Urban Outfitters(US:URBN)2021-05-26 03:06Financial Data and Key Metrics Changes - URBN reported a total retail segment comparable sales increase of 51% year-over-year and 10% compared to the first quarter of fiscal 2020 [9][10] - The company achieved record Q1 earnings per share due to strong full-price selling and a decrease in markdown sales [11] - Total inventory was up 17%, while inventory in transit was a significant factor in the inventory management strategy [58][59] Business Line Data and Key Metrics Changes - Urban Outfitters brand saw a sequential improvement in store comps from double-digit negative in February to positive in April, with a 29% increase in full-price selling [12][13] - Anthropologie experienced a 1,200 basis point improvement in retail segment comps from the previous quarter, with a positive 1% comp in North America [15][18] - Free People achieved a remarkable 44% increase in retail segment comps year-over-year, with direct channel sales showing almost triple-digit growth [19][21] Market Data and Key Metrics Changes - In Europe, retail segment results were less positive due to COVID-related restrictions, but digital sales saw triple-digit comp gains [22][23] - May results in Europe showed strong double-digit positive comps, indicating a recovery in store performance [24] Company Strategy and Development Direction - The company plans to open approximately 54 new stores and close 18 stores this year, with a focus on enhancing distribution and fulfillment capacity [41][42] - URBN aims to maintain lower markdown rates and improve gross profit margins through disciplined inventory control and strong product performance [37][38] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q2 and FY 2022, citing strong consumer demand and a shift in the retail environment post-COVID [28][30] - The company noted challenges in sourcing, production, and logistics due to ongoing COVID impacts but has strategies in place to mitigate these pressures [33][34] Other Important Information - The wholesale segment sales decreased by 24% year-over-year, but Urban wholesale revenue exceeded $5 million, up 400% from last year [25][26] - Nuuly, the subscription rental business, is on track to meet its goal of 50,000 subscribers by the end of FY 2022 [27] Q&A Session Summary Question: Can you discuss the accelerating momentum in the business? - Management attributed the acceleration to strong product demand and consumer eagerness to refresh their wardrobes after lockdowns [52][54] Question: How are you balancing inventory with maintaining strong margins? - The company is aggressively chasing inventory while maintaining clean inventory balances and ordering products earlier to meet demand [58][60] Question: What is the quality of sales for Anthropologie? - Anthropologie is seeing significant improvement in apparel sales, particularly in casual categories, as customers return to social occasions [65][66] Question: How do you view the sustainability of lower markdown rates? - Management plans to remain disciplined with inventory management to sustain low markdown rates and full-price selling [123] Question: What is the outlook for consumer spending? - Management believes that consumer spending will remain strong through Q2, with gradual competition for consumer dollars expected to increase later in the year [140][141]