Alex Straton: Perfect. I just have two for you. One is on Free People Movement. Can you just elaborate on the positioning of that brand from a competitive standpoint? And who do you think of the peers? And what you think about the size of that business over time? And then my second question is just on gross margin and that 500 bps of opportunity over time. What is the ceiling? So should Urban be going to 35% gross margin over time? I’m just trying to understand where we’re at exactly, make sure that’s all tied up.
Sheila Harrington: Okay. I’ll take the first question. Around FP Movement, we believe, as Dick alluded to, that this brand has the opportunity to be one of the largest, certainly larger than our Free People brand. We think it welcomes a great deal of consumers with being true to its roots, which is an active lifestyle, it’s a merge of fashion along with performance. And I think how it differentiates itself is just that, the idea that you can be fashionable and have a performance point of view, as well as being highly female-centric brand. I think there are other brands that I think we would say we’re sharing our wallet share with. But for the — for our focus, it’s around the female athlete, female consumer, and that’s where we plan to stay focused to win.
Frank Conforti: And then, Alex, this is Frank. On the — sorry, didn’t mean to cut you off, Sheila. On gross profit margin, as we said, we think we have about 50 to 100 basis points of opportunity this year. As Dick noted, we do think we’ll hit that 500 basis point mark by Q4 of this year, but we don’t think we’re done at IMU, we still think that there’s some other cross-functional initiatives to unlock, and we do think technology is going to play a big role in that. I would also say, relative to the company, we don’t think the Urban brand will be fully there yet from a markdown rate perspective. And we’ll probably still have for the full year elevated markdown rates and opportunity for continued improvement there. I do think it’s important also just to take a pause.
We’ve been talking a lot about getting to 10% operating profit and hitting that double-digit mark here as a company. Obviously, fiscal ’24, hitting 270 basis points improvement in rate and operating profit and 70% growth in operating profit dollars leaves us confident, and then we talked about the gains and opportunities yet to come yet here in fiscal ’25. But speaking to the long term, obviously, turning UO is our biggest opportunity. When that business recovers, it’s going to contribute significantly to our increased profitability, but UO is not the only opportunity, right? FP Movement, which delivered 53% Retail segment growth this past year is running a very nice double-digit operating profit rate. So as that brand continues to grow, and as Sheila just mentioned, we think the ceiling is pretty high on that brand.
That’s going to contribute nicely to URBN. The Free People brand in total is our most profitable brand on a rate basis, and continues to grow at an exceptional pace. If they continue to gain larger penetration of URBN, they’re also going to contribute to rate growth as well as dollars growth. And then Anthropologie delivered record operating profit dollars this year, in fiscal ’24, and I know Anthro believes that they can — the brand can continue to deliver more and is planning to do so in fiscal ’25. And certainly, lastly, as Dave mentioned, we believe Nuuly could deliver their first year of operating profit this year, and could continue to build from there and growing — helping URBN to grow operating profit for years. So we think there’s gross profit margin opportunity.
And then I think what I’m just trying to stress here is there’s a lot of levers here where we think we can continue to grow our operating profit dollars and rate for several years to come.
Operator: And that will come from the line of Ike Boruchow with Wells Fargo.
Irwin Boruchow: Just wanted to — Dick, just I want to go back to the comp guidance. I don’t mean to nitpick, but you had said 3% comp guide for 1Q, but I think in the answer, you said spring was trending reasonably in line with 4Q. I’m just trying to understand, are you running at 3%? Are you running above that and expecting a deceleration? I just want to make sure I understood what the quarter-to-date look like.
Richard Hayne: Okay. Ike, good catch. Our February sales results right now remains strong, and they’re very similar to the fourth quarter results. But as I said before, it’s a touch softer than Q4 results, both by total and by brand. We’re currently running slightly ahead of our Q1 plan, which calls for a total Retail segment comp sales of 3%. So is it going to come down a bit and hit the 3% or be slightly above? I can’t tell you that. If I could, I’d probably be in the investment world, not here.
Operator: We do have time for one final question. And that will come from the line of Janet Kloppenburg with JJK Research Associates.
