URBN - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Incorporated First Quarter Fiscal 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce Oona McCullough, Director of Investor Relations. Ms. begin. may you McCullough,

Oona McCullough

the welcome In Earlier URBN issued this the may results release COVID-XX and XXXX. It's April XXXX following first fiscal The XXXX, global a referred quarter conference outlining discussions today's for operating and commentary, call. afternoon, comparisons forward-looking financial has period all to time, of noted, afternoon, pandemic note ending first XX, will statements. the be include fiscal press this three-month Good as the continues quarter a LLY. important and unless otherwise made to at to URBN's to the impact significant had to business. the have company on

content about extent from could duration and call current uncertainty time. impact change of materially the and at to and future practices the descriptions, materially on retail differ discussed estimates results could suggestions. any today's virus, Given or environment, results Accordingly, historical the the global

materially results and concerning factors the Exchange information Additional call, Co-President company's Commission. Officer, filings Richard Chief URBN; On Conforti, in you'll Securities Executive differ that results Frank and with and Hayne, today's URBN. cause actual is contained from the hear COO, to from could projected

pleased be that, we questions. address Following will to your

now on will more turn refer today's conference the to and over For call, commentary our I the call detailed Dick. please at website our performance quarterly text www.urbn.com. of Investor to Relations

Richard Hayne

than by progressed. LY against negative, American advanced all URBN teams the the I'm although strong prospects discuss to Today, demand quarter when quarter our in improvement and brands. at first showed produced by that Powerful on QX comps execution North then everyone. Thank drove categories results product afternoon, much first XX% consumer segment consumer began. some quarter, results I'll our the for plus you, and retail exceptionally pleased positive stronger significant comps and strong as Total segment the our XX% versus Oona, good across most stores, LLY. forecasted beyond. retail announce thoughts comp provide quarter and and

booming results by quarter. strategy events to thanks Meg promotional negative store orchestrating brand, offset excellent be April. by improved Retail deliver The earnings a improved per go price comp more brand first each decrease segment brand Outfitters. company-wide with channel of and than continued control, The Urban promotional an in fewer events price comp were remained holding produced in markdown selling remains North comps, and from retail share. in negative saw home quarter. in as sales XX%, effect double-digit double-digit AUR. brand ever team low the line My comp improvement sales despite full than increase, during price rate, improved impressive also in that recap conversion the selling in of the accomplishment to first low already bogie. basis favorable a margins with with the While double-digits. markdown the combined print. on strength for corresponding the brand. its The women's strong. sequential by goods. expense store a led improved, when sales, entire the to Better digital which double-digit and comps increase biggest Urban Sheila, performance Operating strength and starting QX's profit QX which rate in from a positive XX% in came selling continued top led the reached continues store February lowest to for quarter segment led Perhaps channel quarter America outstanding first jump in was have more tight The direct the record generated poised but in historically strong merchandise to markdown QX I'll full Urban apparel comps. together results an America full rate to year-to-date decrease now traffic in Urban North and recorded Store at The

apparel Anthropologie, XXX welcoming traffic QX Tricia like for America. I by having perspective, feel full-price positive. well, would the quarter, dresses Tricia, segment momentum rate swinging markdown positive. brand most thank you, I in a Everyone North and improvement. Smith, with a are showing to denim. from improvement Anthro's Meg led and the QX to times mid-single-digit for retail and was anniversary the what corresponding sequential building. home to the to showed increase brand's basis in can at point by large positive continued call. improvement the brand. a wonderful April eight led meaningful career and despite has to is in URBN comps of these the sales now in during comp including Total enthusiastic, quarter the The X,XXX results product Retail Anthropologie deliver but goods to earnings Global X% exciting improvement sales double-digit segment first Turning your not the increase came choosing and a perform way begin quarter with begin the merchandise store to momentum quarter. both rebound Tricia This previous a in I are the Fewer the continued important brand second From CEO basis and retail the point her team, promotions comps strong events segment brand Anthropologie, comps margins. a to exceptionally positive sales, promotional in a during news results, monthly

lowest the FP over generated almost movement quarter offset product The your an Free XX% increase The the Now, breathtaking brand. retail segment achieving showed easily and ever Store direct rate of People Free sales the comps in Every May. to quarter brand has comps. brand sales comp strong the was a triple-digit comps, which increase the any markdown URBN paced powerful, recorded store continued team improvement extraordinary sequential in Free with improve have total quarter to in negative which for recorded People's any almost Free on People the to attention in activewear, LLY’s have by how above basis People produced XXX It's could a XXX% margin gain quarter. XXX% red-hot mid-teens LLY. to LLY. delivered a the quarter. turn rate. profit, a an brand team better operating please points produced category see and This hard merchandise improvement almost led

from results Meg due stores URBN Free severe are open time XX. our or Sheila, in to brands under Of closed U.K., stores forced go in they Most were performance. could and stores remain only restrictions. limitations. Europe for reopened, Once XX rebounded to Movement April for brand occupancy led thanks FP to segment tighter close my Europe, a COVID-related were Compared the the People nicely stores. and retail by teams and North in URBN through all holiday XX% America, positive the to these less terrific So,

currently than strong European seen in While continuing XXX% three Europe, customers. brands store date gains digital post to are the showing channel comps. All direct much Together, suffered, have triple-digit increase their Retail digital sales Results and of offset digital sales, double-digit produced sales in store in the total May business May store boomed. gains. expected performing which in positive drove better a with sales new triple-digit segment to loss comp sales

our performance QX in Now other divisions. moving to

Last aligned versus full-price by its segment First, mix, some wholesale. better of accounts People wholesale Total decreased Wholesale Free on XX% sales go-forward this LLY. cutting selling. customer strategy adjusted back year, to with concentrating

the the will the sales brand While LLY adjustment in short-term, wholesale to retailers. benefit the in XXX% revenue year. fall operating of denim believe likely and this from exceeded this in QX, we Urban offering depressed their Urban half of better BDG produced launched second of result $X million, sustainably and in XXXX, LLY. income versus In wholesale jeans staples equity select line up

Next is Nuuly.

saw to March, early in on in new positive the goal This deliveries combined quarter. post our shift XXXX reopening subscribers Nuuly its resumed Many ending XX,XXX subscriber trend FY a and year, business, growth, has course began in last country first monthly with subscribers. the with their Nuuly meet had puts subscription behavior. who subscription of continued customer their rental As

spent efforts launch. since QX. results thanks deliver team the and in Nuuly My Nuuly much last made of efficiencies working those margins operational the team the gross and positive David to on they've addition, to brand of allow progress In for year excellent the

now future, The the we QX of prospects believe to the headwinds strong behind. COVID winds from for are Looking brightly. during blow the remainder and shine gale URBN's FY the faced XXXX quickly shifting we and

its some the quarter I'll favorably resulting over surge and first have all With wardrobe vaccines on Free in seems continuing to robust for another the result have returning to a could been demand time. the QX, to is Atlantic defy feeling North URBN likely to powerful record both normal Now the is improvements They're life. and and year. comps widely Each with they to currently three half People's call in This money respective that gravity. now positive double-digit environment. Frank. of impact want America U.K., their living to propel comp The spend outpacing of and to and new brand more sides back of are performance way consumers optimistic, and a in administered pass that, the remain

Frank Conforti

quarter fiscal thoughts on Dick, year financial discuss afternoon, full and good our On XXXX call, everyone. Thank today's performance. you, I second will our and

brands first quarter, the remain is growth. share about us we ahead our this of we many virus which demand, consumer markets, the Dick of we than of and have is similar optimistic As capturing to strong that our in year. demand winning more noted opportunity The believe of capable driving

Of always COVID most overall challenges still logistics, and pressures market. The of the numerous and production, in impacted business. is sourcing cost are problems areas the impact areas fulfillment, the and many course, to of labor there significantly driving and are overcome

year. these several out place how think keep posted the course the of we'll have they play pressures will on the impact we We and to in over of strategies you mitigate

full XXXX. Now, sales show speak sales believe detail of our the FY the I range. could driving We We improvement double-digit FY mid-teens in year to second total a quarter will low continue more the segment and comp range, could the versus in XXXX. sales land growth believe bit company second Retail to in steady quarter

selling. of forecast, well customer be inventory Free disciplined to regular control. Retail more quarter the and as could driven the comp increased increases on We segment price segment a of realignment points brand improvement first due could base that to wholesale XXX sales markdown focus are result offset margins and profit by the the XXXX. on deleverage markups partially favorable primarily by FY improving over to we basis product likely Based in could improvement the show as and as by commodity People gross initial believe to like of consumer quarter, and rates performance price part digital the by is sales, our lower Our Much pressured performance for penetration believe driven second the strong offset expense, current in largely be lower being of this delivery markdowns demand, freight logistics channel. negative

to our on below SG&A. plan, our the performance believe grow just second rate we moving on quarter a Now, sales Based for SG&A sales current at and could rate. growth

SG&A primarily growth marketing and in to growth. channel is Our digital to creative our greater support due spend robust planned

result in expenses our store by The due offset FY of controllable in was costs SG&A to incentive-based not partially planned a management. direct which achieved these be growth is Additionally, largely compensation, lower improved growth could labor XXXX.

relative our quarters, to past the teams will in done actual SG&A sales. manage have we As

to We rate distribution are year new spend $XXX support expenditures and planning growing capacity FY approximately million. stores. quarter tax business, secondarily, and to The the our is XXXX. effective fulfillment the full are at for second providing and currently Capital year for to planned to opening related approximately fiscal be digital increased primarily XX% our

operations completed for automated Our Kansas be new XXXX. of Kansas, facility distribution highly by the should City, spring in and opened

distribution the is planned year. facility live this new QX Our to in in U.K. of go

year. planning on Lastly, and XX approximately this stores XX we opening closing are new stores

opening locations in number does Our not partner markets. franchise new international include store

this XX new new that larger because, store more approximately favorable People years spores are number attractive us. year, to availability store lease in economics the Free of is as we the well as previous Our than makes adding terms

but statements. update is reflection As The a reminder, of forecast, to a the constitute our disclaims obligation current foregoing does a company simply forward-looking any views. not

turn to to back Dick. the I'm Now pleased call

Richard Hayne

Thanks, Frank.

work always, that produced hard and have our it's of creativity, extraordinary our As dedication success. teams an

delivering sourcing our XX,XXX conditions. the for team, to recognize difficult addition under logistics already work world. thank teams, performance. shared his associates the also partners recognize want and brand around In our fulfillment and Omar teams, very and worldwide. And amazing I I our many who, thanked they I've for record group, will Barbara including and did service and to QX her our

questions. That prepared for a remarks. continued to As the per our one over thank turn reminder, call limit I concludes support. shareholders now questions I your caller. their Finally, And your for our please

Operator

Thank [Operator comes Instructions] you. Stanley. Morgan line question the of from from Your first Greenberger Kimberly

now is open. line Your

Kimberly Greenberger

fantastic. you spinning. Okay, is Dick, Thank head so my much.

Richard Hayne

Kimberly. Hi

Kimberly Greenberger

The fourth acceleration around, resonating? diagnose catch-up? head dig is, I'm through extremely struggling wanted just drivers? whole sort think stock the QX? just play you parse that's QX here you momentum. very know understand, at under through brand, trying to wow. the through how were accelerating feeding this my Really is you, Are Is inventory business. sound through covers in what And do meaningful to just you wrap promising, is in the question turnabout of it this to business? enough, have you a seeing Dick, the of your the kind here? QX, progressively my bit I in product the just all nice just and get asking I to you really Are a Thanks. little of And And back For quarter. example, numbers stock

Richard Hayne

think Well, very -- first, thanks much, Kimberly. I

and to first there's think that demand And anxious with now. is friends. XX you last on think demand, market get product out. I the group I out. just that, I in the be I beginning a incredibly there strong is give to of get from target. because very have also is brands, think, lockdown, credit the The social and be right to creative And she, wearing now to to as And again. the when and emerge lounge she pants She the months sweats couldn't because of XX wanting wear, you think things months, she other you're I And she's meeting being is home. that I when and to been for at starting social. and more need and people again, just closet, her might said, and down locked do, is that are and track appropriate see buying out outside that go she's to refresh things for sorts

little are with Most because of compete had used the think retail is with there many think and activities demand spend has I still to able Demand place there. right is to that over I side. engage open. that to also she last she's to flushed the other And home So, in been the on year, the cash her beginning it that just dollar, now. very areas still recently the

we So, from that are I think benefiting that as well.

and it. it's behind think brands the the than I emergence think it. of product and the I So, and the it's the financial But it's more end imagery anything,

credit. I So, our a people of lot give

Kimberly Greenberger

Thanks Terrific. Dick.

Richard Hayne

you. Thank

Operator

Bank next And from Hutchinson your question of America. from comes Lorraine

Lorraine Hutchinson

maintaining balancing, a Thanks. now. Good with strong the how chasing you've inventory I'd demand made afternoon. progress right pretty so imagine talk about aggressively you thinking margin Can little you're about you're far? the bit that surging meeting

Richard Hayne

delta We X% correct. now. which finished quarter with We comp, are inventory being minus said, the total segment the inventory retail pretty between first a healthy you're at you. in minus chasing is Thank And plus XX% being and XX% comp, absolutely a up Hi, inventory the there. was certainly XX%. The so right drove inventory X% That transit. Lorraine. difference inventory comp

supply as is transit you the right chasing your inventory the an are earlier would than tell significant reason we as normally the inbound is with in from perspective. chase. for sales, increase product now one there in in So, chain are we that we the challenges I big ordering is would well

to to in able with as be a early would normally I balances. out try are strong this the inventory there. say, to we we is and product get demand that concerned possible our weeks And would. several ordering as are We meet order overall, here earlier is than not

think I have inventory a you. Our like agents are Thank to magic wand, can incredibly little we And waive in-house we now. actually clean. right a if more

Operator

Yih from Adrienne from comes question next your Barclays. And

Adrienne Yih

everybody. afternoon Good

to of It's congratulations. back in action. my add pleasing me nice hear Let and so old Urban

LLY? Free markdown, low on historically sort right, some Thank older My she more to give comp sale. how of one Urban quality is of quality shaping It than with What's commentary are you price is of kind of And school. recovery? is back to sell-through. of color levels to you regard this much. one back of plus is woman, the very us demand How probably congrats. Outfitters of that? of question work who full sort the it's Anthropologie's People return the to along sounds Can So, levels the over high coming she and on like of

Richard Hayne

is about to now going her talk that Adrienne, I'm ask that since Tricia to job.

Tricia Smith

Adrienne. Hi,

of the Anthropologie mentioned, the with brand, appetite the as I one most think about excited is newness. we're things Dick for

People seeing more significant eventually office again. creating Anthropologie improvement, is customer, I in some its place. apparel an more particularly occasions that definitely think I take for are to think events the business. return gathering And the we're with and

As mentioned, marketing back we've positively. newness -- she's newness on significantly really driving we on Dick and and focused promotions, really pulled responded

occasions. think introduced shop So, And the she's those as where seeing we we're I is pandemic, to beginning continue. now, think casual improvement apparel Anthropologie overall we're categories those in more seeing for that the I throughout overall

occasion think So the things take and to needs her return by we be Anthropologie. continue to casual office really from to leverage can care counts on newer the to fact for that able categories and encouraged she to of more that I special all

Richard Hayne

producing a all make basis. heard brands sure commentary, that And now segment Adrienne, the right you I'd are on double-digit that, retail just add prepared to comps

of you Anthropologie So gives idea an is. that where

Operator

comes next Citi. from Paul your And Lejuez from question

Kelly Crago

guess, had quarter. I I in This taking record Crago the rates Thanks that Paul. People Free UO you Kelly both is think and markdown question. Hi. on mentioned for my for

to were you be better XXXX? trends XQ curious just to the achieve you in would given in versus strong look Just XQ that's that the seeing? gross case, think curious Anthro that if And if able margin why will relative XQ

Richard Hayne

take of best be first second part. it, There's rate outdone, but markdown have part no Urban brand question, not let Free rate ever, in any quarter. I'll Well, the best to and QX its Okay. any had take the Frank markdown of People, the

So, a about did And That’s actually think there. point Anthropologie much we basis it's quarter XXX-plus in markdowns. improvement markdown spectacular of don't I that perspective. that congratulations from had better, both to ended them. believe also

involved the -- better we everybody can I think and myself better. brand, will Anthropologie do that and do believes Anthropologie

yes, can record we as Anthropologie -- So, markdowns get your the is, question we to can well. answer to low

Frank Conforti

your on And plan just of QX brands I -- for it plan are I kind that prudent as to be performing right records. said how thinking about think the the now, mentioned, Dick all and sort the With we're don't three well. optionally to has would just being business

certainly planning not in take as that a they all planning are in rates we are. three because set healthy and But not brands. new to brands don't But the performing now So, right please well for improvement exceptionally strong we're across markdown records QX. are

Operator

next question your is Telsey Telsey Advisory from Group. from And Dana

Dana Telsey

results. Good terrific the afternoon on and congratulations

Richard Hayne

Thanks Dana.

Dana Telsey

you. then how And about that you to three there does much at driving done, occupancy numbers talked you comparing the you comparison you've have year? XXXX. silhouette obviously, just continue secondly, the past, on here, a that in into do side, the that an renegotiating contributing? fashion brands? through you've costs Is Thank this? of that's As And the that's expect Where leases -- added these comps would new driver say to double-digit and but come that fashion all you're

Richard Hayne

said there that occurring. think remember what almost And it that know you shift And called do what mainstreaming remember now I Sure, you of silhouette we you the you're verbatim, out of I out we was that can process think seeing is in Dana change. right Dana. I ago. if Well, years two probably well remember, silhouette

big. about talked the over always morphing sort of over I little So, big a to little

so we're of fashion That's seeing. what driver. And that's sort the part of

have we class she And three change a the essentially. the COVID wardrobe spending I hot her talked then well in emerging before, an in XX very new of which about last The dresses the give particularly and last wants she's all customer that's from the example brands. over a other months, performed part it. all you spend, the she's buying. I apparel brands. is and not now lockdown, what mood I'll And she said three indication has very she's think a the as they're money thing, of at and the And as customer the good to that so earlier change of use is is

Frank Conforti

relates two, our comp, Those for digital leverage two occupancy good did it and we and costs. received in good job, quarter and negative the European in the going credits our increase was the as and reasons. penetration they We leverage first due job, really and should abatements to you primarily were did we where the say, that majority occupancy closed a despite for stores, abatements referenced, Dana, occupancy; related store the And back in the quarter. to store a and were to providing of I leases, One, the did of and that occupancy getting abatements. did as teams

look the opportunity lifted second forward starting are think the as the increased leverage channel penetration that the the occupancy lack to quarter by we now abatements European now again receiving driven for in which we fact of continue well store make second digital that we anticipate to stores will quarter, market. as to in improve have restrictions of business and we also there, to sort believe have be don't the the As do the up most been showing of we of stronger the as

Operator

line question JPMorgan from Matthew comes the from Boss . of next Your

line Your now is open.

Matthew Boss

Great. the congrats Thanks and on improvement.

Richard Hayne

Thanks Matt.

Matthew Boss

a now And gross half the sustainable just drivers maybe, year for multiyear over the gross how your margin to points, I gross margin? And about think think about to guess, to best think rank gross we margin year, level Frank, of consider? range as moving which relative outcomes we XXX forward full basis as first any up I XX.X%. of XXXX maybe So, with pre-pandemic margin, was

Richard Hayne

going this stay focused I'm Matt, to year. on So

still the digital lot it penetration there's all-important -- yet as a as And of to you things land. the to think as business. stores relates it relates and unfold, to know I of where

I think digital here, us for as first the the throughout quarter encouraging stores has what's continue really remained into second to and quarter that strong. is improve

profitability in us the the look do and us for going back strong basis with that leaves throughout I optimistic that year as the improvement gross entire as all velocity forward. XXX to can of And So year, to really Relative as model model like to of exists show the a if the certainly margin for what the improvement that in commented, for it now again and little URBN. for opportunity as the I the remains points is of the profit opportunity second it of quarter, first half relates business levels year to similar same the right I over for the the and entire continue quarter. year think we of think have

Operator

Janet comes Your from of the from line next JJK question Kloppenburg Research.

Your line now is open.

Janet Kloppenburg

certainly lot where it repositioning? Do we Or to Tricia. with that special in casual I Anthro, and quarter wanted Great occasion the And quarter. levels through trends. Hi, And sequentially of And, more couple thereof of you're there I the in was It's particular the to in levels repositioning turned as faster embedded second traffic they a and and you’ve to think congratulations. improvement Hi, ask work, work or are on for a Thanks emphasis great that, everybody lack May is wanted complete? what and stores and you about and traffic it's come? A store much. wondering still so Tricia. look city what kind than and seeing? expected. month-by-month how I welcome outlook questions. for you on I

Richard Hayne

we Okay, a question of conversion the in when of fewer are store. word there higher we are Janet. to AURs. because take one. traffic be a is that we but number AURs markdowns traffic It's you AUS to-date, to and seeing to quarter, and better traffic things that's -- have There's is AUS from both couple better a AUSs Higher are still I'll be also aware improved, a improved. us about improving. try just have comp also May not the Throughout having coming talk And the taken. and rate

still and is actually, Urban it's posting So And while conversion and the Free additional May, we're brand cusp. negative. is currently traffic seeing comp. in The comps. a that in right the of seeing positive brand, cases, But positive AUR improving, on is the some store we’re People overcome store sort

So, because like York you City together, the traffic there, only aren't but know, were down but markets, The take as challenging. and is But people And live them remains market a you back brands challenging, in when traffic not New -- actually remains because you the to yet, office tourism. we slightly seeing difficulties we're not some out. negative, all market lot. still the the pointed York New also

So, because is in Canadian North we look of the to it there a difficult then on bogey provinces point difficulty American are of in at of And also, lot stores are having a restrictions our overcome. the there double Canada. because big a number view,

we have a also places together, is which of say should to back pre-COVID and -- in the the where north almost store traffic in the Southwest. that Southeast all putting gets I number numbers, in So, the

see So, large then is a still comps see And by we few New mostly again, outliers, to York there important the you faster together, City. are at put a store that but traffic we cities, us far, improving, most rate. improving the

Tricia Smith

question. of the It's very you? days I'm I'll early the for team. are my the still role, How second Janet. part Hi, and still me in take getting know to

really already the going of groundwork into fantastic leverage and a opportunity significant we've more that's categories. some think to design I casual laid a However, identified continue in team been

the a As quite bit for business mentioned, denim strong underdeveloped Dick Anthropologie. is and

strengthen already to heavily that and that this we're to continuing looking So fall dresses. expand and pretty

occasions the think in has couple that business you're the May bit special ensuring of a I been categories the in Anthropologie I and last is loves well So, particularly brand both the really Anthropologie she rebalancing, a meet way a lot of done casual of as apparel the occasions really quarters that of a in and brand. see the to work improvement starting that think, as more that can

to is the of categories in would to great that. able full with work to I the and to be excited business a say, be occasion-based think stabilization team but we're So, the happening, the started of kind of just on casual able super addition, getting I expansion do

Operator

Your the next Marni comes Shapiro line Tracker. from question The from of Retail

Your now is open. line

MarniShapiro

about lie, PTSD in big comes And have to Hey shift; guys, back. congratulations. I a the not Dick, time talk over you big that little, little every going I'm over a little

I think do. we all

as this in were missed, been? everyone maybe think you I penetration if the about States a Europe? a about that through talk little in about digital. didn't did Could they you we've relative in into hear I you bit coming quarter the well U.S. could or DTC wondering, what just little noted you a sales the brands new And big I'm was saw if people United in where talk bit you jump to coming customers new as on to call -- talk does. just the

Richard Hayne

high from the Sure, customers -- XXs new in results first range XX% Digital QX. Marni. saw in in quarter, the North America up

being bit by now stores, in gain. the not was it People penetrating Europe. far but And for XX% brand a heavily versus a So little much a as the gain, penetration is nice with most different obviously, brand nice digital as is as concerned, And penetrated. Free around XX% as so

Operator

Janine Your from Jefferies. line from of next Stichter comes question the

Your open. is now line

Janine Stichter

there. to taking I'm on a question. the for I curious Hi, want bit Congrats incredible home thanks about you're my the what seeing ask category. results.

how pullback apparel that curious And you. in starved. returns, building, I any much category, been seeing inventory of that had the the you're particularly As home Thank is know home? I'm which on are then you

Richard Hayne

category home prepared very in The in Janine. home any Thanks, haven't produce we comps. the as of -- seen leaders Yes. And of or decor. categories. continues leading I to And really the the it's strong slowdown said amongst remarks,

landed an most bit in our seen of So, get inventory get get just we've What's back it actually the increase. to fact, is a and ability and shipped. it us holding

very apparel. any Asia, like It's retailers because with goods, in right you to difficult what I we with have home know, many from from So, we stuff anything bring to think this than opportunity air don't don't do switch now experiencing. we other ocean is different as are when home

So, delayed, broken, don't it our Other excited its say far slowdown treating at see with that I in about bogey. all. any sure that, extremely going than freight, the prospects being where so ocean the shouldn't it is is And is go we well. We're extremely -- forward. to biggest but us business I guess, home

Frank Conforti

apparel the want well. And based that in I addition as is add transit, business, in to just also to supporting home

are And mentioned, because as apparel. in-part, business growing. home its the apparel you've think We accelerate, seen strong, now chasing I due is and as Dick

So, the it's additive accelerating overall and business. sort of

is multiple right into chasing now. categories are in we what So,

Operator

from comes question next Fargo. of Your the Wells line Boruchow from Ike

is now line open. Your

Ike Boruchow

as Frank, wholesale, just Congrats to for specifically thanks. year? overall, the Free up, of potential this half continue understanding question do be a year? of you expect everyone. kind to once exit meaning wholesale People moves, your margin where to Hi back the think on then, you you in I quick the for business, to guess, QX, business do right-size the And the we down LLY versus guide business, that business

Richard Hayne

of in ask take and to going knows best. charge it to question, that it Sheila she she's because I'm Harrington

Sheila Harrington

Thank Okay. you.

strategically volumes. People the and have a our Free align was rates down, within of make But business of was brand were our direction. in way total as against where for brand business. our the But was we so where we've done said a continue total the So with to best XX% reflecting, revenue think, being strength and We that business maintain it the QX, feel mid-teens Dick with is being sort that income, vision Free to the historical operating the like wholesale from. op-income we to mentioned, planned and the healthier seen supports down, it Free with in grow People while, to up and high ability

Frank Conforti

for underlying very for to, I anticipate reversals, due opportunity actually rate mid-teens. business want And part where out quarter. point in the op profit that quarter. potential quarter mid-teens, is just And I People the further wouldn't the we in Free healthy just wholesale XX%. The first in is some -- that for to reversals that, some the the around inventory the is second reversals we first experienced reserve landed still underlying was actual rate of I

see selling, similar. with could operating So to great for reg-price reducing margins you job the profit wholesale due a And looks and inventory managing just more doing that's brand great aging. job their

overhang So inventory. recorded the of COVID. during that through of we've been we able down some We're to take that reserves working

Operator

from Baird. question of from Mark line next the comes Altschwager Your

Your open. line now is

Mark Altschwager

Thanks. appreciate for my Good taking questions. I evening.

in I of you guess, thinking rates markdown rational about in industry the chasing a are of seeing shift kind now, of pretty and going about from more respect broadly in categories? sheets. long how think Movement sustainability the hoping how supply can active right Or you. categories you on. of experience, periods you type business, wallet a recovers before as thinking lot you're being recovery like the And an kind persist out in some was just share to guess, seeing? industry about? the out your see talked demand of outpacing I of type given Do the I strong the as be separately, demand with Free there's mean, the to sustainability going you you how the lower demand spend, picture, So about, is then, consumer incremental of balance People, Thank fashion could inventory It these categories you going overcorrect bigger some are the I you're standpoint? talk Dick, seems

Richard Hayne

as inventories and to best, the to in our Mark, the way the don’t low it's into belief think best in not is I to going margins do, and it's will don't what market fast can low speed I'm second remain do we're that -- markdown reality rates. what of I will I to I But to to to not -- industry. I continue going the over again control we we're do, I'm because try founded intend and know first. take and possible, tell get the are to the that of disciplined you lean the selling industry markdowns, Sustainability that. as going and over because question accomplish full-price and

now. we know are our right and on Now sales don't do that have such somewhere. we coming. that it's need right where now are inventory but or more And available is, I it's the exactly we that, to we say said, it having sell Frank said water as inventory than chasing know as they

with pleased we're so And that.

of won't low increases inventory the up we we be or high if think unhappy. doubles-digit end at get I into QX, singles

that. So very, way think inventory, that's get want do I inventory. of We that, a still our will to over at very not conservative looking don't we and

Frank Conforti

the next Okay. of like performance And space. for question within Movement We and entered take a felt We a going growth the I'm there fashion with long-term on Movement. white activewear FP FP about was be space to to met. this view

got while we year a so certainly slowdown a the business. from pandemic, the bump And bit we of our last see don't little in

our a As are Movement across wider the up slowing our strength will selling Free Dick segment, see our customer alluded that depth this. brands. of the the And faster, on our wholesale than volume, and actually business down. sales select the opened retail that the also partners of brand all a conversion sales we're our We People than the don't and products traffic enormously of stores knowing brand. the FP to, we People breadth locations And We customers is the seven has. Free far where UPTs are attract believe of AOB QX. seeing Movement in are still higher We exceeding are to that further indicators improving and stronger. that And even strong are FP for total so expectations from

continuing look have think, to to, I a So we lot forward to grow this brand.

Operator

from Markets. Simeon Capital of line the from comes question BMO Siegel next Your

Your open. now is line

SimeonSiegel

guys. the on Congrats Thanks. progress,

missed quarter? And just at guys of last? it. Sorry, maybe that rent, the you carry rent rent AUR quantify Frank, then, will is expect this this this point, Did what dollars year this sorry. like the Or renegotiations at Thanks. savings is from versus you look say contingent if what to can occupancy I contingency? percent what you point forward And the

Frank Conforti

Sure.

on So base than variable or our want depending to percentage-based XX% coming it. to rents less or contingent into right you now, the year, how of refer are

for We have next about come year, XX% leases renewal percentage our over this XX% XX of years. On out over rent. our new those the deals -- of of up are three our

our AURs legacy over the next have years meaningfully three a stores our base. did give what are. they great by category. by of and lot Obviously, to We to we not So opportunity variable differ convert a brand out

did But higher a I say Free Dick Urban mentioned in of we increase being brands AUR a by and well increases that earlier, quarter, lower AUR the healthy, see there higher of was So double-digit AUR as Outfitters both lot can this change as driven sort mix and from we a quarter-to-quarter. People said, Anthropologie. will there's driving that most very did markdowns. by driven this well. AUS also as in see That was of, as

relates it three you Simeon, I in think As rent question, there, your abatements. the on to had

to our able negotiate closed. been we've stores what the for that abatements and the of periods did we what So time years were over past X.X is

the and when clawing of near rent -- authority otherwise. periods closed whether abatements existing be not leases. for There's government hit at reduction time. So Those themselves in going or stores back were back going or ongoing those on rent by

those of now we subside most remainder the abatements on as continue So of year. for the

Operator

the Jay from UBS. comes Sole from question line last of Our

line Your now is open.

Jay Sole

it's you customer I physical stimulus really in the that Thank that so up right do that least be much. made about perception to U.S. holiday, Do enthusiastic the view? that? spending? and been on maybe follow you mentioned. to a beyond? mean sales, how more thing? April, do at QX your consumer think How going the and think Great. helped consumer Dick, out, a March really long comment into long wanted is now. spend I you like in even you drive extend you to cash a -- is to kind feel you coming this about What's has you back of how a longevity handoff there's Do your the of But

Richard Hayne

in probably some had and the maybe I with but think an of Jay, the less Urban Anthropologie the may -- brand. brand Okay. the customers stimulus have in impact

the Most over think behind what's driver we there spend shutdown, is after she in hasn't this. that months who's able this and that many to the last been to person been are of been entertainment the restaurants. of main travel. even able XX -- to So this money, hasn't venues sense don't able go woman much the really Remember, that's out not she

So places she had that lot really money. a to spend hasn't

it's And so And accumulated. that's seeing. what we're think I

order I to as she's think said, wants cash, things reasonably back is, into. flushed get that she are and think mode into morphing she in I that social we with there the

our Travel most around. only her So dollar, available, long it's that certainly auto. back. but coming by guess travel for domestically. still gradually would say not increasing of is competition, I that not say now is increasing, how you'd I And the is

full destinations, short-hauls, not it. they're are most of to not while even So, full long-haul, for still able do overseas planes the on on and

have So going restaurants the expenses to come. sure restaurants vacations they are ourselves. are still to the we I’m and return

there. returning went on returning But, We are what's think business. nicely. of pretty we reasonably and So, cognizant the it of restaurants that out of going all see

there macro many when restaurants, at are restaurants the fewer you of around. environment look So,

much money or time restaurants as as spending on not either. much she's so, And

in one will some come point is gradually. coming back. the will And her back. have It each those So, come yes, will It back that we additional of future. for at areas competition wallet

I increasingly becomes competitive. think it that's after QX,

I most see what next think for we happens year. then through see we'll probably and good probably we're -- that holiday,

view my that. on that's So,

Richard Hayne

today. call we it. for thank that, I forward our And next much concludes being with of being And think, We look you very to quarter. part you

Operator

conference you concludes for Thank This participating. call. today's

You may now disconnect.

Urban Outfitters (URBN) 26 May 212022 Q1 Earnings call transcript