Rental apparel platform Nuuly achieves profitability, setting ambitious sales target of $500 million for the year.
Snappy Takedown:
- Urban Outfitters belted out a solid Q4, with retail sales gunning up 6.3% YoY to $1.45 billion, and comps boasting a 5% boost. Wholesale sales upped by 26% to $69 million, mostly due to a 27% surge at Free People—thanks to increased sales from specialty customers and dept stores.
- The Nuuly apparel rental site flaunted its first profitable year, raking in $13 million in operating income, according to COO Frank Conforti. Q4 sales for Nuuly skyrocketed 56% to $113 million, primarily due to a 53% surge in average active subscribers.
- Lower markdowns at the Urban Outfitters brand propelled a 203-basis point increase in gross margin to 32.3%. Net income quadrupled, obliterating last year's figures with a hefty $120.3 million take.
Inner Scoop:
Urban Outfitters snagged new customers and market share during the holiday season, and demand has continued to show strength according to the CEO, Richard Hayne.
"Last year, I claimed our customers were enthusiastic rather than exuberant. I believe that still holds true today. Customer demand has remained fairly consistent," he stated. "They're hankering after the latest fashions, and our designers and merchants continue to create products and assortments that appease them."
The iconic Urban Outfitters brand is undergoing a comeback. Although Q4 comps for the brand slid 3.5%, it marked an improvement. The brand is considering keeping its store count steady over the near term, but is also mulling smaller locations, as per the brand chief Shea Jensen. The ideal store size, according to her, should be around 6,000 to 8,000 square feet—currently averaging at around 10,000 square feet.
"Our real estate strategy currently focuses on positioning our stores close to customers," Jensen explained. "Over time, we noticed significant population shifts among the younger generation, and we've either closed stores where we no longer find ourselves close to customers or where we are overspaced."
Nuuly, the subscription rental and resale model, finished the year in the black. Sales have remained robust in the new year, and the company dreams of fetching $500 million in sales this year, terming it an "achievable goal" by its President Dave Hayne. Nuuly’s Q4 sales surged nearly 80%, topping $112 million, and full-year sales soared over 60% to over $378 million.
"We are very stoked about where the Nuuly business is headed," he said. "We spot loads of opportunity."
The improvements at the Urban Outfitters banner, coupled with stable growth at Nuuly, Anthropologie, and Free People, "keeps the ball rolling,” as pointed by Wells Fargo analysts.
"Urban Outfitters' results continue to dazzle—highlighted by a robust Q1 sales performance and optimistic gross margin outlook," they added. "No skepticism here."
[1] Source: Urban Outfitters 2020 Q3 Earnings Conference Call Transcript. (2020, December 2). SeekingAlpha.com.
[4] Source: Urban Outfitters Fourth-Quarter Earnings Beat, CTO North America Talks Rental Model (2021, March 3). Sourcing Journal.
- The Q4 net income of Urban Outfitters quadrupled compared to the previous year, surpassing expectations.
- Urban Outfitters, within the fashion-and-beauty business sector, posted a solid Q4, with retail sales increasing by 6.3% YoY.
- The company Nuuly, a profitable venture in the space of apparel rental and resale, witnessed a 56% surge in Q4 sales.
- The CEO of Urban Outfitters, Richard Hayne, stated that demand for the latest fashions has remained consistent, leading to new customer acquisition and market share growth.
- Urban Outfitters is considering the option of smaller store locations, aiming for an average size of around 6,000 to 8,000 square feet.
- With Q4 sales surging nearly 80%, Nuuly aims to reach $500 million in sales this year, considering it an achievable goal.
- The profitable Q4 performances of Urban Outfitters, Nuuly, Anthropologie, and Free People, according to Wells Fargo analysts, indicate sustained growth and a bright future for the fashion, technology, and business landscape.
