As Urban Outfitters sales struggle, the company is focusing on Anthropologie and Free People

Retailer Urban Outfitters saw sales decrease 12.6% year over year in the second quarter, according to the company’s recent quarterly report. While Urban Outfitters brand sales decreased, the total company URBN sales increased by 7.5% during that time. The company plans to boost investments in the Anthropologie and Free People groups, which are seeing growth.

“There is still much work to be done to right the Urban ship,” chief executive officer at URBN, Richard A. Hayne, said in an earnings call Tuesday. “That work is underway but could take longer than we originally expected.”

URBN, which opened its first store in West Philadelphia in 1970, is currently based at the Navy Yard in South Philadelphia. Brands in the URBN portfolio include Urban Outfitters, Anthropologie, Free People, Terrain, Nuuly, and the company’s restaurant group known as Menus & Venues.

The Anthropologie group reported “outstanding second quarter performance,” according to global CEO of the Anthropologie Group, Tricia D. Smith.

“These days it’s just harder, especially for younger consumers and those with less income, to do the kind of discretionary buying that they were able to do before,” said Peter Fader, professor of marketing at the University of Pennsylvania’s Wharton School. He has not done consulting for the company but has collaborated with them in the past in academic research.

“Things will get better, but for right now, it’s time to batten the hatches on stuff you don’t necessarily need and that goes right to the heart of Urban Outfitters,” Fader said.

As of last month, there were 200 Urban Outfitters stores in North America. The company plans to shed eight stores and open two more, bringing the total number to 194 by next January.

“It’s tempting for people who don’t know them as well to read things into things and to go to extremes,” Fader said. “Right now, it appears that they’re kind of pulling the rug out from under Urban Outfitters, but they’re not doing that. It’s a slight adjustment; it’s an appropriate one.”

While Urban Outfitters struggles, the company plans to increase marketing to attract customers to the higher-performing Free People and Anthropologie groups.

The Anthropologie group, which includes the fashion retail store Anthropologie and the brand’s home and garden concept, Terrain, expects to increase its apparel and accessories business to $2 billion and double its home business to reach $1 billion over the next few years.

The Anthropologie group will grow from 216 stores in North America as of last month to 219 stores by January of next year and expand to 270 stores over the next several years. Locally, the brand opened a new Terrain store in Doylestown this summer.

Similarly, URBN opened five FP Movement locations this year in North America, which are dedicated to the group’s retail activewear. Free People stores will increase from 146 this past January to 147 stores by next January in North America.

Fader said URBN is more agile than other publicly traded firms at adapting store locations to the current environment. “They’re not afraid to make bold changes on both sides: opening and closing,” he said.

Store closings are due to leases coming to an end and the decision to not renew them, according to a company spokesperson.

As the company strategizes for the future, there is also focus on Nuuly, URBN’s rental clothing program. The company plans to open a new fulfillment center for the brand in Missouri in fiscal year 2025.