Urban Outfitters Speeds Up And Branches Out

Flash back in time to 2016. Urban Outfitters was beginning to look like a lot of other physical retail brands that were getting into hot water in the digital age. Comparable sales were down, revenue was falling and the murmurs about another once-hip brand falling from grace started to make the rounds.

But Urban Outfitters — and its associated family of brands: Anthropologie, Free People, Terrain and BHLDN — has been battling back, expanding its offerings and tightening up its supply chain.

By the numbers, the effort is logging results. During its last quarterly report, the firm beat expectations on both earnings and revenues, with sales up 14 percent and earnings per share up 91 percent year-on-year. Same store sales growth clocked in at 13 percent — led by a 17 percent improvement at Free People, followed by a 15 percent uptick at its eponymous brand and 11 percent at Anthropologie. All of its brands had positive comparable sales during the last quarter. During the same time, it also logged double digit growth in the digital segment across brands — Free People and Anthropologie saw the biggest bump, with digital sales up 50 percent.

It is a series of results pushed by a multi-phase reset on the Urban Outfitters’ business, which has seen big upgrades to its digital platform, expansions in its offerings and an out-of the-box approach to developing new retail experiences that leverage the interplay between its brands and the crossover nature of its consumer base. Urban’s digital reset expanded options for delivery, allowed for in-store pickup, improved digital displays and load times and added additional payment methods for consumers, to improve and streamline checkout. Apple Pay was among the new payment methods to be added.

The brand has long carried various cosmetic products and brands on its physical and digital shelves, including cult favorites like Ouai and Sand & Sky and up-and-coming indie brands like Asarai and Winky Lux.

But now, Urban is taking a stab at its own line of cosmetics with its in-house brand, 0hii.

Sleekly packaged in super minimalist whites, with whimsical names and a very affordable price tag ($8 – $24), ohii offers up various masks, cleansers, creams, palettes, mascara, lip glosses and more. All of the items are promised to be both cruelty- and paraben-free. The Moonlight palette features colors such as “pixie” (white), “stardust” (light pink) and “siren” (sparkly grey), while the Treasures palette is more floral, with “zinnia” (peach), “cardamom” (sparkly yellow) and “aubergine”(sparkly purple).

More than rolling new things out, the brand has gotten better at putting those things in customers’ hands faster. It has significantly revised its backend with an eye toward efficiency, as fast fashion has come to dominate the retail space. In Urban’s core consumer demographic, trend lines move so quickly that it needs to keep up with the pace of a much more rapidly shifting retail cycle.

“We believe there is a shift in fashion that is creating demand for newness and variety,” said Hillary Super, president of apparel and accessories at Anthropologie on its first quarter earnings call.

Pushing down lead times has meant completely rethinking product development time.

“We have better decision-making. We have platformed fabrics and we have had pre-development, which has definitely allowed us to reduce our lead times,” said Executive Director of Sourcing Barbara Rozsas on last week’s call.

Better inventory management has not just boosted sales and increased consumer interest, but has also boosted margin by keeping more items out of the clearance bins.

Past that, Urban Outfitters is rethinking the retail experience entirely, and not in the ways typical of retailers of its type.

Urban Outfitters recently opened an experimental lifestyle center in suburban Pennsylvania called Devon Yard — a 6-acre, five-building retail village that houses multiple brands owned by the company. Though it has only been open for business for about two weeks, Urban’s CEO Richard Hayne has already touted it as success on its most recent call, noting the complex is doing “extremely well.”

Urban Outfitters is predicting strong growth for the rest of the year, though perhaps less dramatic results than seen in Q2.