Urban Outfitters shares tumble on disappointing holiday sales, retailer taps Harrington as CEO
Shoppers with their Urban Outfitters shopping bags in Soho in New York
Richard Levine | Corbis | Getty Images
Urban Outfitters shares tumbled Tuesday after the apparel retailer reported disappointing holiday sales and announced its current chief executive is set to depart at the end of the month.
Its stock dropped about 11% in after-hours trading, having closed the day up nearly 6%.
Urban Outfitters, which also owns the Anthropologie and Free People brands, said current CEO Trish Donnelly will be leaving, effective Jan. 31, to pursue another career opportunity. It has named Sheila Harrington, current CEO of Free People, as CEO of Urban Outfitters, and she will continue to oversee the Free People banner.
During the two-month period ended Dec. 31, Urban said its total company sales fell 8.4% from a year earlier, while same-store sales fell 9% due to declines in store traffic because of the Covid pandemic. Same-store sales track revenue both online and at stores open for at least 12 months.
Its online sales grew double digits, the company said, but that wasn’t enough to offset the losses in its stores. Urban said sales were up 1% at Free People, down 8% at Urban Outfitters, and down 12% at Anthropologie.
In a virtual presentation at the annual ICR Conference Tuesday afternoon, CFO Frank Conforti explained the company kept its inventories light during the holidays, especially in stores, to avoid having to discount excess merchandise at the season. But this strategy might have backfired and hit store sales, Conforti said. “This may be the first time we experienced the negative impact due to our product model,” he said.
Urban is also in the process of building another warehouse facility in Kansas, he said, to be able to meet the demand spike it is experiencing online, and it will open a temporary warehouse in the interim to help it with digital orders.
The company noted its same-store sales across the portfolio have “rebounded nicely” during January. However, it expects profits to be pressured during the fourth quarter due, in part, to heightened delivery and logistics expenses because of the surge it is experiencing online.
For the eleven-month period ended Dec. 31, Urban said its total net sales fell 14.3%, while same-store sales dropped 12% overall.
Also Tuesday, Urban named Gabrielle Conforti, its current chief merchandising officer, as president for Urban’s North America division. Emma Wisden, current managing director for Urban’s Europe division, will lead Urban’s wholesale business, the company said.
Urban Outfitters shares had climbed almost 15% over the past 12 months, as of Tuesday’s market close.