American fashion group Urban Outfitters has failed to meet expectations in its third quarter, with particularly weak performances in its Free People and Anthropologie chains.
Additional discounts impact profit margin
Urban Outfitters’ total turnover reached 862.5 million dollars (820 million euro), up 4.5 %, although like-for-like turnover growth only reached 1 %. Analysts had expected a 1.9 % like-for-like turnover growth and a total revenue of 868.8 million dollars (825 million euro). Profit also dropped compared to last year, down to 47.4 million dollars (45 million euro) from 52 million dollars (50 million euro).
The weaker results are mainly because of underperforming subsidiary brands Anthropologie and Free People, whose like-for-like turnover dropped 2.7 and 1.5 % respectively. A drop was to be expected, but analysts had estimated a mere 1 % drop for both brands.
Its current quarter may also yield weak results: the company is handing out additional discounts for both its Anthropologie brand and in its Urban Outfitters chain in an attempt to draw in more customers, but that has sizeable reverberations for the profit margins.
