Urban Outfitters (URBN) 27 Feb 242024 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Urban Outfitters, Inc. Fourth Quarter Fiscal 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce Oona McCullough, Executive Director of Investor Relations. Ms. McCullough, you may begin.

to Fourth welcome Conference Fiscal and Call. afternoon, the Quarter URBN XXXX Good the press XX-month issued financial this may company Earlier afternoon, statements. a XX, following results the include forward-looking January and for release X- ending and period XXXX. The discussions operating the outlining actual differ note those materially statements. that Please from results may

you'll is Hayne, could and company's the filings URBN. Executive the Securities factors Additional results Frank and differ in information that Conforti, concerning Richard materially Melanie COO contained to Commission. On hear today's Officer, URBN; URBN; call, Exchange actual Officer, Chief Marein-Efron, cause from from projected results Co-President Financial Chief with and

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good Thank everyone. you, Oona, and afternoon,

my Before to remarks, pleasure call. welcome Shea we prepared begin to today's our it's Jensen

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home million URBN due and SG&A prior costs related in to I sales for and above full the expansion year. well full The while the will record by for low $XX flat. digit jumped earnings incentive-based drove higher low apparel XX category, to with points. fourth details was our high fourth quarter more as quarter, delivered expense increased operating comp quarter dollars diluted digit operating year quarter expense positive Anthropologie segment Retail primarily comps or increase $XX the in double and income was comps was the sales than comps creative XX% By support results compensation deleveraged segment to and as increase were deleverage and strong in sales margin versus double brand, strong share. growth, $X.XX single impressive The an and the improved quarter, of This more growth. provide an the by and increase customer completed digit by digital even healthy profit prior impressive and Anthropologie. The soared increased growth the XX% comparable For QX. store brand. performance. URBN's and profit company Retail The sales nicely marketing accessories delivered strong to basis per comps. team to now year impressive XX% starting continued positive million, a driven Total in XX%

fiscal customer occasion the range to entertainment XXXX, furniture decline enter to a by casual optimistic and broad the categories. newness. The fashion home in Anthropologie and of positively offset continues and continued year The and transitioned the in remains is decor. partially spring gift see strength responding a respond which consumer we well January, and to in As early was the to category, teams into category

target traction. of customer continued gain team's the quarter, strategy a the to younger During execution the slightly to brand

us the by accessories that strength brand remarkable along in and increased America quarter customer in to XX%. customers North new entertainment, continue New can The drive Anthropologie year acquisition, positive has gift a the the 'XX. comps nicely fiscal in optimistic with in apparel,

team your to was quarter, achieving Free again, Retail Once in versus segment last comp an XX% People produced call attention and Retail will People. with digital driven both segment by comps double-digit comp year. the channels. growth Free I Now outstanding an impressive gain store the

and a by and dollars. Early operating During delivered believe and to response and the FP XX% quarter, be and brand We the total near-flat full profitability. increased driven grow to when Retail growth to be segment apparel, while nicely Record elevated believe counts year segment X% achieving brand's at rate. the inventory reduce improved fiscal profitability accessories had spring fourth performance the the sales helped margins sales remarkable delivering could Wholesale brand has double-digit continue another year in been sales People channel sales across segment from brand The achieved prior during the department the customer customer quarter, Retail Free trends XXXX, in closeout year Segment profit strong quarter, in Wholesale Movement XXXX. movement. sales segment year record growth. We could positive quarter stores. improved The Free significantly new People double-digit deliver improved strong, fiscal gains levels. brand

the comp declines recorded into brand year. With North The sales brand had holiday on fiscal last XXXX, made quarter the the quarter. comp entering in believe Europe. America noted UO's to higher categories segment the in moving on fourth we gradual year levels progresses of significant year we and control, negative. When brand decline digital double-digit deliver in looking and to spoke, the and the than XXXX improvements all led both of Retail inventory store fiscal comp product and This declines result the were disappointing first markdowns as of the the Urban performance excess Global place fiscal entering brand. segment with XX% leaner Now during Retail Urban a year both the fourth better quarter in inventory similar quarter. comp with the new to leadership could negative these likely improvement significantly is inventories prior XXXX. inventory the was UO channels, driven season. by were and we Outfitters

Finally, I on business. Revenue the continued and to our will outperform expectations. growth touch subscriber Nuuly

the rental see during For first business, our most seasonally quarters. third significant subscribers and the growth we strong in

ended year, quarter. and the During XX% prior fourth third subscribers X% quarter, average the the growing XXX,XXX, at versus versus

our growth quarter. This into some by future abate and the facility fourth the incremental began quarter As to continue the capacity. transitioning second our first Missouri, you transition in of which in will The in the costs to support process the logistics, in know, we and have quarter. led capacity second Pennsylvania fulfillment center. subscriber reached full brand's facility nonrecurring tripling team Raymore, in will This

now totes as ramp brand announce quarter We Raymore, the first pleased of have first out to the will are up shipped to continue progresses. capacity the and

or XXXX. achieved record in Let their our for concept, X customer $XXX fiscal in I expanded gains you done sales employees Financial and over growth, year know and Nuuly, newest performance diluted call turn Marein-Efron, is I extraordinary ever time. there of Chief operating basis our Officer. and of as be we share. well first XXXX. Thank in to delivered XXX be be which of if didn't the me We work profit review made, Gross growth delivered growth X in per brands the billion now XX% but now more brand all as points, to to for of $X.X I thank culminating milestones our profit earnings your by improvements profitable and always margin remiss our would drove many in delivered will its year and XX% double-digit a sales. quarter. We fiscal growth new resulting million, sales X% Melanie congratulate

on afternoon, and thoughts Frank, good full everyone. 'XX. On and I will discuss call, you, today's our the first quarter Thank year fiscal

gradual to low we year first at the growth revenue FY with Retail Anthropologie of as Nuuly. We sales quarter, and begin similar We digit Sales versus quarter growth for could first single QX company year, last segment result could and brand UO and could low total comps that deliver driven and digits. that positive comps believe Nuuly by quarter, 'XX, year mid-double-digit comp segment single believe progresses. mid-single fourth As first at digit nicely sales we the People, we in improvement be sales full from the will Free quarter in look comp the growing the digits. believe growth growth mid-double

in first offset the by approximately Nuuly versus favorably from margins by and Missouri. in in in impact improve logistics growth Wholesale be current facility startup logistics The the offset quarter. The planned likely that sales a primarily points increase slight product by product and Nuuly segments segment. Based due be performance new partially first and initial segment the could could be for profit cross-functional Retail we basis initial costs rental margin largely will gross quarter rate fiscal Our 'XX. could gross product profit the initial believe sales our is initiatives XX improvements to costs margins. increase believe higher is by our year margins to in the which on in in plan, transition driven quarter the first We decline the of primarily higher fulfillment

brand believe at year We improved by improve higher still 'XX, opportunity FY be lower product to more growth performance FY ago result at deleverage Urban be and the improve to tightly XX points markdowns sales on albeit is to initial a for this full fiscal there believe the relates SG&A year, about Frank year basis and realized. transition to years half basis inbound result margins at could total margins of a the product freight initiative. inventory and plan opportunity it and quarter, year In 'XX and year. 'XX, in of thinking brand. versus of Outfitters could product as on lesser gross base year, as brands controlled gross important and for profit established XXX could remember of progress margin As extent. When recapture margins. 'XX 'XX, the all XXX fiscal 'XX. In into that the Urban margin our cross-functional year. Based the full primarily in profit margins of the The year second current made 'XX points to is fourth quarter to profit X-year began FY more second by mentioned, end we call. This plan X the Outfitters for the lower product growth we gross to a initiatives FY margins sales of in quarter 'XX. tremendous initial in financial the the fiscal This our the from of continue outpace plan, our of SG&A is costs this FY driven announced was the approximately initial third and our will

half Movement, double the our While to expenses Free growth be between Anthropologie grow rate not be will brands. In Nuuly support closer to growth. do believe could that relates Urban Outfitters sales delta is we and SG&A while half customers the at and larger will the growth We marketing could year in of increases low FP 'XX. in a the to year. first in QX, the the negative than sales SG&A expenses the sales People, to believe year expenses and believe in in the at SG&A rates the in prudent primarily FY reduced The we in brand, growth performance much it sales of have of second reduce digits, occur

sales variable up performance certain our always, fluctuate if level SG&A a and depending on As fluctuates, is maintain can we performing. of how that spending down business we

the Our the be for planned annual quarter. XX% is year for approximately effective tax XX% and to rate first

to moving inventory. Now on

past with result of FY believe product In weeks allowed faster of inventory has speed grow increased on in supply. to chain in up to levels year, and to us turns focused more been the 'XX, we've be speed year. and the closer able rate turns. demand As bring at a manage the our below to in reliable to coming supply We reliability, product product our lower that a could will sales continue a our increasing we growth. This

planned million timing project was spend lower capital planned As expenditure came you flows, cash approximately have may due 'XX FY our spend. FY to in 'XX of shifted which have FY 'XX noticed, than capital $XX 'XX. FY lower than into

normal XX% XX% Nuuly and Raymore, expansion our FY of For Missouri, FY 'XX capital shift spend expenditure operations. is in planned including supporting to at approximately follows: $XXX Frank to capital logistics and million, which broken of would including be timing support; investments, and from approximately the center related $XX office fulfillment store related home capacity the is remaining is capital XX% is project retail FY as approximately referenced; 'XX IT, million 'XX. The spend investment capital rental down logistics

approximately opening during stores 'XX. XX year fiscal XX be stores new approximately We will and closing

in by Anthropologie and Movement, being Free stores. new net driven store growth FP growth Our is People

FY XX we current XX and Free During opening People FP offset dilution a plan to, at FY we repurchase on XX stores shares plan Anthropologie on Movement stores, minimum, our to stores. Based the plans, in 'XX. 'XX,

Of repurchase share on Board of market conditions will contingent approval. course, be Director and activity

our a company foregoing current statements. any the reminder, a to but disclaims update obligation forward-looking does views. forecast of is a simply not reflection constitute As The

my Dick is Executive of it call over Now the pleasure URBN. to Chief Officer Hayne, turn to

Mel. you, Thank

about and of for strong People, albeit these their we somewhat brands As a given FP Nuuly their post I'm Frank healthy current optimistic believe this performances. Mel, QX trends, to all continue year, last and prospects X at Free comps, brands, rate you each heard can our lower Anthropologie, delivered of from Movement And than year.

market negative brand, growth few current excellent of fall this And the a say Outfitters, short young, double-digit in the sales brands I'll in negative Entering they and continued brands our fifth year year Urban plus fiscal we to for so view last of and Our with X enjoyed posted fast-growing we X opportunities QX. gained XXXX, far see larger share our expectations, comps remain year. about February. Today, comps consumer. that words our discuss

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shorts, cover-ups, and of skin first vacation-ready fashion shop consists care. The sundresses, like accessories essentials sandals,

helping and the mid-single believe the first positive February. features wear, beauty comps segment for drive half. Anthropologie to range concepts can Group in shop increases deliver digit year and X Overall, essentials. These the sleep gains and comp intimates, enjoying comp lounge an second Retail outsized we of The are expanded nicely

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People execute free-est Our in plan. a data XX attire sales X,XXX square The Movement in on additional generating its current recognition, brand has marketing both expanding growth footwear through sales while an the additional in that the digital confirms team with Movement FY our also Palm shop and helps opportunity XX% deliver the channel Beach, a attracting sensibility. To URBN brand brand like robust to wholesale customers that in end, pop-up with within credibility growth. solid increase highest the store specialty efforts, that drive opened only gives opening team above engagement. The areas brand that a accounts Movement new the optimistic also all brands, will very and strategy effortless activewear location North concentrates beach centered provides free-est, of sub-brand, America codes. In the plans the globally. over the space year, believe which accessories. in building We more base. but to business brick-and-mortar on not also surrounding open ZIP stores, digital list name offering Free The an Florida, expanding a is augments to 'XX, recognition. count activity-based product collection and This with additional additional method significantly Partnering the is of mid-February, premiere plans

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we that the around highly the to aware our acutely our America. is are team, turning brand line strengthening URBN's improve are focused opportunity that bottom in marketing improving single and offering Urban largest We North product offer. the To on building end,

joined I the earlier, As announced team as President UO Shea has Jensen America. of North

brand's Additionally, rejoined X I with has Digital Creative and the will these in Officer. renaissance the Dmitri as America. spearhead teams, believe Siegel Chief leaders, North their team Sheila, and working

deliver calls to but over plan this and comps of progress for the year the steady QX. flat reach brand Our in course slow

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I I as them their experience outstanding just they expectations. FY globe. operating thank that many around 'XX. Our our and and XX,XXX record-setting closing, recognize partners teams always, to our worldwide. They performance we exceed to we is poised and believe are their shared We the give ensure also that. In delivered products and creative service an job, leaders, the our do and thank merchant, brand in associates

over for now Finally, your prepared remarks, I concludes the turn our their our support. That continued for call thank shareholders and questions. I

Instructions] come with And question of line of Lorraine first Bank [Operator our the from will Hutchinson America.

brand. Urban on is the question My Outfitters

Now the how marketing quickly are that message? the Dmitri and Shea can then they board, on and impact product

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really focus in their larger immediately. although I can to QX a business impact they're the So say is can affect on dissecting as all they of parts much as

Boss will that from And Matthew JPMorgan. the come of line with

So Dick, here? the response expansion to picture, base could on successful the turnaround Urban at guess, do to to you from then positive cited And you larger elaborate the I see customer at early spoke you key you the what offering. as that Anthropologie. brand spring

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that tell going is of help the I turnaround. the to out leadership can't review, come So is will #X brand say, will in what place I but the having you that element

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the that comps and tribute the brand and selection leaders So we're have assortment to a the that's seeing done. good

the from that Yih And with Adrienne Barclays. will line of come

would Urban make understand higher People, is And then of there's Urban. you can down to Anthro, Free you range Dick, on obviously, my store thought that any margin, or margin the for Urban kind you impacting in those of for age perhaps Anthropologie maybe be gross Outfitters. coming peak maybe base a Wondering if the at the us operating of just they question profitability. sort rationalizing on, at Melanie, help end the what seem usefulness consider then Outfitters? And on

turn further And you URBN much further that's sustainable? So can how get you much go at do the think gross how a UO? if margins overall

to Even that we actually one we there, have Urban very have Adrienne. explored question overlap there's a Anthropologie, Okay, there's On more that through them. and focus with answer little. though we'll times number than found of groups, try Outfitters'

there are bedding think that sometimes I see we of Now some categories fairly some like products that's But minor. overlap.

and for Free always Free People. proclivity we Anthropologie, not. Free current between see has bleed for I think into femininity, brand. fashion probably could And given been the there's think Urban some I more Mel? the People that known But overlap that People from Urban and femininity customers

Adrienne. is This Frank,

we profit, to gross opportunity. think As it in remarks, say as IMU relates prepared think have I continued did brands our we all

that But that relates think to biggest add obviously, gross from improve for it we obviously, So always all inventory would rate still brand. as still we're Outfitters the opportunity all for markdown that And I to control this opportunities think brands. which better profit. there's come and their that speed, the for can happen year at upon Urban looking rates. But to there's is to impact yes, brands

And the Paul line of Citi. that with Lejuez will from come

retailers? brands. you little the business could about product-cost in dig bit of initiatives just that, are opportunity those How the performing specific you Dick, national on you People the -- just Movement initiatives? And recently doors to some is wondering other just a Could will Just at the to many related? exactly anything are that Free all opportunity set what secondly, UO there understand trying and how there. dig kind there in on the know of year whether business, there's be it, improve entered, I in kind to you or a into on of outside follow-up IMU of Is then IMU some this expand

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we So driven also is you drove lot. that less have freight, to which, that a lot our air as to But much freight a used know, of that we ocean expensive. and converted do

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are Going technology -- and forward, have that of better of use result automation. a additional be we process improvements will

and points So done do. that Sheila? XXX that But things the Frank to to years there's have start. we continuing more that those great basis are X like we're Mel the are come. Oh, delivering in the But both a and we believe is said,

I can really with to active brands like partnership hop the on lifestyle with Movement. Goods. along with some credibility in our other feel us given lot Sporting strong this DICK'S very of space, it's pleased a Okay. market. We've I regards in been

So how we love space. to we that care the And brand and store very of continue -- the positive they the hopefully be feel really will proud forward. take think within product going of I partnership

very we run huge wholesale the these the that to intentions our focus Movement, around outdoor, brand lifestyle and active the believe is the of strongly. thrive on areas with they studio space. represent has a FP As and opportunity wholesale of within And rest far channel each outdoor, as X focused

with And come the Dana line from Telsey that will Group. of Advisory Telsey

study what you the that from every Is particularly results time of you examining do is firm it? in talked thinking Or the business? it the how have delayed? is Sea, undergoing, with study? study to expect holistic that lastly inventory the the What's strategic if on margins about that And Urban of part levels, that external are any you you? an when Outfitters seeing are frame you home? and in using Dick, of is to division And are just then the you Red issues about it the

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to we our we're And far. months, X or listed I more the think in update so and of few will a you the about calls. happy than think take better study future progress we've XX on part

is this Dana, And Frank.

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will come from Tracker. Marni Shapiro with And that The Retail the line of

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tripling we're So as XXX,XXX we've to capacity to before, said up our network going subscribers. be

our will automated building than new more lead existing be efficiencies. much to Our building, should which

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So brand. headroom situation of for the and it much a in lot a should improved result

from Alex the of come will line that And Straton with Morgan Stanley.

for Perfect. peers? you who on business And the People of One you. standpoint? is that you think you positioning brand I that just from just over of time? size what And Movement. about a think of on Free do elaborate have competitive Can the X the

over And So that we're time. margin and be then gross on understand Urban What gross bps going XX% at all the to should sure opportunity up. over where exactly, that's margin ceiling? to trying question tied my is second make time? is just XXX of I'm just

we one alluded Okay. brand. brand Dick idea just to the brand. certainly our has as a largest, is it this roots, well I'll FP an first the deal it's Movement, consumers than fashion lifestyle, female-centric People is question. differentiates think be a opportunity think to, great its take which larger along of view, it with the of being Around We the that true merge and of a you have believe, fashionable Free with as can be how active to I performance. And that, of being itself performance as highly that welcomes point

around our for I brands the focused and -- that's for think say the sharing to we that we female win. wallet consumer, there stay it's to are our think But where focus, plan female would I athlete, we're with. share other

is Alex, Frank. then, this And

basis margin, cut to as mean XX On off, we XXX we about we points Sheila. opportunity profit gross year. didn't sorry, of -- to have think said, you the On this

think As play some that. QX basis think Dick to we're we there's is we still this XXX big in think that done but we do at IMU, unlock, other do we'll mark and role we a going hit by of to initiatives think technology point cross-functional year, noted, don't that

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-- direction Anthropologie a UO. and versus as for SHEIN about talk I'll Janet, Okay,

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we at least think we costs. can So be more and down bring the efficient

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intact. what we deliver So keep just the we that fix and to be that, that I want will marketing and think to product decide share have and then market our the

Janet, gross the me, margin. on profit we margin, our think overall -- excuse profit operating

be XX into basis for points in would So gross that a eat number SG&A that about could bit. little the XXX we to deleverage profit year, slight think with a just

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basis where XX of just XX year. still bit So that points, the XXX on to XXX shake all eating the shakes for out into that to out deleverage where little depend will a

Okay.

you think much talking I for a call. that thank look completes and few you I joining, very to that, in I all to the forward months.

today's concludes participating. Thank This all you program. for

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