Urban Outfitters CEO Glen Senk had some interesting things to say during the company’s fourth quarter earnings conference call last week about the company’s business in 2009, its priorities for 2010, its online initiatives and his take on the consumer’s current psyche.
Urban has outperformed most of its peers during the recession. In 2009, sales rose 6% to $1.9 billion. Net income increased 10.1% to $220 million.
Direct to consumer sales increased 19% to $324 million.
Glen Senk: “The company did an amazing job at dividing and concurring. There was a group of us looked at the budgets, looked at the expenses in the business and did an amazing job with fiscal discipline and control.
“There was another group of us who said how is this economic environment impacting what the customer is going to want to experience and going to want to buy?
“The creative manifestation doesn't just happen with new brands, it happens with rebirth of each of our brands, quite frankly, almost every day. We have many things in this organization. One is that the only thing that's constant is change. If you look in the rear view mirror more than once ever seven seconds, you get into a car accident. Nothing is more boring than last year's best seller.”
Drive productivity in stores
Drive ecommerce business
Adding new brands to portfolio
The company has had a lot of success with its online business. In the fourth quarter, direct to consumer sales, including catalog sales, increased 28% to $112 million.
Direct sales increased to 19% of total sales.
The company logged 26 million website visits during the quarter, a gain of 27%. The channel was double digit positive across all brands.
Going forward, Senk said the company is “increasingly channel-agnostic as to how the customer reaches us. Strategies for the year revolve around making iterative and disruptive changes to our online merchandise content. Continuing to increase access to our brands through mobile technology, continuing to improve fulfillment operations, and continuing to mine social media.”
By disruptive changes to assortments, he means carrying sizes and inseams not found in stores.
The company will also add more video to the site, a proven way to increase sales conversions, he said, and will test “fast and free” delivery. Senk said the company benchmarks its e-commerce business against large e-commerce retailers rather than traditional retail competitors.
Zappos has had a lot of success with “fast and free” deliveries.
Senk said one the company’s core belief’s is that “scarcity creates value” so it doesn’t want to over-expand its brands.
Thus the goal is to have up to six brands in the portfolio in next 10 years.
The company is expanding its newer Leifsdottir brand, a woman’s clothing brand with vintage inspiration. Leifsdottir now has an online store and a brick and mortar store will open in early 2011.
Urban is also getting into the wedding lifestyle business and will open stores with heirloom dresses, bridesmaid gowns, shoes, bags and everything else needed for a wedding.
Senk: “I don't think we've returned to 2007. I don't think we're out of the woods. I think the difference between today and a year ago is that there's much more stability. None of us knew what was going to happen a year ago.
“But I don't think that spending is going to return to 2007 levels. I keep saying that if a customer spent an average of $100 on an average outing in 2007, she's spending $90 today. So we have to be 10% or 11% better than we were in 2007 to be flat. And I think we have to be 15% or 20% better to be comp positive. And that's how we think about it internally, we, as a company, we don't talk about weather, the economy, we have just a culture of constant growth, and we will grow or we will endeavor to grow however we need to and we've just had to be better.”