Urban Outfitters reports strong earnings in Q3

Dive Brief:

Urban Outfitters, which runs Anthropologie, BHLDN, Free People, Terrain, and Urban Outfitters stores, reported Q3 earnings above analysts' expectations on Monday, according to a company press release. The retailer reported a net sales increase of 9% to $974 million (a record, according to the company), up from $893 million a year ago.
Same-store sales increased 8% for the company overall, driven in part by "double-digit growth in the digital channel." By division, same-store sales rose 12% at Free People, 8% at the Anthropologie Group and 7% at Urban Outfitters.
The business announced a net income of $78 million, compared to $45 million in the year-ago quarter.

Dive Insight:

Urban Outfitters' strategy to turn the brand around appears to be working. Last year the company was struggling to define its space in specialty retail, emerging from fashion misses, lackluster e-commerce and an overreliance on its Free People label.

The company is bouncing back according to a transcript from Seeking Alpha. CEO Richard Hayne told investors that "strong demand for apparel and accessories drove much of these record-setting results." Hayne went on to say that streamlined inventory helped boost merchandise margins.

A shift in markdown strategy is also an improvement for the brand. "There are now fewer reductions than a year ago which is protecting margins," Neil Saunders, managing director of GlobalData Retail, said in an email to Retail Dive. "This, along with good store growth, is helping to offset some of the margin pressure from the continued rapid expansion of online."

The retailer's push further into the wholesale market drove increased net sales as well. The company reported a net sales increase for the wholesale division of 12% for the quarter. This past spring the company announced a partnership with Nordstrom that successfully introduced over 200 items from Anthropologie Home. Attention is also being drawn toward Urban Outfitters' home goods segment. After soft sales for a year in the category, it turned a corner with positive sales in Q3.