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Urban Outfitters, Inc. (URBN)
September 27, 2012 1:00 pm ET
Francis J. Conforti - Chief Financial Officer, Chief Accounting Officer and Controller
Tedford G. Marlow - Chief Executive Officer of Urban Outfitters Group
David W. McCreight - Chief Executive Officer of Anthropologie Group
Margaret Hayne - President of Free People Brand
Krissy Meehan - Managing Director
Richard A. Hayne - Co-Founder, Chairman of the Board of Directors, Chief Executive Officer and President
John D. Morris - BMO Capital Markets Canada
Paul Lejuez - Nomura Securities Co. Ltd., Research Division
Oliver Chen - Citigroup Inc, Research Division
Roxanne Meyer - UBS Investment Bank, Research Division
Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division
Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division
Kimberly C. Greenberger - Morgan Stanley, Research Division
Francis J. Conforti
Previous Statements by URBN
» Urban Outfitters Management Discusses Q2 2013 Results - Earnings Call Transcript
» Urban Outfitters Management Discusses Q1 2013 Results - Earnings Call Transcript
» Urban Outfitters' CEO Discusses Q4 2012 Results - Earnings Call Transcript
Hello, and welcome to our home office here in the Philadelphia Navy Yard. I'm Frank Conforti, our Chief Financial Officer, and I couldn't be more proud to be standing here in front of you today and welcome to you to our first ever URBN Investor Day. I thank all of you for coming today. We appreciate you spending the time and sharing your afternoon with us. Wait, there's a couple more people coming in.
Okay. So we have what we believe is a fantastic day planned for you today. It is going to be a busy day. Don't get comfortable. Weather permitting, we are going to move around a bit today. This is our first go-around and investor day, so there's a lot of topics that we did want to cover. I'm going to just speak to you real quick about our agenda and how the day is going to flow and then a couple of the goals that we would like to accomplish today, and then I'm going to hand it over to the Urban Outfitters brand.
Our first goal was to share with you our incredible home office space. Hopefully, many of you had the -- took the opportunity to join our Chief Operating Officer, Freeman Zausner, who I believe is around somewhere on a tour that was offered earlier today. I can tell you that there is very few people that know more about that Navy Yard, more about our home office and more about Urban than Freeman.
As you walk around this campus, it is a direct result of the vision of our chairman and founder, Dick Hayne. These were vacated, old, beat-up buildings when Dick first came down here, and his vision was to create an incredibly useful, creative and inspirational environment to help us attract and retain the best talent in the industry. I believe you'll agree with me, as you walk around today, we've done an amazing job at doing just that.
The second goal for today, and this is an important one, is to share our brand leadership teams with the external community. All too often, you end up having to speak to me, and me trying to have to communicate to you what our brands are about, there is nobody better than to speak to you -- to speak to you about the essence of the brands than the brands themselves. I'm very excited for this opportunity.
The brands will be doing a presentation today, as well as they're going to be available for some Q&A, each of the 3 larger brands, I should say. There will be 2 common themes that the brands are going to touch on in their presentations. First is what the brands are about, who they are, how they've evolved, who their customers are and why we believe that we are still so very differentiated and unique in the marketplace today. Second topic, a common theme that the brands will touch upon, is growth. This is going to be a common mantra for us today. They're going to speak to you about several of the growth initiatives that they're excited about and that they are currently working on.
After the brand presentations, you will have the opportunity for Q&A with the brands. Weather permitting, we have set up tents outside. There will be one tent for each of the 3 larger brands for you to start and -- excuse me, this is set up very informally, intentionally. You can start your Q&A with whichever brand that you would like and end your Q&A with whichever brand you would like. We are a large group today. The tents aren't quite sufficiently sized to service all of us. There's about 80 of us here today, so we do ask that not all of us start with the same brand and end with the same brand.
Just getting back to the agenda real quick. Once I'm done speaking here, the Urban Outfitters brand will be presenting to you, here in this building, followed then by the Anthropologie brand, who will be presented to you here in this building. Then as I said, we are going to move around a bit today, we're going to get up and walk over to Building 25, which is right across the way here, the Free People building, where Free People, Meg and team, will be delivering their presentation. Then as I said, I'll lead us outside to, weather permitting, to the tent, where we'll sit down for a Q&A session with the brands.
Once the Q&A session -- or excuse me, also I wanted to remind you, there will be local refreshments available for you, during the Q&A session, as it will be a couple of hours later and people may start to get a little hungry and need something to drink. Once the Q&A sessions are finished, we're actually going to come back in to this room here where we're going to touch on some technology initiatives. Our Chief Logistics and Information Officer, Calvin Hollinger, has prepared a presentation for you today on, what he would call, magical technology initiatives that we've been working on over the past few years. Yes, he does them that magical. Once Calvin is done speaking to you about the magic of URBN technology, he'll be handing over the, I guess, the stage, if you will, to our Chief Executive Officer, Dick Hayne, who will bring the entire day together for you with his closing remarks.
Once Dick is finished with his closing remarks, myself and the rest of the presenters today would join Dick up here for your final chance at -- for some question and answer before we finish our day. After the Q&A is completed, we will have some cocktails and hors d'oeuvres available, again, weather permitting, right outside the building for you here today. For those of you who came via train, just a quick logistics note, we do have 2 shuttles running from outside of Building 12. There will be one at 5:15 and one at 6:15, and note the shuttle will be running back to 30th Street Train Station for you. Okay?
So that's our agenda. That's our day. We've got a lot to get through. Before I hand over to the Urban Outfitters brand, I just wanted to touch on our last and probably our most important goal of the day and that's the concept of growth. I can tell you that we are -- we hope that you leave here today feeling a level of excitement, energy, commitment and focus that this organization has around accelerating our growth. We believe that there are significant growth opportunities ahead of us. We believe we've got exceptional brands with dynamic leadership and an incredible strategy in place to go out there and seize those opportunities. I can tell you, I've only been here for a little less than 6 years, but this is as focused as the organization has ever been, from top to bottom, on growth, and it's truly exciting coming to work everyday.
So with that being said, I'm going to leave you in the good hands of Sue Otto, executive director of the Urban Outfitters brand. Sue was one of the very first employees ever hired by Urban Outfitters. She exudes a certain amount of energy that I think is unparalleled. She has an incredible creative vision that has done an amazing job at formulating that creative vision as customers' taste has changed through the years and staying just ahead of the curve.
So without further ado, Sue? Thank you very much, again.
Hi, how are you? And thank you very much, Frank. That was very nice. Frank's right. I've actually been here 31 years and I was making a joke with Kevin earlier, saying Jane Goodall only did 50 years, I think I'm going to be able to surpass that, in terms of my study of my clients. The -- I was a -- had a unique opportunity to be able to develop the creative working with Dick Hayne, and it's been an amazing opportunity to be able to do that and to be able to see this business grow the way it has. Ted asked me to speak to you a little bit about the customer and so I want to show the first slide, actually was a very small ad in university news in 1976, and that kind of was the start of it, when it was officially Urban Outfitters. Just so you know, in real life, that's probably about 2-by-3 ad, and yet it still was extremely successful, and lots of enthusiasm. Okay, we know our customer well. And our customer, however, our customer may be an enigma to most. They are intentionally contrary and urge you to find, separate themselves from other generations, in particular their parents. They have great confidence and unique persona and experience and they're in the process of experimenting with roles, behavior and ideologies, and I think this further shows in terms of customer the '90s or it could be early '80s, and then in the 2000s, and fairly similar crowd. Our customer, in terms of experimentation with roles, behavior and ideologies, and in terms of being intentionally contrary, I think, a good example of that is we were selling a lot of glass soap dishes in Berkeley and I really couldn't understand why, because I thought why would any of these kids decorate their bathroom with glass soap dishes. And I asked the merchandiser there at the time, Madeleine, I said, why would we sell these? And as she goes, well, our customer hates the big cigarette companies, they hate cigarettes, however, they use these as ashtrays. As the truth is we had ashtrays at the same time and they weren't selling. So that's something that we have the learn, to adapt and be able to respond to, in terms of being able to please this customer. Our customer is an expert on everything, exposed to new independent cultures, ideas and environment. Independence leads to great confidence and conviction. They really believe that they're the first to experience this. They have great optimism. They feel that they can change and do anything. They're involved in travel and exploration, either real travel or local travel. And that leads to exposure to new cultures, food products and the like, and they actively seek that out. This creates expertise as well. One of the things that I thought was interesting, there's a culinary trend mapping report and they currently use students primarily for their trend study. They feel that the food industry needs to respond to the habits of 20 million when they leave campus and begin to earn their own paycheck, so the cultures and interest that they have at that point follow them. Our customer is from traditional homes and advantage, but this offers them the benefit of rebellion. Rebellion is often based on the previous generations. Rebellion in aesthetics. I'm sure you've all seen like whether that's the punks studs now, over the '60s fashion and the re-emergence of it. So we really feel that, that speaks to a 20-year cycle, because I think probably when they were little, they saw the older kids do something they thought was really cool and they weren't allowed to do it and now that they're adults, it's sort of like ice cream for breakfast, they can do whatever they want now. They're out on their own, independent. So one thing that actually Urban Outfitters is selling now is Beavis and Butthead tees, which sort of surprised me because I was no fan of it, but maybe I was little bit older then, but that was in 1992. So the chronology still speaks true to the interest they have. They undoubtedly probably don't know anything about Beavis and Butthead but simply remember that being something the older cool kids did and something clearly they were denied.
Our customer is exposed to new ideas and philosophies. This can be a real involvement and work, or it could be just talk. And enigmatic personalities also lead to irreverence. Issues can be real or a non-issue with irreverence. Irreverence and concern can live together. We need to be sensitive to both. Often products sell well that represent the concerns they have but also can speak to their irreverence.
Our customer leads a pretty cloistered existence although they deem themselves worldly, they believe the way they see things personally is the correct way and everyone else feels exactly the same way. Even more than -- even with more information than ever, they still believe that they're right and they believe that everything that's happening to them is what's happening everywhere. One of my favorite stories, when I was really young and I started, Dick told me that he really believed that McGovern was going to win. And of course, you're probably surprised by that, and also the fact that he was a Democrat at that time, and he really thought -- I saw posters everywhere, everyone that he knew was voting for McGovern. Everyone with that -- was interested in that and campaigning for McGovern. He was genuinely surprised when Nixon won and couldn't understand because he couldn't imagine who voted for Nixon. And that was a good parable for me to understand because, when you're young, you are intrinsically that customer when you first start working here. Well, you can use words like, "Well, everyone likes that." And you begin to open up to the idea that although you deem yourself a know-it-all, you might actually not be.
Our customer has an attachment to the locals. Thoughts may be worldly but support an emotional attachment to their college neighborhood and their experience. Even the worldly is seen through the context of this local experience. We create individualized store environments, design, products, and we have local involvement in events that support this.
One story I'd like to share with you on that, I was working in Georgetown, on the floor, a long time ago, and there were these 2 girls shopping near me. One of them said, "I absolutely hate this store." And naturally, I wanted to know why, and I was like, "What's wrong?" And she says, "I only like the Ann Arbor store, it's the best store. I like the way it looks. I like the movie theater. I really don't like this store." And then the other girl goes, "You're crazy, this is my favorite Urban. I can't stand this store and I really don't like this other store either, but I love this store." To be able to stand and listen a little bit longer to their conversation, obviously, the girl who loves the Georgetown store had gone to Georgetown; and the girl who loved Ann Arbor had been at University of Michigan. So there's a strong emotional attachment, not only to that neighborhood, to the Urban Outfitters in their neighborhood and that experience with them. And so in other words, we were doing our job well because we pleased them locally.