Urban Outfitters’ Profits Plunge 58% as Young Shoppers Flinch at Price Hikes

Urban Outfitters (Philadelphia) says while sales are growing at its Anthropologie and Free People chains, they have been falling at its namesake brand. The retailer made those disclosures in its third-quarter sales results for the period ending Oct. 31.

Specifically, Urban Outfitters said comparable retail sales increased 13 percent at the Anthropologie and 8 percent at the Free People Group but decreased 9 percent at Urban Outfitters. In addition, the retailer reported net sales for the period increased 3.9 percent over the same period last year to a record $1.18 billion, but that its net income fell to $37.2 million, a 58 percent drop from a year earlier.

“We are pleased to announce record Q3 sales fueled by strong ‘comps’ at the Anthropologie and Free People brands,” said CEO Richard Hayne said in a news release. “As we approach the all-important Black Friday/Cyber Monday weekend, we are encouraged by sales quarter-to-date.”

However, in a teleconference with stock analysts after the results were released, Hayne said the retailer’s namesake chain raised prices too high and that its younger customers are feeling the squeeze of inflation.

“I think that we’ve made a couple of mistakes. I think that we probably raised our prices a little more than we should have,” Hayne said. “I think the customer is telling us loud and clear that she doesn’t like that. And she’s buying more when we offer her promotions.

“Now I think that, that’s a mistake on our part, but I also think it’s a result of the macro climate with that particular customer group who is a little bit more challenged economically and inflation is really hurting them quite a bit.”

So far this year, the company has opened a total of 23 new retail locations: 13 Free People Group stores (including seven FP Movement stores), five Urban Outfitters stores, four Anthropologie Group stores and one Menus & Venues restaurant. It also closed four retail locations: two Urban Outfitters, one Anthropologie Group and one Free People.