Urban Outfitters Inc. has now seen its net income fall for each of the last four quarters. The company, which reported third-quarter earnings after the close of the market on Monday, said profits declined 31 percent amid deteriorating margins.
Net sales in the third quarter ended Oct. 31 increased 6 percent to $610 million, compared with $573.5 million in last year’s third quarter. The retailer reported net income for the quarter of $50.7 million, or 33 cents a share, compared with $73.1 million, or 43 cents per share, for the 2010 third quarter, beating Wall Street estimates of 32 cents a share. Net income for the nine months ended Oct. 31 was $146 million, or 91 cents a share. The results were largely driven by a 31 percent increase in Web traffic.
Comparable retail segment net sales, which include the direct-to-consumer channels, decreased 3 percent in the quarter and comp-store net sales fell 7 percent. Free People’s comps increased 14 percent, Urban Outfitters comps were flat and Anthropologie saw a 7 percent decline. Direct-to-consumer comparable net sales rose 15 percent and wholesale segment net sales increased 13 percent in the quarter.
Operating margins for the quarter dropped to 12 percent from 18.3 percent in the prior-year quarter.
“The organization and I were disappointed with our third-quarter performance,” said Glen Senk, chief executive officer. “The relative performance falls short of our historical accomplishments and goals.”
Senk said that at Anthropologie, bottoms, dresses, shoes and the home business were positive, but tops have been a problem. The category, which represents half of the retailer’s business in this time of year, is hurting at both Anthropologie and Urban Outfitters.
“We need more compelling product and we’re improving the offering,” said Senk. “We’ve seen this before when we had challenges making the tops relate to the bottoms perfectly or making the prints and textures work. We’re able to adjust the Web site much more quickly and we use that information to go back and guide our retail assortment, as well.”
Gross profit margin percentage in the third quarter declined by 571 basis points versus the prior year’s period, mainly due to higher markdowns to clear slow-moving women’s apparel at Anthropologie and Urban, as well as occupancy deleverage caused by negative comp-store sales.
During a Webcast, Senk was asked why it’s taken so long to turn the Anthropologie business around. “The last thing I want to do is sound defensive,” he said. “Last year, we had the second best year in company history. Anthropologie’s had superb performance for decades. We made some structural mistakes, some people mistakes and some fashion mistakes.”
Urban expects about a 2 percent increase in comp-store sales in the fourth quarter and is planning capital expenditures of $180 million to $190 million in 2012.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast