URBN - Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen, and welcome to the Urban Outfitters, Inc., Second Quarter Fiscal 2023 Earnings Conference 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 is being recorded. I would now like to introduce Oona McCullough, Executive Director of Investor Relations. Ms. begin. may you McCullough,

Oona McCullough

the welcome Earlier URBN issued this the XXXX. and may include The results the release a and period XXXX a impact continues quarter to to It's forward-looking COVID-XX global URBN's discussions conference outlining for time, on operating this have and call. afternoon, financial at and to the afternoon, following three-month second business. pandemic ending XX, the fiscal statements. press sixth Good the important July note has had significant Company

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

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

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

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

Richard Hayne

and Europe environment. macro second call X% results make positive comp provide Total print the strong a and performance. then I'll Thank about begin increasing sales by concerning comps in same revenue X%. year, saw X% Anthropologie segment remarks will quarter brand by both last second People consumer respectively. The especially segment to the believe that year. much year will in good details, Retail versus and thoughts the of significant over for increased robust segment over-assortment is in record-breaking execution future against our and with distortion Today, Oona, product the factors: QX and URBN to gain against afternoon, X%, due XX% problems. more offset along against FY inaccurate by first everyone. turn North inventory Urban Urban brand quarter posted brand last weakness brief included quarterly few period Melanie, you, 'XX. our Sales Retail delivered call led partially issues, and our Retail declined with Frank growth Overall, last regarding some the was who three I these to Free the weakness the and America. comps and observations We

which is less inflation, spending. customer fueled money prior money And have that that year included discretionary caused Urban Second the to stimulus is demand. for last severe an exaggerated comparison

grew QX, remained URBN challenging in on weighed Although operating and sales environment the profitability.

transportation and year we low MMU. normalized these in margins costs a combination freight to controlled and gross operating last inbound returned factors of two the while The markdowns achieved drove higher Even rate. versus rates expenses historic more were IMU and a though high SG&A Continued well lower, produced hurt decline profits. year-over-year

who the the robust to newness single-digit and her Anthro tailored case, to increase our differentiator. accommodate People XX% Anthropologie million, was People record posting pace in bifurcated the and products calendar, inflation to low slightly Free continued these positive both Those sales from a behavior well our has high but did Second comps. Customer in at two higher serving points date willing more To throughout a have spending level. despite QX, continue affluent a choosing with continue Demand brands record and price customer Free going able to customer, is perform nicely and out. a quarter QX. August, She's being brands teen and brands in both last XX% demanding affluence brands from with profits, moderate FY versus shopping social current income fashion for year's $XX drop but 'XX. operating shopping with at

and current customer the mirroring is crippling. energy For brand convenience who Urban and younger not inflation, is less like especially the economically is a affluent, food, around rent necessities

result, on If the waiting discretionary cautiously driving this full half. we we and see believe in and before bifurcation who deteriorate spending macroeconomic customer customers much This customer entire contrast promotions current situation price second a to for further, will the stark As People continue through more often Free the buying. Anthropologie is doesn't strong items sales. are the

positive. two result, nicely a last suffer the to brand year could the Urban versus produce is brands performance As while likely other and remain comps, negative

Finally, experience apparel response exceed to and continued I'm now QX. year. product subscribers XX,XXX, Active and a its concept business positive from URBN's increase percent report from in that pleased rental to service QX XX% XXX-plus newly jump a last QX to a strong offering

XXX,XXXth celebrating call nicely additional to In that, these and toward to provide our performance. from the addition, able Nuuly the our in 'XX. to more subs was turn subscriber profitability. FY year hopefully this to forward Frank profitable quarter Nuuly's later With excellent now in over sometime revenue and welcoming leverage increase look on We make I'll first progress details

Frank Conforti

by comp of Wholesale flat. million. to while to of a a Dick, growth segment sales everyone. X% increase I People. was by brand. will sales Nuuly at by subscribers increase increase sales results some company in more sales sales sales grew $XX due driven to due was in sales a good billion, afternoon, comp increase begin The single-digit Retail QX segment driven Retail of and $X.X a company sales and a X% my segment the record growth X% comp a Free increase in was the comparable versus quarter our prior increase segment total robust you, Wholesale Total sales, low total channel detailed second quarter, X%, of significant were prior by Nuuly's commentary segment year. store digital Thank discussing by followed notes comp from

due freight exceptional prior year excess deleverage were increase lower in selling inventory a low Markdowns profit the receipts sales remains at decline during last each had a to certain challenging. the challenges, to positive, and planned all because to from in certain were end initial was inventory although due product rates performance were excess costs noted, markdown at protect exceptionally increased expense. higher coupled brands was the operating Total last this higher sales elevated quarter year, brand operating year year profit the Dick slower markdowns, The ago. and to volatile and of and lower the in chain mainly earlier because environment in inventory markups delivery contributed versus than part a As of in QX, categories. with operating Those supply resulting against inbound costs, higher is categories.

the to third Urban sell We to through Outfitters inventory. in America North overage. The have markdowns excess deploy this will largest throughout has brand quarter incremental the

position the IMU quarter working year. impact last The news end third lower of being the with towards in elevated do versus continued in of inventory was end is meaningfully easier the are back the our costs. improved chain to that due good sales supply of line the fiscal half and year the by the year. performance only at comparisons We not of get

have in on deliver which our also starting IMU trend. of improving are an IMU, to initiatives improve resulted We both our to

times gradually transit the market pricing Additionally, are in and beginning improve. to

continues, increased our times pre-pandemic versus not only could improvement markdowns and but early and as well. very significantly still are this still is transit costs overall levels. If benefit it IMU, it While

our the markets. of opportunity you fashion chain gives our the reliable the of is is all prior many the and our to fashion. in greater to surcharges supply speed versus built inflation know, As quarter faster the on in deliver year, Delivery right the merchants due fuel deleveraged our fuel model primarily part and expense significant related in more to

months is The positive comps Anthropologie delivered apparel of an comps. team by prior quarter. been business as women's Anthropologie impressive store pants, digital to Retail shoes positive by is a well new versus responding that portion all being nicely brand the the May categories The segment brand, the in heels. consumer Anthropologie shipments. now and out-of-market both year. and positive with surcharges provide dresses, three strategy to with in will in shopping comps was shipments the able more with acquiring category, are July have dressed-up and strongest. and younger and Anthropologie still offset more jackets starting brand We the with these The I team's comp delivered By is in on execution of attracting Group. increase delivered the QX our split reduce home driven initiatives and The like details comps they positive The and X% impact a customers. having

and gift decor Within offset category, strength furniture in the home and demand the entertainment. in weaknesses

remain we product Although performing it the early, half brand's back optimistic the for while major and the performance is of across about well year. categories, is

single-digit driven August offset Retail by segment accelerated call progressed, a which strong in quarter the has will low to the attention last produced your Group. Once growth double-digit quarter segment decline an comps as Retail the channel, People comps results. a achieving sales were segment team year. with again, Now in from was versus X% by Free gain Retail stores. digital Free People comp partially moderated I July's but the

of XX% versus During and with by categories strong very a customer in growth growing outstanding quarter multiyear retail brand and the on strength quarter, delivered Movement The apparel. several XX% another FP across top growth the their segment year brand achieved accessories delivering comparison. base last

increased FP in and believe the New store People to we in for during The that bodes department performance which store by the delivered to see by continued fall the believe may half similar the lower change in to with partially offset exceed Wholesale look year in segment segment the accounts. store sales the the second second quarter Retail in which partners, customer, back well accounts. growth Free have sales This a the increase the quarter. X% in performance, continue inventory wholesale coupled of received a declines specialty could driven levels People's weigh wholesale quarter, brand. half department of stores rate and Early the brand's was of third on by Movement existing due the year. been expectations weaknesses profit We well strength to segment could receipts second the Free

result America to of delivered the year, Now and store X% which comp segment sales. negative brand, Outfitters digital was negative the double-digit Urban in negative comp comp the versus due disappointing moving prior North Retail to performance UO's a on

Urban presents believe year, UO environment a North outsized America from North in years, unique American prior As the the in in to trillions in inflation impact on an XX addition is rates lapping Dick funding customer. previously having the mentioned, stimulus it we for over macro Outfitters seen customer. With the challenge of dollars not

can execute the fashion challenging While The for appropriately. macro we not period, know their did brand also customer we has better. but Urban remain working, distort may environment know is some we that buys for

As a to North to result, convert need more the and will be customer. America brand in attract this promotional

in levels America inventory we would like. are higher than North Additionally,

focused delivering well, to perform gaining are market third share. Customer and those a levels, prior for higher will correcting position, quarter on in XX% Europe year. UO stores, are In Retail continues better We the lead strong the which contrast, the segment to inventory compared we for quarter. a inventory exceptionally markdowns was to is traffic comp believe in the levels brand remarkably

the I does EU comps As our brand total to will results the the believe could in we over deliver deliver Officer. turn similar segment Retail while long the results. Outfitters not continue Financial economy quarter get Chief now can worse, as to third Melanie, Urban to materially positive call QX's UO

Melanie Marein-Efron

good you, third our quarter performance. discuss Frank, afternoon, the financial 'XX everyone. I year thoughts and on and will fiscal full Thank

low positive comp single-digit trends the sales started plans, sales Our Retail out comps. comp quarter. our for third and sales our the growth URBN segment believe performance our segment digit low Based could positive have sales register QX similar on quarter with performance URBN comp we Retail to quarter-to-date single

Our Retail in Together, be Wholesale single-digit to is by company our growth segment's sales the partially lower range. this total growth segment. low sales likely would than offset in result

third XXX quarter. as rates could could decline versus last largely margin. year's and gross decline inventory third all we Based The as that quarter higher in profit more growth current today's points brands profit than be profit gross to the elevated for driven levels exceptionally basis by on margins margins believe this performance low sales on by markdown Now well markdown at plan, year. rates

year, levels experienced third quarter inventory rates. reminder, an and due benefited significantly QX low could unsustainably keep year's we shortfalls last record to a last very from not gross strong significant markdown supply As interruptions. was receipt margin severe pace In demand chain when our

the in SG&A single high for believe will quarter We third Moving SG&A. to the growth digits. increase

Our of the planned more result growth rate pre-pandemic last versus would year. increased This and line in deleveraged versus in SG&A percent but a to year, SG&A we sales customer is acquisition prior net primarily labor store rate could levels. costs marketing SG&A with due to as in expect come costs

currently are rate The for increased XX% planning 'XX. We and capacity quarter year related primarily approximately million. to openings. the year tax at spending be store XX% to fulfillment FY third providing planned Capital expenditures new our effective and is for distribution $XXX the the for fiscal approximately and full are

we XX year. are stores and planning on stores opening Lastly, XX approximately new during fiscal approximately the closing

number FP stores Movement this store XX new new Our includes year.

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

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

Richard Hayne

extra thank That service their hard associates will and thank creative the many world amazing thank now the overcome turn you, work, dedication your And partners I support. their interest Frank, to creativity. thank we over in shareholders our around finally, call our I I their I you, for Thank the and leaders. brand, continued helping questions. supply for our also their for remarks. concludes chain you XX,XXX for faced. our thank shared numerous prepared effort and us worldwide I and our Melanie. disruptions

please reminder, per questions one caller. limit a As to your

Operator

will come Kimberly ahead. Morgan question first Stanley. Our Please Instructions] Greenberger [Operator with from go

Kimberly Greenberger

double-click quarter, were talked regard that inventory certain I Dick, correct. with about distortions -- on were to wanted comments that the during you the not inventory that second there to

you in if assessment properly Could is and elaborate or on that make and to And your to too able have point high least the distorted. what quarter inventory that? buys either the buys quarter adjustments second this at the time, just address your know third second that to during like conclusion maybe sounds quarter it is was your So at not let to in fourth on I've saw sort what you come then me right you quarter? of been

Richard Hayne

I'm Frank Kimberly. to going Okay, take to that.

with going bit. think you're overall. Urban and about to little a confusing inventory inventory I I talked talk about he's

Frank Conforti

Hey, the question. for Kimberly, thanks

due So part First, is our the inventory of cost to in increased inventory.

most which with obviously, Retail as is up chain supply is of cost input at inventory, as looking XX% this by easily think well the as what's our this only the is, segment up well costs XX%. other illustrated units cost driving I mix. And at increased as product

product categories things about mix that's our think dress You working impacting increase and there. the like cost your also

brought unreliable is early Second earlier receipts. in We intentionally chain. supply inventory due previously to the

over XX right has Fortunately, improvements last XX chain now, that to days. shown supply the

this hopefully, So of further stability to chain coming our That see continually contributed has need than also in the we our earlier improvement anticipated. some in we supply receipts there. to as do could subside inventory

well This than in our got as you you've So do lastly, certain once as receipts. in at you've got want We And segment. America to, cost Outfitters areas. more are have inventory early correct. brand Urban North is would the we primarily Wholesale

possible. much of committed think be through quarter. inventory by in our position improved the we'll absolutely clearing as that are as quickly the excess a third We end to inventory We

over segment you quarter. improved think by be and more line into end time the get could with points comp I sales see third XX fourth by Retail the of we our the in the by quarter

Operator

Barclays. Please the next question, go with of Yih Adrienne Thank you. our for that from will line One come moment ahead.

Adrienne Yih

the U.S. strength? wondering then muted seems gets It be recent compares Should from in as what demand some does that? to And in sort first of Dick, a talk sort you're I'm Frank, this shift And wondering I that we shortage but fashion of you fashion wondering, we're just coming for question wondering it and out of earlier like coming of it's of fashion we just my say, the about still when if I'm about kind we the can if increases drought disruptive much? know perspective, to is going fashion how worried XXXX. a were environment, cotton? a COVID. like matter as were in from

Richard Hayne

Adrienne. Okay,

haven't the seems our fashion secondary. their I wealth of to to difference really much that bifurcation to think groups. the are buy to you They're them want bifurcation We customer view now continuing I along how we still like in the top and is basically would that but And folks or buy. group. a in within driving seen said, I is that define continuing -- X/X important important purchases income right customer price there's either to the is fashion extremely and that, behavior. They're say their of be to extremely the

that those some, have On brand folks, don't the have but bottom the a of they're they in These hand, started in inflation. really we out just not young. but going Urban earning less. X/X bottom forever, have as be much result, lot because a X/X to and other in by they're have it the the and particularly happens they're we life just very impacted And folks been

to in is many much, left don't There a rent and so after up really choice. income struggling necessities They they're down for of discretionary pay incomes. is struggling they that They're fuel over because their considerably. on so the car buy have the to -- their that. have those cases, amount And

So, important, important while case, say And fashion in still hard they that make less I very past. it is you're to been than some choices. has would right, in have it's the

Frank Conforti

our adjusted not forward. our on affects we're rate obviously, to what on sales based for inventory. inventory, remarks, as Melanie that And And your one clear buys and receipt drivers about through higher we've order course, in then, cotton, Kimberly, the trends prepared question markdown her in current as of going our a question to mentioned And planning on we're just your now. follow of right that up that's biggest Adrienne, on doing facing we're

Richard Hayne

any we're we're buy little as don't seeing China. almost Yes, none as think procuring Adrienne, cotton. problem trying I from And to

Operator

for line from One question Citi. Lejuez our you. Paul Thank of with next Please moment that come go will and the ahead.

Paul Lejuez

I was Dick, how the comp down of were for thinking versus curious assortment price looking spring make can the you ticket you're how adjust on if transactions? driven differ And an at a brand? assortment of the end the comps the consumer, each curious perspective, brand, much terms the does if does that weaker opening from break metrics of how by by And it low we're points? particularly in you about

Frank Conforti

Paul, So I quarter little by comp if driving didn't third Tricia now. the -- a that second segment just I they're for basis metrics, what's right to to relates Sheila know talk as maybe quarter a, it obviously, different brand very the and bit wanted on the guess, a on sorry. Retail about

Tricia Smith

Yes. I to speak can Anthropologie.

Our -- up. and are both both AOV AUR our

order up XX%. is Our up is our average AUR X%, and

Our we're seeing conversion. UPTs ticket and flat, are flat and a improvement is slight our in

So definitely our AUR and seeing some in increase AOV. both

Sheila Harrington

metrics and are Free where think I AUR Anthropology, to for similar are up. the brands, nicely People AOV

much metric history. think slightly AOV challenged in being but versus being up in still terms somewhat is FY Urban where line, I the in down 'XX down year, is versus conversion our to more and last of

Richard Hayne

about And retailer we as to see Paul, bullish being But fashion, we of lot Okay. this spring, are accuse very as ever often spring. charged. of and the guilty and a me

selling lot well, an very selling it's right Urban that about to the well optimistic that to in awful we're the hopeful be that now in are and Urban I get is product and that think going to about we to very Europe. and of product in it feel able is reason -- that's spring. positive similar is so that the comps And back there's U.K. hopeful brand has

the I've the is right. one off. said main it of necessarily problems They -- was has didn't said the that product they Sheila distortion didn't that As and of buy

now we'll a that course, And line, lot of to we're get be do that. pretty and right able we that so to in of time distortion back have confident

Operator

Please and ahead. of Thank from Boss come next go you. One the question with moment for our Matthew that JPMorgan. will line

Matthew Boss

on Dick, maybe rank spring. national then? Urban the And banner, your between more you at and the brand the label to that the comment between if apparel? shift would you How Urban and performance two-part merchandising and today Free what seeing the on last we're trend that part maybe a the then to in acceleration. core Maybe a the private the Dick, you thinking take question. in I returning think back, is So And we that occasion-based recent growth brands are step guess initiatives How strength type about can do you how this People seeing are long this duration Anthro of last? of and into business?

Richard Hayne

I'm to in last years, off cuff, or time not say, just measured will of it the considerable amount Okay. think in a seasons. months I going

about So that's it Sheila of the ask brand, much, than she's question. closer And much Urban first part your to the going talk to I. I'm to

Sheila Harrington

Okay.

then brands react the within we're can experiencing. large like and think And brands in of partnerships market. misstepped history this speaks success could that we've on those that the new So have team But it extremely the I fashion brands, be we're customer, is the big, said, definitely, within with the how been national is to -- the select they perform. brands, U.S. well proud resonated right we to the seeing big customer. fashion And to and fashion everything has that urban own that national of some with able been doing consistency versus a mix our really Dick year the

as into spring, confident in more of are gain our can model. we back go like speed feel some We we reaction we that

Richard Hayne

that, would on top top think I add enough. distorting to not is I large And Yes. of that, the Sheila just items,

of of I much think that some rely have too historic of penetration historic too items things try the categories on was to and great. be did history the the one we

Sheila Harrington

to a spend dollars. with specific way money limited wanting Right, very is where urban their I the customer think definitely in

Operator

moment Please come of with you. Lorraine question go line America. next will of Hutchinson Bank ahead. our and for Thank that the One from

Lorraine Hutchinson

using see product? less also the expect severe on the Would for less air from XQ quarter the dimensionalize markdown could to you costs some you be And third pressure you then the opportunities freight fourth freight than of quarter?

Richard Hayne

first of part markdowns. Lorraine, that, the the I'll take

little As third bit inventories a anticipate end by being the Frank the cleaner said, of quarter. we the

should think bit little quarter. the so cadence be the And a fourth I markdown better in

course, of offsetting too the doing. is, don't much are to going think all, what first our We that, of we inventory know competitors across Now be there's board.

the with of I say in that lower and that So be but a I there's ugly customer, third call -- going discounting the been would to bifurcation in going I've bath, group about of markdowns. hesitate talking to the terms it's blood of amount to -- it be

end the fashion, of On right top going full She's to buying very customer there's the kind upper quarter. on and third, the I for that very economy. another really think that usual, leg be fourth bodes see in now, as serious unless down buying it's price. Again, well business we

Frank Conforti

Lorraine, as asking think margin. relates to profit and you're gross about probably IMU, overall guess, I really it I

for I gross margin. us have think to is the there opportunity profit improved

the is and seeing. think markdowns biggest the I wildcard, that as as bifurcation Dick relates mentioned, we're to it

you as to year IMU know, QX. was significantly last relates in it down IMU, As

of as strategies we So obviously an as well easier are have comparison several our hold. taking

promotions So, environment retail markdowns we deploy. will is and that the that is competitive overall we how rest where an do will that show to and opportunity us margins. on of for macro A improvement IMU of last have versus much the should the and rest gives year, depend in believe lot and environment better

Operator

the with Please One ahead. you. question next moment and that Shapiro our Retail from go will Marni Tracker. of Thank the for come line

Marni Shapiro

just then good. of I very there? been look example? buying for And Outfitters, to, see you Outfitters has talk closer I'm there to I to the actually balanced coming have improvements home, say, that's denim, what bit is product some wanted at at need. consistent, big Anthropologie. that a has changed about Urban in. season applicable learned some The after season. to Urban does little the improvement the dresses, been the on changed focus Can Is accessories, just very, consumer? between well team curious, has what's you The look there stores You what -- the kind you Are of very holding looked of getting better picture, closer there? But

Richard Hayne

Okay. say I ask she'll own that to to want she's know give that would Tricia's also never credit, I'm will give a -- she's know she Tricia been credit. that and team and but her them I going of big I built. part the but very I horn, them

little well answer done, you less more on Tricia and on question bit So, maybe product. people a and can the

Tricia Smith

Marni. think but well you, And And really Dick, we're it's of Dick mentioned, and and I Thank us our seeing, strategy. a long-life do to our giving interest components customers' thank opportunity of in mentioned. as call the doubt, from that, is very spend, we're investments But repeat an team three improvement, think, then leverage just definitely some strategy, customer that was kind if Frank to Yes. demand. there deeper kind for was you, I the executing No benefiting addition, we in in are core margin some also items first and what fashion. appetite appetite their the on brand really delivering vessel outsized and IMU as

we error those kind moving on strategy that I and we're that think fashion deeper needed as quickly as can enables our in can. core on offset of investments

our seeing really the that really fashion. strong in in I well mentioned, you some consecutive Anthropologie silhouettes key of resonating really distorting we're and think was. acquire shoes, what goal to in with meeting and then customer it goals our really under of new new-to-brand is And third, customers we're which demand in is after second from coming part second I as really categories chasing was as and demands that to newness pants think was a our XX, bottom dresses, quarter those younger efforts our really, recognizing rebalancing age kind and the

quite and the online approach I really team in focused and really very stores on So both our to is our on of enabling Anthro incredible side. that newness business inspire furniture along our some continues, customers, leveraging a our the demand in icons, think investing the women's really working creative and is product key in and with assortment that, deliberate that our strong. distorting we're and and And in in home, then living in core

it's and overall. our think for the categories important that I newness really and brand on team editing working focusing those So is

Operator

question, Thank Mark line moment Please come Altschwager the you. for that One will our from go next of Robert ahead. with Baird.

Mark Altschwager

couple a quick ones here. Just of

Just could if how your and non-home half. rapid you there. the see any on to trending to mix it's then into categories back pretty affecting how more shift for outlook scale newly first margin And curious speak is home, great the that's

in the think a million way revenue maybe has to but You've it it's over about two one to in to past any growth calibrate about per seasonality revenue expecting you get the might obviously, So good half quarter or change sales of first of overall sequentially I been trend to our Is small, of for you that still contributed back the guidance we in a the the year? be gave? here. want points as better half back $X the sense half adding trajectory the in couple models just quarters to

Richard Hayne

the first. Dave Okay. I'll Mark, to take Nuuly question ask

David Hayne

driven top improved seen and the with the rates bottom retention also Yes, Sales both by well we've We've very momentum an first new on half about loss roof in as the subscriber improved sales in enthusiastic But has growth and We've business, only operating subscribers into very on we're been been the Mark, the focused the not in been question. thanks improvement. through for acceleration rates. profitability. line program. Nuuly's reactivation line, in focused

of rate great as loss as by operating improvement QX rate improvements loss really expense leverage efficiencies points see in were refine year-over-year well execution been been getting our which variable both XXX the of it's -- has we from driven fixed to expenses on model. the our improvement, as that over in basis coming So

So also about about with and third the future really potential in for acceleration we're the solid subscribers. the far in quarter good profit really the feeling so August profit excited and in what with seeing in

So it now. feels good right

Richard Hayne

Mark, about you talked And Okay. home.

nice urban board, in think of very briefly, pretty give and we're home try the we're I business, comps that much touched business, the I'll seeing it. on also In improvement an in across the furniture business. and Tricia overview that decor to the seeing but and positive

on confident So we're that.

got and gift and was beginning I call early by because retained that we Some quarter. of got largely guess to all on a we of sudden, come the Because the boom tried then a and earlier make the to supply back. struggled started we I just cut what second call of chain categories purchases the, in earlier basically and of and inventory. had the hit And first what sonic quarter earlier as would

up the back. excellent chain inventory. of job many an in and done in come doubled had way of Anthropologie started much we the classifications has to too So

And had the in Anthropologie inventory. In bit pretty in and I So many the job new now to Urban, holiday. home And gift buy back and which an same working in excess was, we there downfall that their we has we're And and of us the the gift confidence much too thing. would seeing we're up way we're old problem back-to-school a and doubled inventory. concentrating and category. again, of soft entertain, right done in through much really relying in around excellent style. and better the classifications bedding much enough the new had too line not see and again, of that starting lot the better say of not selling and on enough full the much on the goods little business the for price centered the both much entertain a gives in

actually top, I at well very home years all. good. it very are I not it's not the the some like extraordinary but doing would It's ago. in doing that So was it's well, the X.X good, and not now, there first the business category, put in meaning very us people but at doing some seems to be And then people well, guess, right less people some

Operator

And come moment our next for will question. the Group. ahead. go Please Telsey Dana That Telsey from one line of Advisory with

Dana Telsey

over quick for do or you do magnitude thing think for QX. you the QX? then the quarter was you As think one you next digital terms stores, and you than of the channels of of markdowns more Outfitters usage inventory that of gross each basis think digital just points any points XXX in margin How in or do saw on how the about so, difference at there channel? the more Urban And in what XXX about clearing division think erosion and about stores? And basis

Richard Hayne

well. Europe. that was was I'll a better has big this traffic America it very vibrant cadence. Dana, and is extremely And from wasn't would and based it difference actually as a again, just and there. strong, North traffic in on so much Germany I and between tourism was EU was up XX%, business strong Dick. say good Europe, in London travel, so urban very because In saw, and rebounded The it start was actually store

Urban -- would lack better the year, Now they better fashion lot And they lower the that off America year, a traffic recovered. do items, in of fashion fully as North but Europe, I recovered. the I'll some to actually ordering more of of are in again, that the ascribe say of of early to products, with fully last well, comps. coming them. this they saw newer a items, ordering lockdown were had they enough now hadn't And has and that

And better the stock of some is the we're trending so throughout out But positively. traffic of stores items. in QX,

aren't FY that. to we are -- we are approaching We back getting but 'XX,

we to inventory the now markdowns, to Urban down, use will to how going as So discussed. for get necessary think as I probably as the and in-store markdowns are Frank brand, both use digitally, we

see don't I So that. a difference in big

Operator

of the And come ahead. and with from one Please final line Kloppenburg today's go And moment JJK line question. Research. that Thank you. that will for Janet

Janet Kloppenburg

the industry. we looking for the in looking year-over-year. and should should gross successful hearing on you Outfitters. Anthropologie quarter, across about understand for dressing fourth I talked the question sounds Urban to the improvement bit wanted quarter? for is questions. just towards be And of it airfreight Outfitters margin are have a the actually we markdown a also, business? little be if we be by perhaps urban that third inventories the is freight part like couple I and pivoting that moderating Should difficult a end declining a more looking the in get quite Dick? distortion back are We of there? the about casual shape that Or Or is more that of trends Urban the what distortion, quick

Richard Hayne

the first casual to your of is turn part dead it first question going over think very to and take at don't all. I'm Janet, Sheila. then We

customer a correctly, to them of them the them distort number and matter them. bought are well, of buy but would we a extremely didn't reasonably fact, bought degree I the that that them But that anywhere As we meaning selling near items heavily, call we didn't wanted the pretty casual. we

And so, of sold out we them.

I trying what an which doing, calls so, fashion. see don't Anthropologie Urban what And succeeded of selling to duplicate wife awful smart in lot has is my

have casual, be still items the will they changed. but So

in were And aggressive so safe. we a as that that that of enough were kill buy of did too business bit a There said too a think little results but last being can lot year, the bulk good pretty area. fashion a And fashion the what they I I of little see in you. before, was items in not

Frank Conforti

URBN. And Janet, I your question on think total then, margin for was QX

Urban Outfitters answer the versus brand. So just Sheila letting that I'll take for

the relates position third better on the heading we've So -- Yes, year-over-year IMU and basis as IMU much at will got fourth quarter. of be markup to should fourth in you favorable do the trend post are quarter. a an inventory We quarter the it initial a in think into correct. end improving

gives that opportunity So around an us markdown rate.

quarter for to to right XXX% to certainly, a better is like will are medicine going all and in profit there is drawing is the the inventory improvement within in lot do that there on the to and how our inventory try us, much just the be have fourth on. just industry case, going ourselves the where I like I be. think the going quickly be environment going that But we're fourth less feel the area margin and at a a definitely promotional and is and if give is we're But that to -- position quarter, to which out people how take opportunity now quarter. yet. of the promotional for stand brands to their is certain not think And before we is gross how there's promotional feels as wildcard what illustrate that Dick industry is be tell, exactly going three is and time line we opportunity not fourth

Richard Hayne

if So we questions? we'll get not, Janet, if Okay. answer offline. did, did that. you that's we Well, your Hopefully,

want And for want call. three I you to for back all to invite So in thank I you you. joining Thank months the QX.

Operator

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

now may disconnect. You

Urban Outfitters (URBN) 24 Aug 222023 Q2 Earnings call transcript