Urban Outfitters’ profit spike defies retail slump

The numbers out today could have spelled doom for a company like Urban Outfitters Inc., whose merchandise hardly caters to the "value" shopper: July inflation numbers were twice as high as expected, and consumers swarmed discount-retailer Wal-Mart Stores Inc., which said profit rose 17 percent the last three months.

But instead, Philadelphia's upscale specialty retailer continued to defy the consumer downturn, thrilling investors with a 79 percent increase in second-quarter profit.

The $1.5 billion company said profit at its four lines of stores hit $57 million, or 33 cents a share, during the quarter that ended July 31, compared with $31.9 million, or 19 cents a share, the same period a year earlier.

Chief executive officer Glen T. Senk told analysts today that he was "bursting with pride" over the results. Shares closed up $1.35 today, or 3.96 percent, at $35.40 on the Nasdaq Stock Market.

The profit surge came off a 30 percent increase in sales, which reached $454 million, compared with $348 million a year earlier.

Customers bought a lot of merchandise at original prices - not on clearance racks - which is the most profitable way a retailer can sell clothes.

Unlike other retailers, who buy massive quantities of a single style in different colors and prints, Urban has kept its offerings sparse, in part to keep its merchandise eclectic, said chief financial officer John Kyees.

"It also has another advantage," Kyees said. "It means we sell out of styles very quickly. That means people can't wait for markdowns."

Kyees said another reason for the strong numbers was that women revel in the stores' unpredictable offerings and might be indulging all the more during these tough times.

"People want to feel a little bit good about themselves and about life in general," Kyees said, "and sometimes a new outfit can provide that thrill."

Internet and catalog sales were up 42 percent, while sales at stores open at least a year were up 13 percent.

The strongest performance came from the company's namesake Urban Outfitters stores, which saw same-store sales spike 19 percent. The company's two other apparel-store lines did well, too, with comparable sales up 7 percent at Anthropologie and 10 percent at Free People.

The retailer has 269 stores around the globe and targets well-heeled college students, young adults and professional women under age 45.