Urban Outfitters’ namesake brand is struggling.
The brand’s same-store sales plunged 10% in the second quarter over last year, marking the fourth straight quarter of comparable sales declines.
By comparison, same-store sales increased 21% at Free People and 6% at Anthropologie in the second quarter.
The company blamed Urban Outfitters’ poor performance on fashion misses and “what had become incessant promotional activity” in an earnings call with analysts Monday.
President and CEO Richard Hayne outlined three key steps to returning to positive sales.
1. Raise average prices and improve fashion designs. As part of this goal, the company is planning to start selling more higher-quality fabrics.
2. Cut back on the “incessant” promotional activity that has ramped over the last year to clear out unpopular inventory.
To achieve that goal, the brand is reducing the risk associated with fashion misses by making leaner inventory orders, Hayne said.
“Given the difficult women’s apparel and accessory businesses at the Urban brand over the past nine months, those teams were rightfully very conservative when ordering initial back to school inventory,” Hayne said, according to a transcript of the call. “Lean buys, combined with strong sell-throughs on a number of items have created more out of stock situations than normal.”
“The merchants are now in chase mode,” so improved same-store sales will be a “gradual process,” he added.
3. Better visual merchandising in stores and online. Urban Outfitters wants its stores to become a place where customers want to hang out, not just shop. The company used its newest Manhattan location in Herald Square as an example of this new store concept. The 57,000-square-foot Herald Square store contains a coffee shop, a bookstore, and a hair salon.
The company is also focused on better visuals online. Hayne cited one case where a couple items at Free People weren’t selling well online, so the brand took new photos of the items.
“They went back and reshot those images and saw a fairly substantial lift in the selling,” Hayne said. “It brought home to us how important the imagery is when we’re talking about web.”
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