Urban Outfitters Reports Record Sales

Urban Outfitters posted record second-quarter sales and earnings beat expectations.

The Philly-retailer reported sales of $867 million — a 7 percent increase and the company’s highest second-quarter ever. Net sales increased 14 percent at Free People ($154 million), 4 percent at Urban Outfitters ($342 million) and 2 percent at the Anthropologie Group ($370 million). It saw a net increase of four stores and a 21 percent growth in wholesale sales.

Perhaps most importantly, gross profit margin increased 5 percent. The Wall Street Journal reports that gross margin has been an issue recently as the company “had a lower gross margin over the past five years than Gap Inc. and [it’s] far lower than fellow youth retailer Abercrombie & Fitch Co. or fast fashion giant H&M.”

The positive numbers come as the company routinely offends one group or another with its clothing. This week it was Hindus who were upset with the company for selling a ceramic jewelry stand in the shape of a Hindu goddess. That comes after the company used the likeness of deity Lord Ganesha on items like socks and duvet covers — which was seen as an insult.

Meanwhile, the company’s direct-to-consumer channel “continued to outperform stores, posting positive gains driven by increases in sessions, average order value, and session conversion,” said CFO Frank Conforti. While an increase in online sales may seem like a blessing, Forbes argues that it may not be all that profitable.

“On the surface, it seems that the direct-to-consumer channel should have higher margins since there are fewer expenses related to the retail stores,” said Forbes. “However, after factoring in the expenses related to storage, packaging and delivery of online orders, as well as sales mix, the channel actually accounts for weaker margins as compared to the brick-and-mortar business.”