In a disclosure with the Securities and Exchange Commission, Urban noted that comparable-store sales are trending “in the high-single-digit negative” so far in the second quarter of the year.
While the retailer did not expand on the progress of the second quarter, which spans from the beginning of April to the end of June, Wall Street took it as a sign for worry and sent Urban’s stock down 10.31 percent to $16.35, an eight-year low.
A company representative could not be immediately reached for comment.
Baird Equity Research said it held a “fireside chat” with Urban chief financial officer Frank J. Conforti, where he “held a cautious tone” regarding the company’s near-term outlook.
The firm said weaker comps are being driven by apparel performance at Urban Outfitters and Anthropologie, “particularly in dresses,” and that “the falloff in conversion caught the team by surprise in recent weeks.”
Should full second-quarter sales ultimately show a decline, it would be a continuation of issues Urban has been facing on the physical retail front.
The company’s first-quarter results showed total comp sales, including web operations, down 3.1 percent at Urban Outfitters, down by 4.4 percent at Anthropologie Group and up 1.5 percent at Free People. Meanwhile, net income fell by 60 percent to $11.9 million and consolidated sales fell by 0.2 percent to $761.2 million.
Chief executive officer Richard Hayne at the time attributed the dip in sales to “sluggish” foot traffic in North America, an issue he noted is “impacting virtually all U.S. brick-and-mortar retailers.”
“There are simply too many stores at too many malls in North America,” he added.
Urban is not a wholly mall-based brand, but it’s looking to shake up its store base as well.
The company said in the SEC disclosure that it intends to close seven retail stores during 2017, including two Urban Outfitters, two Anthropologies and three Free People stores. There are also plans to open 18 stores during the year, including four each for Urban Outfitters and Anthropologie and 10 for Free People.
Going forward, Urban said it expects future store growth for the three brands to come from “modest expansion internationally.”
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