PHILADELPHIA, United States — A year ago, Urban Outfitters set out to get older. Now the company is finally showing its age.
The Urban Outfitters brand posted a 4 percent increase in comparable sales on Monday, its first bump in a year after three quarters of same-store sales dips ranging from 7 to 12 percent. That's an important milestone for a brand struggling to redefine itself and lure shoppers back into stores.
In a conference call with analysts this week, chief executive Richard Hayne attributed the success to a series of changes that started at Urban Outfitters a year ago. Suffering from three years of stagnant sales while sister brands Anthropologie and Free People prospered, Urban Outfitters had a problem: Its customer base was increasingly comprised of younger shoppers, all the way down to 14- and 15-year-olds. Those kids expected different prices and products than the older, trendier hipster types who represent the brand's traditional customer. “I don’t think this is a good place for us to be,” Hayne said last year. “We have always said that we want to be college and post- college in terms of the customer base that we try to serve.”
Urban Outfitters lost some of that focus under former CEO Glen Senk, who resigned in 2012. Slammed for selling "bizarre" and "lackluster" styles, the company's repeated missteps ate away at the brand and spooked investors. Hayne, the billionaire founder who reassumed the reins of Urban Outfitters when Senk left, hired Trish Donnelly, a veteran executive of Steven Alan and J. Crew, as Urban Outfitters' president in July of last year. He tasked her with reinvigorating the ailing brand.
As part of that strategy, Urban Outfitters reoriented itself to sell items, as Hayne put it in November, “appropriate for the man or woman living in Brooklyn or living in Abbot Kinney or any place else that is reasonably cool.” That meant fewer lowbrow, smart-aleck graphic tees and more fashionable party dresses and chic rompers. The company also improved the quality of some garments by using better fabrics, which led to higher prices.
According to Hayne, Urban Outfitters had also been marketing itself with imagery that was too "juvenile." The retailer's website, once covered in pop graphics and bright proclamations of discounts, now features more sophisticated photography. Right now, the Urban Outfitters homepage lacks any "sale" icons, and the photos look they belong on Instagram. Indeed, the brand’s Instagram page has similarly matured — executives say people are interacting with its posts more than ever.
The Urban Outfitters website on March 10, 2015, after the brand revamped its digital marketing efforts.
Stores are changing too. They’d become too cluttered and overwhelming, Donnelly said on Monday's call, so the company is undertaking a “detailed review of productivity” to figure out how much space to devote to each kind of product. Urban Outfitters is also cutting down the number of styles it sells to reduce redundancy. That culling process should eliminate some of the more questionable fashion choices that Urban Outfitters has offered in the past — in 2013, an awkward denim-tutu combo even managed to unnerve analysts at Goldman Sachs.
Bridget Weishaar, an analyst at Morningstar, said Urban Outfitters is staying "laser-focused" on its niche market of 18- to 28-year-olds. That focus is still a work-in-progress, but the newer clothes seem to be precisely what these shoppers want. "They's doing everything right," she said. "Their store windows look better, and they have blogs with stories and themes that are more attractive to the older customer."
Despite that progress, Urban Outfitters still seems intent on courting controversy. In February, the company was widely criticized when it sold a tapestry that resembled holocaust garb. A few months before that, a faux-bloodstained Kent State sweatshirt also yielded a flurry of bad PR. “By no means are we claiming that the business is fixed,” Donnelly said. “But we feel we have established momentum in the right direction.”
A representative for Urban Outfitters did not respond to a request for additional comment.
By: Kim Bhasin; editor: Katie Drummond.