In another move to boost its lower performing brands, Urban Outfitters Inc. on Wednesday announced plans to roll out larger Anthropologie stores during a first-quarter earnings call in which the company reported record sales.
Despite growing competition, total net sales for the Philadelphia-based company for the first quarter of fiscal 2017 rose 3 percent over the same quarter last year to a narrow record $763 million.
Encouraged by the first-quarter numbers and improving profit margins, management said the company was moving in the right direction and adjusting to a consumer who wants more variety and offerings - bigger everything.
The new Anthropologie stores will measure 20,000 to 30,000 square feet, more than 21/2 times the typical size of the current ones. A larger Anthropologie will open in King of Prussia Mall in the fall, and also in Palo Alto and Walnut Creek, both in northern California; one will open in Westport Conn., in spring 2017.
The company, which also owns the Urban Outfitters and Free People brands, said the enlarged Anthropologie stores will feature expanded selections of home products, apparel, and shoes and accessories, including jewelry; a petite shop; and, in some cases, a dining experience.
Sales were flat at just the Anthropologie Group compared with the same quarter last year. Other Anthropologie Group brands are BHLDN and Terrain.
Some of the larger Anthropologie stores will sell BHLDN and Terrain merchandise.
The entire company generated net income of $30 million - or $0.25 per diluted share - for the three months ended April 30.
Comparable retail segment net sales increased 2 percent at Urban Outfitters, were flat at the Anthropologie Group, and fell 2 percent at Free People.
Introducing larger Anthropologie stores is the latest in a series of moves by the retailer to show its willingness for risk.
Last month the company said it will cluster four of its brands on the same level at King of Prussia Mall for the first time.
The company announced in November that it had bought out the Vetri Family group of restaurants, which includes Pizzeria Vetri.
Urban's director of investor relations, Oona McCullough, said the company plans to have the restaurant chain next to its apparel stores to extend the shopper's stay and get a larger share of wallet from shopping and eating.
This will be the case at King of Prussia Mall, where one wall of the Urban Outfitters store is being knocked down to make room for the pizza restaurant.
David McCreight, president of Urban Outfitters Inc. and CEO of Anthropologie Group, said the company is responding to customer demand by rolling out bigger stores.
The first pair of larger Anthropologie stores recently opened in Portland, Ore., and in Newport Beach, Calif., and he said they received very enthusiastic responses. The stores have a full-service shoe salon, which has been a hit.
"We believe we are moving in the right direction," McCreight said during Wednesday's conference call. "We have a strong strategic growth plan to meet consumers' changing needs.
Customers "are shopping across multiple product categories, spending a longer time shopping in store, and traveling a greater distance to expanded locations," he said.
McCreight said that online and brick-and-mortar sales can coexist.
"There's room for bricks and clicks," he said. "We can make it work."
Urban Outfitters stock closed Wednesday at $24.59, down $0.85 or 3.34 percent.