) internet & catalog order business has been performing
considerably well. Internet sales helped drive sales growth for the
year, representing about 32% of the incremental $340 million in
annual revenues for 2010. The company believes that, at this rate,
the internet business can double in size over the next three years.
Urban Outfitters competes with J.Crew Group (NYSE:JCG),
) and Abercrombie & Fitch (
) in the retail apparel market.
Growing Online Sales
For the fiscal year ended Jan. 31 2011, Urban Outfitters'
internet sales were up 34%, with net sales increasing 18%. Internet
sales grew from 17% of net sales in 2009 to 19% in 2010.
To enhance its internet business, Urban Outfitters is investing
in the growth of this channel. It is working to improve assortment,
site functionality, marketing, social media, and fulfillment
capabilities. It is also looking to improve analytical tools and
launch sites in other languages.
Outlook for Internet & Catalog Orders
Urban Outfitters' revenues from internet & catalog orders
has seen steady growth over the past few years, increasing from
about $130 million in 2005 to $434 million in 2010. The success is
largely a function of increased internet penetration. We anticipate
that the pace of growth in this channel will continue going
forward, towards $1.2 billion by the end of our forecast
Despite the encouraging outlook, Urban Outfitters actually
missed out on some key fashion trends towards the end of the last
fiscal year. This, coupled with still-pressured consumer spending
habits, caused some difficulty in clearing inventory. The retailer
resorted to markdowns, which adversely impacted margins.
Going forward, it may take time for Urban Outfitters' margins to
recover. The success of its Spring collection could go a long way
in setting the tone for future trends.
See our complete analysis for Urban Outfitters