August 31, 2011, 3:45 PM

Urban Outfitters prepares to grow online

The chain retailer will open a western U.S. distribution center to support e-commerce.

Mark Brohan

Research Director

Lead Photo

The apparel retailer recently launched a fall catalog on Facebook.

Direct sales, which are nearly all online, are growing nicely for specialty apparel chain retailer Urban Outfitters Inc. In fact, to support its growing e-commerce channel, Urban Outfitters, No. 48 in the Internet Retailer Top 500 Guide, is opening a new western U.S. distribution center, CEO Glen Senk told Wall Street analysts on the company’s recent second quarter earnings call.

To support its expanding e-commerce business, which includes UrbanOutfitters.com, Anthropologie.com, Freepeople.com, BHLDN.com and Terrain.com, Urban Outfitters is opening a new pick, pack and ship facility near Reno, NV. The new facility will be operational in the third quarter of 2012 before the brunt of the holiday shopping season. “We broke ground on our new West Coast fulfillment center in the quarter and when the facility is operational in the third quarter of next year, we’ll be able to reach 80% of the U.S. with two-day ground shipping service versus just 40% today,” Senk told analysts.

As Urban Outfitters grows, the retailer will continue to invest heavily in e-commerce and mobile commerce as younger apparel buyers take more of their shopping online, Senk told analysts. “Direct-to-consumer remains a focal point for the entire organization based upon what we believe is a paradigm shift towards online shopping,” Senk said. “We’re beginning to see results from our consumer insights initiative which we have translated into deliberate strategies for increasing customer acquisition, targeted communication and further expansion of our web assortments. We have continued to push investment in the sites themselves, social media, video, mobile technology and personalization.”

For the second quarter ended July 31, Urban Outfitters reported:

  • Direct sales increased 16.7% to $112.6 million from $96.5 million in the second quarter of 2010.
  • Total sales grew year over year 10.3% to $609.2 million from $552.2 million.
  • Comparable-store sales decreased 2%.
  • Net income decreased 20.9% to $56.7 million from $71.7 million in the second quarter of 2010.

Internet Retailer calculates the direct channel accounted for 18.5% of total sales compared with 17.5% in the second quarter.

For the first two quarters, Urban Outfitters reported:

  • Direct sales increased 17.6% to $214.9 million from $182.8 million in the second quarter of 2010.
  • Total sales grew year over year 9.7% to $1.13 billion from $1.03 billion.
  • Net income decreased 23.5% to $95.3 million from $124.6 million in the second quarter of 2010.

Internet Retailer calculates the direct channel accounted for 19.0% of total sales compared with 17.7% in the second quarter.

 

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