Urban Outfitters Inc. just reported a bang-up second quarter. Overall sales rose 13.7% to reach a record $992 million in the second quarter 2018. The company attributed those gains to “double-digit growth in the digital channel and positive retail store sales,” noting a comparable retail store increase of 13%.
The company remained conservative in its next-quarter guidance, however, in the high-single digits, citing strong third-quarter comps last year, particularly during October 2017.
Because of the company’s outstanding performance, Urban will make a one-time payment to all non-bonus eligible employees “as a thank you for their hard work,” Frank Conforti, the company’s CFO, said in the latest earnings call, noting this $2.5 million payout was included in the second-quarter SG&A expenses.
Free People scores another stellar quarter
With its diversified portfolio of brands heavy on fashion, home and now a restaurant group, though dining service amounts to less than 1% of revenue, Urban reported sales in its young (25-to-30 year old), contemporary women’s Free People brand rose 17%. Free People was also the primary contributor to the company’s 10% increase in its wholesale segment.
In addition, this marks the 11th consecutive quarter that Free People produced positive results in its retail segment.
During the earnings call, Richard Hayne, CEO, attributed FP’s growth to strong sales in its core apparel, accessories and intimates categories. He also noted that its new activewear Free People Movement and denim launches have been well received. In total Free People accounted for 11.3% of consolidated sales.
Urban Outfitters unisex-Millennial brand nails it
Urban’s young-adult (18-to-28 year old) lifestyle brand Urban Outfitters grew 15% in the quarter, which includes 180 U.S., 18 Canadian and 47 European stores. Urban Outfitters in North America makes up 30.8% of consolidated net sales.
UO also found success in self-checkout tested at its Herald Square, NY location, with more self-checkouts planned to be rolled out to other stores soon, and its Shoppable Instagram app which was launched in the second quarter to its 8 million followers.
Anthropologie is for grownups
Free People’s and Urban Outfitters’ big sister is Anthropologie Group, which consists of 226 stores, 204 in the U.S. Anthropologie is for grown-up women, aged 28-to-45 years, with a little more money in her pocketbook.
The most diverse of its brands, Anthropologie sells women’s fashion, activewear, intimates, fashion accessories, home furnishings, beauty and gift selections at more premium price points.
The Anthropologie Group also includes BHLDN wedding boutiques (which stands for BEHOLDEN with the vowels removed), Terrain garden centers and the company’s restaurant group which now numbers ten restaurants.
Accounting for 39.1% of North American consolidated net sales, Anthropologie rose 11% in the quarter, slightly lagging its youth-focused sibling brands.
But prospects look particularly bright for the future of Anthropologie judging from my experience at its new incarnation, called Devon Yard, which just opened on Philadelphia’s moneyed Main Line, close to where the brand got its start in 1992 in Wayne, PA.
Setting the table
Devon Yard was built on a six-acre site vacated by Waterloo Gardens center that is right next door to the historic Devon Horse Show and County Fair, in constant use since 1896.
Devon Yard has retained its outdoor-living past life with Terrain, a full-service nursery and outdoor-living center, in its courtyard. Visitors get to enjoy the greenery before they even get inside the main Anthropologie store.
Also flanking the courtyard is a Terrain Gardens event space that can accommodate 150 guests with in-house catering and beverage service. Hosting weddings is the natural target for the Terrain Gardens service, with Urban’s BHLDN Weddings boutique also on site, providing bridal parties with wedding gowns, shoes, accessories, stylist services and everything else needed to support that special day. And Terrain can provide the flowers too.
Devon Yard’s regular guests have two dining choices: Urban’s own Terrain Café with a farm-to-table vibe and its fine-dining Amis Trattoria for Italian fare under the direction of Philadelphia’s acclaimed chef, Brad Spence.
On my lunch-time visit Amis Trattoria wasn’t open yet and Terrain Café was packed. An hour-and-a-half wait time wasn’t in my plans that day, but after reviving with a glass of wine at the bar, I was ready to venture into the Anthropologie store.
Anthropologie is looking good
In my travels I have visited many Anthropologie stores and have been a fan. But Devon Yard takes Anthropologie to a whole new level, literally as it has two selling floors. Anthropologie is one of the few retailers that knows how to merchandise and sell fashion and fashionable home accessories.
In Devon Yard it goes even further to showcase a whole range of furniture and furnishings in a cohesive lifestyle setting. Custom home design services are prominently on display, along with various vignette groupings that feature the furniture and furnishings in room settings. The furniture and home décor accents felt right at home with the women’s fashion that you expect from Anthropologie.
It also has elevated its beauty offerings from the expected bath and body, skin care and cosmetics into a wellness concept. This follows the path it first introduced in Palo Alto, California earlier this year when it added a Wellness by Anthropologie shop in its flagship store there.
The wellness shop-in-shop features what the company describes as “ethical and conscious” products, including aromatherapy and essential oils, yoga mats, teas and elixirs, snack bags, supplements, and new-age crystal products like face rollers, water bottles, combs and toothbrushes.
Some 12 Anthropologie stores already have Wellness by Anthropologie shops, and more are planned for this fall.
Anthropologie’s future vision
Speaking to the new vision for Urban Outfitters Inc. and its Anthropologie, Terrain and other brands as imagined in Devon Yard, Andrew Carnie, president of home, garden and international Anthropologie Group, said in the earnings call, “Dick’s [referring to Hayne] original vision for Anthropologie was a complete lifestyle based around our customers’ life, how she dresses, how she decorates her home and how she lives her life.”
Regarding home, the Devon Yard store goes much deeper into the category than it has done previously in brick-and-mortar retail. Up until Devon Yard, Anthropologie’s home business was primarily digital, with “over 60% of our sales penetrated online,” Carnie said. “To be honest, we have only scratched the surface in the home business in North America.”
Both Hayne and Carnie see Devon Yard as only the beginning for the new Anthropologie. “It is a wonderful prototype that we would love to see in other places as well,” said Hayne.
And Carnie added, “There is a lot more to come in this space. It’s great that the home business and wellness and accessories and Anthropologie always look cohesive both online and [in] stores.”
Give people a reason to come and they will shop
Retailers have learned that it is not enough anymore to simply open a store and expect people to shop. They have to offer something more than new products to entice shoppers in.
The future for retailers, Ken Nisch, chairman of retail design firm JGA, explains is about delivering experiences along with product. “Retailers have to give people something to do, then they will shop. But shopping can’t be the thing to do,” he says. Urban Outfitter’s Devon Yard gives them that something to do and I fully expect people to shop there as a result.