Urban Outfitters Sees Increased Foot Traffic, Dip in eCommerce Sales

With most COVID-19 pandemic restrictions lifted across North America and Europe, shoppers returned to Urban Outfitters stores in big numbers in the first quarter of fiscal 2022. Supply chain slowdowns, though, have changed the way the company is handling inventory for now.

Urban Outfitters — which includes Anthropologie, BHLDN, Free People, FP Movement, Terrain, Urban Outfitters, Nuuly and Menus & Venues — said its total inventory for the three-month period ending April 30 is up almost 32% ($152.2 million) year-over-year, and inventory costs increased 35% in that period because of supply chain snags, raw material cost hikes, longer lead times and lower-than-expected Q1 sales.

Urban Outfitters also reported double-digit growth in its retail store sales in its Q1 earnings report, a reflection of the lessening of quarantines and temporary store closures. The company also reported net income of $32 million for the quarter and net sales at a record $1.05 billion, up 13.4% from the prior year. Total retail segment net sales increased 12%, and comparable retail segment net sales grew 11%.

Comparable retail segment net sales increased 18% at the Anthropologie Group, 15% at the Free People Group and 1% at Urban Outfitters. Wholesale net sales increased 6%, including a 9% increase in Free People Group wholesale sales. Nuuly’s net sales increased by $15 million, thanks to a jump in subscribers.

Urban Outfitters’ retail store growth was partially offset by mid-single-digit negative digital channel sales, according to the company press release.

Inflationary pressures also impacted their bottom line.

“Unfortunately, the impact of inflation on our costs of doing business more than offset the benefit of record revenues,” said Richard A. Hayne, CEO, in the company press release Tuesday (May 24).

Related: Klarna Expands Urban Outfitters, Anthropologie Partnership to US

Last week, BNPL service Klarna announced an expansion of its partnership with Urban Outfitters to offer its interest-free Pay in 4 plan online at Urban Outfitters, Anthropologie, Free People, and items from BHLDN and Terrain into the U.S. after a longstanding collaboration in several European countries.

Klarna recently debuted a new virtual shopping tool, which will allow customers to shop online using in-store experts. The Klarna Store App, which is merchant-facing, means sellers “can share photos and videos of items and demo products live directly from the store floor, from home, or even from emerging dark store concepts,” according to the company.