Source: Urban Outfitters
He's back
URBN has stumbled the past few years by missing key fashion trends in apparel. URBN has had to offer signficant discounts to sell their clothes impacting company margins. URBN moved so far off path that the 64 year old founder Richard Hayne (owner of nearly 19% in stock) has taken back the CEO role with a $1 salary, he also brought out the broom. In the past year the CEO, CFO and brand managers of URBN have been removed.
Omni-channel done right
Richard has brought back with him a vision that 50% of URBN sales will be from online within 5 years. A realistic target given that online was 30% of overall sales during the most recent holiday period. Staff are now able to access mobile and iPad points of sale so they can see all the inventory that's available to fulfil an order if it isn't in the store. Other initiatives include iPads replacing registers allowing for a more personal interaction between sales and customers. It also works well financially with a fully loaded iPad costing $1,000 versus a regsiter for $5,000.
URBN is a big believer in melding the benefits of a retail store with the benefits of the pure play online retailers. The main takeaway from the pure play online businesses in the chart below is that with online URBN can expand their product range.
Source: Urban Outfitters
Selling through the web allows URBN to broaden their product range for extra sizes or colours that might not make sense with restricted space in a store. It can also sell products that are not profitable if sold in store. The product range can increase tremendously because instead of paying retail $40 a square foot URBN is paying warehouse rates of $4 a square foot. So they can justify more products and sell web exclusive products. URBN is also able to ship from stores not just distribution centres to fulfil internet orders.
Back to growth
URBN wants to be a growth company but total comparable same store sales were a negative 1%. That's no growth. Digging deeper this number is impacted as internet orders can be returned to stores which are charged against store sales. Excluding these returns comparable sales would have been low single digit positive.
Even though URBN has been around since GAP and Limited Brands were founded it is still an American based brand with 90% of sales. There is the potential to roll out more stores in line with Richard's goal of getting back to 20% revenue growth. URBN has around 430 stores they believe they can grow to to 850 not including Asia. URBN has the luck of the Irish!
Jason
Disclosure:
Decisive is long URBN
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