Signature brand drag Urban Outfitters' earnings down

Urban Outfitters Inc. continues to struggle to right its signature brand, whose poor first-quarter performance held back the company's broader success.

Sales for the brand, Urban Outfitters, fell 5.2 percent from the same quarter in 2013, to $277.7 million.

"Lower merchandise margins at the Urban Outfitters brand resulting from poor-performing product contributed to the decline," the company said.

Urban was eclipsed in total sales by stablemate Anthropologie Group. Anthropologie, which targets women 28 to 45 years of age with a mix of casual wear, home furnishings, and gifts, reported a 10.3 percent increase in sales to $295.8 million.

That success paled compared with the company's third brand, Free People, whose revenue jumped 30.4 percent, to $108.7 million. Free People sells women's clothing, accessories, shoes, intimates, and swimwear. It targets women 25 to 30.

Urban's per-share profit fell to 26 cents per share from 32 cents a year earlier, a penny below analysts' consensus estimate.

Total company sales for the quarter increased 6 percent to a first-quarter record of $686 million.

Wall Street pounded retailers Tuesday. Urban Outfitters dropped $3.19, or 8.8 percent, to $32.98.

In an earnings call Monday, company officials outlined a number of developments they said should boost earnings.

The retailer plans to open 35 to 40 new stores this year - 12 Urban Outfitters stores globally, including three in Europe; 15 Anthropologie stores, including three in Europe; and 12 Free People stores in North America.

"The Urban brand is currently focused mainly on creating more compelling fashion and communicating that through more creative displays and online imagery, but there are a number of growth initiatives as well," said Richard Hayne, the company's founder and chief executive officer.

"Like Free People, the Urban brand is planning to grow by expanding product assortments, expanding the brand reach, and by improved marketing. Product categories slated for growth include living and home, beauty, music, and some food offerings."