Anthropologie’s parent company Urban Outfitters held its quarterly earnings call on Monday (March 7 2016) and also discussed its results for the fiscal year. Anthro saw 2% declines in comparable same-store sales, and profits were down due to heavy promotional pricing during the last quarter. Surprised? No you’re not. The Washington Post shared its thoughts about the state of Anthropologie in this fascinating article yesterday.
The 3-second summary of the article is that Anthropologie should beware the pitfalls currently affecting J.Crew, a thought that has not gone unexpressed many times on this blog and seems to be on the mind of retail analysts. J.Crew is struggling to turn around its women’s business, which had alienated its core customer by making a sharp left turn with its designs while at the same time sacrificing quality in the production process.
While J.Crew is slowly limping out of that pit it fell into, Anthropologie seems to be blindly flailing into the exact same pit. It was remarkable when Anthro managed to weather the storm of 2012 with positive results in all four fiscal quarters while every single one of its contemporaries floundered; yet somehow as other brands seem to be picking themselves up Anthropologie finds itself now falling down.
This is not all that surprising; certainly the readership here has been moaning for 2+ years about the design woes. The design team can’t seem to get their finger properly on the pulse of what its customer wants and misplaced strategies about “updating designs for the modern customer” don’t exactly help. All retailers are facing the issue of younger customers wanting new and fast and instant gratification and trying to reconcile that against the prices needed to make a profit. Yet nobody seems to remember that people will pay for quality and great design no matter what their age?
Anyway, here are some highlights from Ms. Halzack’s WP article:
“The problems are piling up, and they have a familiar ring to them. Last May, executives said Anthropologie’s sales took a hit when it whiffed with its line-up of spring dresses: Not enough casual frocks, they said, and some instances where the team missed the mark on fabrics, silhouettes or prices. And the struggles have only continued, with the retailer saying Monday that it ended up having to resort to promotions to sell unappealing dresses and sweaters in the back half of last year. Foot traffic was also lower at its fleet of 218 stores.
On a conference call with investors, chairman Richard Hayne was blunt about what’s ailing the brand.
“Clearly, the task at hand for the Anthropologie team is to improve the apparel assortment,” Hayne said.”
“It’s hard not to see the parallels between what’s ailing J. Crew and what’s ailing Anthropologie: Both chains are simply failing to offer shoppers the kind of clothes they are looking for. And while it was easy at first to write off Anthropologie’s stumbles as a temporary blip, a full year of unattractive merchandise in dresses — one of the chain’s most essential categories — raises questions about whether it might be slipping into a rut.”
For what it’s worth I’m seeing some lovely turnaround at Anthropologie, and my wishlist is fuller than it’s been in a while. Is there room for further improvement? Absolutely. But I am optimistic based on what I’m seeing.
Finally, a huge congratulations is due to Anthropologie Group CEO David McCreight, who was promoted to President of Urban Outfitters, Inc. at the end of February. Mr. McCreight takes on this new title while retaining his former position’s duties. Awesome!