Urban Outfitters Inc. came roaring out of the gate for 2018 — and chief executive officer Richard Hayne said he has the wind at his back.
The specialty retailer posted a 10 percent gain in first-quarter comparable sales and more than tripled profits, outpacing even the generally bullish of Hayne, who in March said the economic and fashion winds had shifted.
“Job and wage growth, tax cuts and strong consumer sentiment combined with a changing fashion silhouette to create a retail friendly environment,” Hayne told investors Tuesday. “It seems [though] I underestimated the power of that tailwind and how well our teams would execute. Results came in stronger than anticipated.”
The company’s three main businesses — Urban Outfitters, Antropologie and Free People — all posted “nicely positive” store comps for the first time in more than four years.
“The total company markdown rate in [the first quarter] was the lowest of any quarter in the last 10 years,” he said. “Better fashion execution, strong demand for apparel and accessories plus a disciplined inventory control reduced the need to take markdowns and drove strong comps and full price selling.”
While analysts took pains to congratulate Hayne on the quarter, the 70-year-old ceo was also asked about planning for his own replacement — some day.
“Those are issues that we deal with at the board level and we have been dealing with those issues now for a number of quarters,” Hayne said. “And I’m not prepared to say anything more about them other than the board is very aware, as am I every morning when I get up, that there is a point in time when I will no longer be the ceo.”
However far away that day is, for now Hayne seems to be enjoying his company’s retail revival.
Urban Outfitter’s first-quarter net income shot up more than threefold to $41.3 million, or 38 cents, from $11.9 million, or 10 cents, a year earlier.
Earnings per share came in 8 cents ahead of the 30 cents analysts projected, although investors apparently wanted more and sent shares of the retailer down 1.8 percent to $40.45 in after-hours trading.
Sales for the three months ended April 30 increased 12.4 percent to $855.7 million from $761.2 million. The 10 percent comp increase was made up of double-digit e-commerce growth and a positive performance from brick-and-mortar stores.
By brand, Free People drove comp sales up 15 percent, while the Anthropologie Group gained 10 percent and Urban Outfitters rose 8 percent. The company’s wholesale sales increased by 13 percent.
Urban’s been working for those sales increases.
The company said its selling, general and administrative expenses increased by $8 million, or 3.7 percent, with additional marketing expenses to fuel sales.
The Anthropologie Group, which includes Anthropologie as well as the much smaller BHLDN and Terrain brands, is the company’s largest business with net sales in the first quarter of $347.1 million. The namesake Urban Outfitters business comes in second with $322.7 million in sales.
During the quarter, the company opened four stores, including two Free People doors and two Urban Outfitters locations. Another Urban Outfitters was shuttered. All together, the firm has 616 locations, including 10 restaurants.
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