Urban Outfitters (URBN) shares collapse as 2020 holiday sales disappoint

Urban Outfitters shares fell on Tuesday after the clothing retailer reported disappointing holiday sales and said its current chief executive is expected to leave at the end of the month.

Its stock fell about 11% after-hours trading, after closing the day up nearly 6%.

Urban Outfitters, which also owns the Anthropologie and Free People brands, said current CEO Trish Donnelly will be leaving effective Jan.31 to pursue another career opportunity. She has appointed Sheila Harrington, current CEO of Free People, as CEO of Urban Outfitters, and she will continue to oversee the Free People banner.

In the two-month period ended Dec.31, Urban said his company’s total sales fell 8.4% from the previous year, while comparable store sales fell 9% due to the drop in store traffic due to the Covid pandemic. Comparable store sales track revenue online and in open stores for at least 12 months.

Its online sales grew by double digits, the company said, but that was not enough to make up for losses at its stores. Urban said sales were up 1% at Free People, down 8% at Urban Outfitters and down 12% at Anthropologie.

In a virtual presentation at the ICR annual conference on Tuesday afternoon, CFO Frank Conforti explained that the company keeps its inventory light during the holidays, especially in stores, to avoid having to cut back on surpluses. goods during the season. But that strategy could have backfired and affected in-store sales, Conforti said. “This may be the first time that we have experienced the negative impact due to our product model,” he said.

Urban is also building another warehouse in Kansas, he said, to be able to meet the spike in demand he is experiencing online, and he will open a temporary warehouse in the meantime for the help with digital controls.

The company noted that its same-store sales across the portfolio had “rebounded well” in January. However, he expects earnings to come under pressure in the fourth quarter due, in part, to increased spending on delivery and logistics due to the boom it is experiencing online.

For the eleven-month period ended Dec. 31, Urban said its total net sales fell 14.3%, while same-store sales fell 12% overall.

Also on Tuesday, Urban appointed Gabrielle Conforti, its current director of merchandising, as president of Urban’s North America division. Emma Wisden, current managing director of Urban’s Europe division, will lead Urban’s wholesale business, the company said.

Urban Outfitters shares had climbed nearly 15% in the past 12 months, as the market closed on Tuesday.