Urban Outfitters Inc. bounced back solidly last year — and in the fourth quarter — but the action was online as brick-and-mortar sales lagged and the company struggled with higher shipping costs.
The retailer’s fourth-quarter net income totaled $41 million, or 41 cents a diluted share, an increase of 43.3 percent from a year earlier and more than twice the profit seen in the fourth quarter of 2019, before the pandemic.
Earnings per share came in 2 cents ahead of the 39 cents analysts projected and investors sent shares of the company up 3.4 percent to $28 in after-hours trading.
Sales for the three months ended Jan. 31 totaled $1.3 billion, up 22.4 percent from a year ago and an increase of 13.9 percent from two years ago.
The strongest showing came from the company’s Anthropologie Group division, which saw sales increase 29.5 percent.
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Comparable sales at the firm increased a collective 14 percent, with the company noting double-digit growth online was “partially offset by low double-digit negative retail store sales primarily due to reduced store traffic.”
Richard Hayne, chief executive officer, said: “Record fourth-quarter sales were driven by positive ‘comps’ at all brands. Strong customer response to our early spring offerings bode well for continued sales growth in the first quarter.”
For the full year, Urban Outfitters’ earnings were $310.6 million, or $3.13 a diluted share, up from net income of just $1.2 million a year ago and marking an increase of 85 percent over two years. Sales for 2021 were $4.5 billion, up 31.9 percent from 2020 and ahead 14.2 percent from 2019.
Hayne told analysts on a conference call: “Both air and ocean cargo rates reached unprecedented levels. These factors resulted in higher-than-planned transportation expenses, which hurt our merchandise margins and lowered fourth-quarter profitability. We believe these costs should level off or potentially recede somewhat by summer. In the meantime, there are a number of actions we will take to boost margins and help mitigate increased freight cost.”
In the fourth quarter, the company was able to offset some of the costs with higher prices, but is also taking a longer view and conducting a review to identify efficiencies that can help boost merchandise margins by 500 basis points over the next three years.
But the CEO said consumers are ready to shop.
“Our customers are anxious to return to normal life and they’re shopping to support that goal,” Hayne said. “They want to be out and about with family and friends, traveling, dining out and going to entertainment venues. Fashion and newness are resonating more than price and driving strong full-price sales of dresses [and] shoes, including heels.”
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