Urban Outfitters Inc. said Monday that its first-quarter net income slid 27.1 percent, as it was forced to aggressively markdown “slow moving” women’s apparel inventory.
The Philadelphia-based retailer, known for its Urban Outfitters, Anthropologie and Free People brands, recorded a profit of $38.6 million, or 23 cents a diluted share, in the quarter ended April 30. This compared with year-ago net income of $53 million, or 31 cents a diluted share.
Net sales for the period rose 9.2 percent to $524 million, from $480 million in 2010.
Analysts anticipated earnings per share of 24 cents on sales of $522.1 million, Yahoo said.
Steep markdowns pushed gross margin down to 36.9 percent of sales versus 41.8 percent, a year earlier. Quarterly comparable-store sales fell 5 percent, as comp retail sales increased 30 percent and 1 percent at Free People and Urban Outfitters, respectively, and fell 6 percent at Anthropologie.
On a company conference call, chief executive officer Glen Senk called the quarter a “disappointment” and vowed to improve women’s apparel and accessories at the company’s namesake chain and at Anthropologie.
“We are working with our merchants to feel emboldened again,” he said, explaining that despite the depressed consumer environment, it’s not the right time for a “cautious approach” when making purchases.
Hampered by recent fashion missteps, the retailer, which plans to open 50 to 55 stores this year, expects markdowns in the second quarter to be comparable to those of the first quarter, noting that inventory productivity “continues to lag expectations.”
The company operates 178 Urban Outfitters stores, 156 Anthropologie stores, 47 Free People locations and one Terrain garden center.