US' Urban Outfitters posts record net sales of $1.11 bn in Q1 FY23

Net sales in the retail segment increased by 4 per cent YoY in Q1 FY23, with comparable retail segment net sales increasing by 5 per cent YoY. This gain was tempered by a 1 per cent negative impact due to foreign currency translation. High single-digit growth in digital channel sales and low single-digit growth in retail store sales contributed to the positive performance.

Notably, Free People group and Anthropologie group brands reported increased comparable retail segment net sales of 17 per cent YoY and 13 per cent YoY respectively, while Urban Outfitters experienced a decrease of 13 per cent YoY, the company said in its financial results for the three months ended April 30, 2023.

The wholesale segment did not perform as strongly in Q1 FY23, with net sales decreasing by 11 per cent YoY. This drop was mainly driven by a 14 per cent decrease in Free People group's wholesale sales, due to reduced sales to department stores and specialty customers. However, Urban Outfitters wholesale sales did increase by $1 million.

In contrast, Nuuly, the company's clothing rental service, saw its net sales increase by $28.6 million, a jump fuelled by a whopping 118 per cent increase in subscribers.

Gross profit rate for Q1 FY23 also saw an improvement, increasing by 260 basis points compared to Q1 FY22, leading to an increase of 14.8 per cent in gross profit dollars to $371.2 million. The higher gross profit rate was primarily due to increased initial merchandise markups at all three brands, primarily driven by lower inbound transportation costs.

Urban Outfitters also demonstrated successful inventory management during the quarter. As of April 30, 2023, total inventory decreased by $39.6 million, or 6.3 per cent, compared to the same date in 2022. This was chiefly due to improved inventory control and a more reliable supply chain.

The company posted a net income of $52.8 million for Q1 FY23. Record first quarter earnings per diluted share were also reported at $0.56.

“We are pleased to report record first quarter sales and earnings per share driven by a 5 per cent increase in comparable retail segment sales, strong growth in Nuuly Rent and a significant improvement in gross margins,” said Richard A Hayne, chief executive officer. “We are equally pleased that Q1’s sales strength has continued quarter-to-date.”

Fibre2Fashion News Desk (DP)