Urban Outfitters Inc. has stabilized its namesake brand in North America and compensated with growth in its other businesses, including Anthropologie, Free People and, especially, FP Movement and the rental concept Nuuly.
That balancing act pushed Urbn’s net income up to $120.3 million in the fourth quarter from $47.8 million a year earlier. Adjusted earnings per share rose to $1.04 from 69 cents a year earlier — coming in 20 cents per share ahead of the 94 cents analysts forecast, according to Yahoo Finance.
Sales for the three months ended Jan. 31 increased 10.1 percent to $1.64 billion with comparable sales up 5.1 percent.
Among the company’s brands, Anthropologie showed momentum with an 8.3 percent comp increase, as did Free People, which was up 8 percent. Urban Outfitters comped down 3.5 percent, although an increase in full-price sales helped reduce operating losses.
Urban Outfitters
George Chinsee/WWD
But it was the company’s new concepts — working off admittedly smaller bases — that showed the most heat.
FP Movement, which is a subbrand of Free People, saw overall growth of 35 percent with a 19 percent retail segment comp in the quarter and 25 new stores last year.
And Nuuly — which rents subscribers looks from its own brands as well as third parties — really stood out, adding 20,000 active subscribers compared with the third quarter for a total of 300,000.
The rental business saw its adjusted subscription sales jump 55.6 percent to $112.5 million for the quarter.
That had 29 cents out of every dollar of adjusted revenue growth logged by Urbn coming from additional Nuuly subscriptions.
Nuuly also delivered $5.2 million in operating profits in the quarter and, for the first time, logged an annual operating profit, reeling in $13 million.
“Nuuly and FP Movement are two of the most exciting high-growth concepts in the market today,” crowed Richard Hayne, chief executive officer, on a conference call with analysts on Wednesday. “Both are nicely profitable and both continue to expand brand awareness and demonstrate the potential to scale further.”
Hayne also said Urban Outfitters has been improving and that the business is “now focused on acquiring new customers and driving profitable full price sales in Europe.”
Last year, Hayne described the consumer’s mood as “enthusiastic rather than exuberant” and the CEO stood by that assessment.
“We’re in a bottoms cycle and all of our brands are selling bottoms very briskly and the bigger the better,” Hayne said. “The full bottoms that are selling so well also require slimmer tops in order to complete the little over big silhouette. So we’re selling a number of tops well, but nowhere near as briskly as the bottoms.”
