Smart business tactics keeping Urban Outfitters ahead of the pack

Thestreet.com has a great story about how Urban Outfitters’ deliberate, well-planned strategy is keeping their stock price up without deep discounting. The summary is that by carrying more styles but less inventory all of Urban Outfitters brands, including Anthropologie, are still seeing good movement at full price.

Hidden below the synopsis are some real gems. On growth strategy:
Then there is the fact that with only about 290 stores across four concepts — Urban Outfitters, Anthropologie, Free People and Terrain — the company boasts significant room to expand. [CFO John] Kyees predicts that the current concepts have the potential to grow to about 800 locations.

“Urban Outfitters is one of about five real growth stories left in apparel retail, with 15% square-foot growth across three of its concepts,” Needham & Co. analyst Christine Chen says.

Kyees expects Urban Outfitters, Anthropologie and Free People will reach saturation in about five years. “Our goal is to never let any one concept become too large,” he said. “As our CEO Glen Senk says, ‘big is the enemy of cool.’ You are no longer a specialty store when you have 700 to 1,000 stores.”

One of the biggest debates of the last 10 years has been how many brick and mortar stores a brand needs. In the era of e-commerce you can spend less infrastructure capital on stores and invest in better inventory management and targeted warehouses for quickest shipment. Then again from a consumer point of view, it’s nice to try stuff on in person.

The article notes that direct-to-consumer sales are 15% of company sales right now across all the brands, and Kyees expects that to grow to 20%. I wonder how Anthropologie’s numbers land within there.