand

As far as pricing is concerned, we don’t believe that that you have to raise to the bottom as you put it in pricing and decrease our prices. We think that when prices product around what the brand value proposition is and that value proposition is created by a number of things including those we said on the call, some of the direct-to-consumer marketing, the store experience, our association in the music world, and a number of other things that creates the value proposition.”

Create an emotional link to support a full price

“I’d direct your attention to, you can go into a Forever 21 and they have some stripe tops in there right aisle for under $11, and you could then go someplace else in the mall and find Michael Kors that has the similar top for $50, but they cost probably relatively the same to make, of course, probably a little bit more, but still it’s relatively the same. But, the Kors can get the $50, because of the value proposition. So our job as merchants is to create that emotional link with the customer and get the value proposition up and that will support a full price.”