Urban Outfitters Inc. is the newest retailer to expertise the damaging results of Omicron.
On Tuesday, forward of the retailer’s presentation at ICR 2022, the digital retail convention, Urban Outfitters — which counts Urban Outfitters, the Anthropologie Group, Free People, Terrain and Bhldn amongst its manufacturers, along with rental subscription service Nuuly and a meals and beverage enterprise beneath the higher firm umbrella — revealed internet gross sales for the two-month and 11-month time intervals ending Dec. 31.
Free People is owned by Urban Outfitters Inc.
While complete firm internet gross sales had been optimistic, higher-than-expected transportation prices, lowered retailer occupancy and elevated promotional exercise in Free People’s wholesale division put a damper on vacation gross sales.
“Our top line is coming in exactly as we expected it to,” Frank Conforti, copresident and chief working officer at Urban Outfitters, stated throughout the ICR presentation Tuesday morning. “What was different for us in the fourth quarter was our inbound freight costs were higher than we expected. Obviously, it was really expensive to get product here. We relied very heavily on air and it was expensive to get product here. It came in more expensive than we had anticipated.”
He added that the Free People model “slowed just a little,” whereas in-store site visitors was down for the quarter. That’s along with lowered retailer hours, partly as a result of of worker absenteeism as associates examined optimistic for the newest pressure of COVID-19.
“Our stores were a little weaker than we had anticipated,” Conforti defined. “I believe we had thought our shops would decide up nearer to the vacations. We simply didn’t see that carry nearer to the vacations as we had in earlier seasons when individuals needed their packages beneath the tree in time.
“The cost pressures will definitely be a headwind in all of those categories in the first half of the year,” he continued. “It’s a complicated year.”
Melanie Marein-Efron, chief monetary officer at Urban Outfitters, added throughout the presentation that “there’s been disruption from absenteeism” in shops.
“Clearly there is an impact,” she stated. “Once we’re limiting our store hours, we’re limiting our sales.”
These headwinds aren’t particular to Urban Outfitters. In reality, provide chain woes and dwindling retailer site visitors have change into industrywide issues because the Omicron variant continues to rage all through the world. On Monday, Lululemon revised its steering downward thanks to provide chain constraints and labor points. The similar day Abercrombie & Fitch stated it misplaced revenues all through the vacation season as a result of of lack of stock. Walmart and Macy’s quickly minimize retailer hours lately as a result of so many workers have been falling sick with Omicron.
But in Urban Outfitters’ case, buyers didn’t appear to thoughts. Company shares had been up almost 2 % throughout Tuesday’s buying and selling session, thanks partly to sturdy general vacation gross sales.
“We feel good about the consumer; the consumer is still out there spending,” Conforti stated. “The variant is affecting our business. But the consumer seems to be resilient and continues to be spending at a high rate. And it doesn’t seem to be taking a lot of promotions to get her to spend.”
Total firm internet gross sales for the 2 months ending Dec. 31 had been up 14.6 %, in contrast with the identical timeframe in December 2019, or in pre-pandemic occasions. Total retail phase internet gross sales additionally grew, up 15 % throughout the quarter, whereas comparable retail internet gross sales rose 14 %, due to double-digit progress in digital channel gross sales. Comparable retail gross sales, nonetheless, offset some of the positive factors with high-single-digit damaging retail retailer gross sales.
By model, comparable retail phase internet gross sales throughout the vacation buying season had been up 47 % on the Free People Group, 15 % on the Anthropologie Group and three % at Urban Outfitters, in contrast with 2019’s pre-pandemic vacation season. In the wholesale division, internet gross sales fell 18 %, primarily from promotional exercise within the Free People Group.
The retailer is now anticipating complete fourth-quarter gross margins to deleverage due to higher-than-expected inbound transportation prices.
For the 11-month interval ending Dec. 31, complete firm internet gross sales rose 14.4 %, in contrast with the identical interval in 2019, whereas comparable retail phase internet gross sales had been up 16 % throughout the identical timeframe, led by double-digit progress in digital channel gross sales. Gains had been offset by low double-digit damaging retail retailer gross sales, pushed by lowered retailer site visitors. Net gross sales within the wholesale phase had been additionally down — 22 % — within the final 11 months, in contrast with 2019 ranges, which the corporate credit to elevated promotions in Free People’s wholesale division.
In the final 11 months, Urban Outfitters opened 55 new brick-and-mortar retail places, or 29 Free People (together with 18 FP Movement), 17 Urban Outfitters and 9 Anthropologie shops, for a complete of 680 shops unfold throughout North America and Europe.
Shares of Urban Outfitters are down about 1.57 % year-over-year.