Shoppers with their Urban Outfitters shopping bags in Soho, New York
Richard Levine | Corbis | Getty Images
Shares of Urban Outfitters plummeted Tuesday after the clothing retailer reported disappointing Christmas sales and announced that its current CEO is leaving at the end of the month.
The stock fell about 11% in out-of-hours trading after the day was up nearly 6%.
Urban Outfitters, which also owns the Anthropologie and Free People brands, said current CEO Trish Donnelly will be leaving January 31 to pursue a new career opportunity. It has appointed Sheila Harrington, the current CEO of Free People, as CEO of Urban Outfitters, and she will continue to oversee the Free People flag.
During the two-month period ending December 31, Urban said the company’s total sales were down 8.4% from a year earlier, while sales at the same store were down 9% due to a decline in shopping traffic as a result of the Covid pandemic. Same-store sales track earnings, both online and in stores that have been open for at least 12 months.
Online sales were up double digits, the company said, but that was not enough to make up for the losses in stores. According to Urban, sales were up 1% at Free People, at Urban Outfitters by 8% and at Anthropologie by 12%.
In a virtual presentation at the annual ICR conference on Tuesday afternoon, CFO Frank Conforti explained that the company kept its inventories light during the holiday season, especially in stores, to avoid having to discount excess merchandise in season. But this strategy may have backfired and hit store sales, Conforti said. “This may be the first time we’ve experienced the negative impact of our product model,” he said.
Urban is also building another warehouse in Kansas, he said, to meet the peak of demand it is experiencing online, and in the meantime, it will open a temporary warehouse to help it with digital orders.
The company noted that its same-store sales across its portfolio “recovered nicely” in January. However, it expects fourth quarter earnings to come under pressure, in part due to increased delivery and logistics costs due to the strong increase online.
For the eleven-month period ending Dec. 31, Urban said total net sales fell 14.3%, while sales at the same store declined 12% overall.
Also Tuesday, Urban appointed Gabrielle Conforti, the current chief merchandising officer, president of Urban’s North American division. Emma Wisden, the current director of Urban’s Europe division, will head Urban’s wholesale business, the company said.
Shares of Urban Outfitters were up nearly 15% over the past 12 months, from Tuesday’s market close.