By Bill Peters
CEO highlights a ‘lively’ consumer, as results and forecast send shares higher after hours
People shop at an Urban Outfitters store in New York on Black Friday in 2017.
As bargain hunting dominates the retail landscape, Urban Outfitters Inc. on Tuesday said shoppers were waiting longer for expected holiday-season deals, but added that customers were still snapping up plenty of the retailer’s clothing at full price.
Executives for the clothing retailer – which along with its namesake stores owns the women’s clothing chains Anthropologie and Free People – made those remarks as its third-quarter results and fourth-quarter outlook sent shares rallying 17.4% higher after hours.
Chief Executive Richard Hayne, during Urban Outfitters’ (URBN) earnings call, said “customer engagement was lively” during the third quarter, as its efforts to expand Anthropologie and recharge its namesake stores start to pay off. But he said customers were also showing a willingness to hold out for more generous holiday-season discounts to emerge.
“We believe customers were waiting a bit longer this year to make their purchases until seasonal promotions began,” he said. However, he added: “We successfully met this shift with strong results in our early holiday events.”
But full-priced items still helped results at Anthropologie and Urban Outfitters stores. Those chains, along with Free People, put up positive same-store sales during the third quarter, led by a 12.5% increase at the Urban Outfitters segment.
Tricia Smith, Anthropologie’s global CEO, said there had been little pushback on the small, targeted price increases the chain had made in response to the U.S. tariffs on imports.
“We’re really planning very little incremental price increases over and above what we’ve already implemented this fall and holiday,” she said. “We really don’t anticipate price resistance.”
Hayne added that he felt there was “little need” to raise prices next year.
Over the past two weeks, Wall Street has been zeroed in on the condition of the U.S. consumer, who has been more aggressive in seeking out discounts to manage higher costs of living elsewhere. Other retailers have suggested that even as low-income customers feel those effects more directly, they haven’t seen a huge impact on business.
Urban Outfitters Chief Financial Officer Melanie Marein-Efron said the retailer was planning for total company revenue to grow in the high single digits for the fourth quarter, with same-store sales potentially up by mid-single digits. Wall Street expected same-store sales growth of 4.4% in the fourth quarter, which encompasses the final weeks of the holiday shopping season.
Urban Outfitters on Tuesday said it earned $1.28 a share for the third quarter, with $1.53 billion in sales and retail same-store sales gains of 8%.
All three figures topped Wall Street analysts’ estimates. Women’s denim helped at Urban Outfitters, while Anthropologie recently launched its popular Maeve clothing line as a standalone brand.
Urban Outfitters reported the results as the company – like Gap (GAP), which issued quarterly results last week – tries to regain relevance at its namesake stores. When Urban Outfitters reported results over the summer, management said that younger consumers were returning to those stores, following efforts to make them more welcoming.
However, at that time, some analysts wondered how much upside was left for the company. Shares are still up more than 24% this year as of Tuesday’s close.
-Bill Peters
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11-25-25 2018ET
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