On Tuesday, investors were cheering as the latest results for markdowns were released. The results revealed that fewer markdowns are needed and that the youth-oriented store has seen a modest increase in sales.
"The Urban brand saw regular price sales and margin improvement throughout the quarter and the end of the year," President and Chief Executive Richard Hayne said. This means that the margins for the last quarter of 2015 would have actually improved and that margins could improve this first quarter "slightly" from a year ago.
Based on an article published by Fortune, "the value of shares jumped 16% on Tuesday and is an interesting case of the power of beating expectations, especially in the wake of a holiday season that saw many clear retail winners and losers."
Meanwhile, Haynes also said that the "death of the retail store has been greatly exaggerated." Haynes is presently making a case for bricks-and-mortar retail experiences.
Diginomica sees this as an interesting view due to two reasons:
One is that "the demographic for Urban Outfitters is heavily youth-oriented, exactly the type of audience that should...be demanding online shopping, ideally from their smart phones" and two is that "there's a harsh reality for Hayne to face up to here in that the firm's line sales are turning in double digit growth, outperforming store sales growth."
Haynes said: "Granted, North America is over-stored and many retailers underperforming units will have to close, and it certainly is true that the role of the store in the digital age is changing. But I envision the bricks-and-mortar store as an equal partner with the virtual store in this new omni-channel world. There's no better proof of this than the current rush by most pure-play retailers to open their own retail stores."
The challenge now for Haynes is to have a balance between this two. It can also be noted that Haynes said that a fashion shift might be the cure. "A major fashion shift is the cure for the current apparel malaise," Hayne said. "I am not predicting exactly when that change will come, but I am certain that it will."
Will this mean the outfit company is changing is strategic positioning in the market? What would be the impact of such change?
