Urban Outfitters Profits Double, Puts Focus on Web

Fourth-quarter profits shot up 110 percent on the strength of double-digit revenue increases.

Urban Outfitters

The e-commerce revolution was in full view in Urban Outfitters Inc.’s fourth-quarter results — the company’s direct-to-consumer business, including its digital business, drove revenues and helped double the trendy retailer’s profits.

This story first appeared in the March 12, 2013 issue of WWD.  Subscribe Today.

Chief executive officer Richard Hayne said the digital transformation is just beginning.

“We are still in a very early stage of unlocking the potential that the Internet and mobile technologies bring to the consumer industry,” Hayne told analysts Monday on a conference call. “The extraordinary rate of change these disruptive forces create brings both significant risk and opportunity.”

This year Urban Outfitters is sinking money into bringing more talent on board, ramping up marketing and sharpening its technological capabilities.

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“The disruptive nature of technology is completely transforming the space, and we are making investments so we remain at the top of the heap and we don’t become an also-ran,” Hayne said.

Sales in the company’s direct-to-consumer business tallied $240.5 million in the fourth quarter, 28.1 percent of the firm’s total sales. That includes mobile sales, which doubled to more than $25 million.

The stores are pitching in. Hayne said the firm’s initiative to “pick, pack and ship,” fulfilling online orders from stores, drove $12 million in incremental sales, picking up online business that would have been lost to out-of-stocks.

Hayne said full-price goods were selling online and would continue to pick up steam.

“Eventually the Web will be a more robust place to sell full-price and higher-price merchandise, and we’re seeing that in a number of the brands,” he said.

Urban’s fourth-quarter profits jumped 110 percent to $82.5 million, or 56 cents a diluted share, from $39.3 million, or 27 cents, a year ago. Sales for the three months ended Jan. 31 rose 17.3 percent to $856.8 million from $730.6 million. The company’s comparable-store sales were flat for the quarter, but comp sales gained 11 percent when direct operations were included.

Comp sales for the Free People brand shot up 37 percent, while Urban Outfitters increased 11 percent and Anthropologie rose 7 percent.