Urban Outfitters Inc. (NASDAQ:URBN) Q3 2018 Earnings Conference Call Transcript

Nov 20, 2017 • 05:00 pm ET

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Urban Outfitters Inc. (NASDAQ:URBN) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen and welcome to the Urban Outfitters Inc. Third Quarter Fiscal 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would like to introduce Oona McCullough, Director of IR. Ms. McCullough, you may begin.

Executive
Oona McCullough

Good afternoon and welcome to the URBN third quarter fiscal 2018 conference call. Earlier this afternoon, the Company issued a press release, outlining the financial and operating results, for the three and nine-month period, ending October 31, 2017.

(Forward-Looking Cautionary Statements)

We will begin today's call with Frank Conforti, our CFO, who will provide financial highlights for the quarter. Sheila Harrington, President, Free People Brand, David McCreight, President of URBN, and CEO of the Anthropologie Group, and Trish Donnelly, Global CEO, Urban Outfitters Group will provide an update on their respective brands. And Richard Hayne, our CEO, will then comment on our broader strategic initiatives. Following that, we will be pleased to address your questions. As usual, the text of today's call will be posted to our corporate website at www.urbn.com.

I will now turn the call over to Frank.

Executive
Frank Conforti

Thank you, Oona and good afternoon everyone. I will start my prepared commentary discussing our recently completed fiscal year 2018 third quarter results versus the prior comparable quarter. Then, I will share some of our thoughts concerning the fourth quarter of fiscal year 2018.

Total Company or URBN sales for the third quarter of fiscal 2018 increased 4% versus the prior year. The increase in sales resulted from a 1% URBN Retail segment comp, a 9% increase in Free People wholesale sales, and a $14 million increase in non-comp sales. URBN Retail segment comp for the quarter, adjusted for the impact of the hurricanes, was 2% Within our URBN Retail segment comp, the direct-to-consumer channel continued to outperform our store channel, driven by increases in sessions and conversion rate, which more than offset a small decrease in average order value. Negative comp store sales resulted from declines in transactions, average unit selling price, and units per transaction. Store traffic for the quarter was up with strong growth in our European market.

By brand, our Retail segment adjusted comp rate was positive at all three brands, with increases of 5% at Free People, 2% at Anthropologie, and 1% at Urban Outfitters. These comps have been adjusted for the two hurricanes experienced in the quarter. The adjustment represents approximately two-thirds of a point at each of our brands. Our URBN Retail segment comp improved sequentially, throughout the quarter, with both September and October being comp positive months. During the third quarter, we opened four new store locations, two Anthropologie locations in North America, and two Free People locations in North America.

Moving on to the Wholesale segment. The Free People wholesale segment sales increase of 9% for the quarter was driven by domestic and