Urban Outfitters surges on a surprise profit (it's a techy fashion smoothie)
The Urban Anthropologie of Free People... That's a mouthful, but apparently a profitable one. Urban Outfitters is the boho-chic retailer that supplies the distressed denim jacket of your high-school dreams. Urban also owns Free People, where a floral tank costs $60, and Anthropologie, where a candle costs more than your car insurance.
- Urban lost $138M during the January-April quarter. Sales plunged across all three of its major brands as Urban stores closed for lockdowns. Analysts were expecting another loss during May-July.
- Surprise! Urban turned a $34M profit. All its brands were profitable and new digital customers jumped 70%. Urban stock popped 21% on the earnings shocker.
Slim fit inventory... Urban's sales were down 17%, but it snagged a profit by keeping its inventory lean. It didn't overspend on clothes/candles/etc, so it didn't lose money when the demand wasn't there. By carefully guarding against overstocking, Urban avoided the discounting death spiral: Once you go 70% off to clear out unsold stuff, you never go back (customers never forget).
Urban is a fashion smoothie with a scoop of techy innovation... Its business is diverse, like a chocolate-banana-kale concoction. In addition to its core clothing biz, Urban sells home decor, food, and skincare products. It also has a clothing rental subscription service called Nuuly. This techy scoop of almond butter makes up just ~1% of Urban's sales — But Nuuly's sales have doubled since last year. It's the kind of innovation you don't see with OG clothing retailers.