Urban Outfitters, Inc. (NASDAQ:URBN) Q3 2023 Earnings Call Transcript

Richard Hayne: Sure, Matt, pleased to do that. If you look at the quarter-to-date performance by brand, Retail segment comps for Anthropologie are currently high single-digit positive. For Free People, they’re mid-single-digit positive just on the cusp of high digits. And for Urban Outfitters, the low double-digit negative. When you put all these together of the Retail segment comp in November is currently running a strong low single-digit positive comp. This is basically what we believe the quarter will end with. So we did see in the first 10 days or so of November a slightly softer sales. I think a number of people have reported that, and we saw it as well. And we’re attributing it to the prior year’s strength when we saw an awful lot of customers shopping early because of the media around — there won’t be any Christmas is sure there’s not enough inventory.

And so everybody seemed to have purchased their holiday gifts in the first couple of weeks. We don’t think it will be like that this year. We believe that the consumer is quite aware of the fact that there’s plenty of inventory out there. And what they’re doing is waiting for big promotional events that normally occur on Black Friday and Cyber Monday in order to make their purchases. To support that, we see record amounts of product being put in carts, probably waiting for this coming Friday and next Monday. So we think that overall, the holiday is likely to be more promotional than last year, but it’s not going to be — I don’t believe it will be a total blood bath. It will be more based on the type of stores and the customers that the stores are serving.

Melanie Marein-Efron: Matt, this is Melanie. Just wanted to take your question about next year’s investments. Right now, we’re currently in the middle of our budget process for next year. So we’re still finalizing plans, and I can’t give you a number quite yet. But I will say that we work really hard to manage SG&A growth expense closer to sales next year. So stay tuned in March.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Paul Lejuez with Citi. Your line is open.

Paul Lejuez: Thanks guys. Just a couple of quick follow-ups. The November slowdown that you saw, I was curious if that was even across all three brands? And then sorry if I missed it in inventory, but did you say how you’re managing units in the first half of next year? And then last, just curious if you can give us any sense of mall versus off mall suburban versus urban performance this quarter.

Richard Hayne: Sure, Paul. The November slowdown we did observe it with all three brands. I would say — but I want to emphasize it was a slight, slight slowdown and — detectable, but slight. And we have — that has since passed and our sales right now are performing very nicely. As far as next year’s units, if I was saying, the merchants in our business have to be very aware of and concerned about when there’s this kind of increase in retail prices that they don’t buy to those retail prices solely, but take a look at the units that are available because the size of our stores, even though we are opening smaller stores across the board than we did three or four or five years ago, we still have to fill those stores. And customers are very sensitive to how full a store is in terms of number of units.