Urban Outfitters Stock Drops on Departure of President

Urban Outfitters Inc. (URBN) stock was down 1.43% in pre-market trading after the retailer announced the departure of its president and CEO of one its main brands, Anthropologie.

The Philadelphia-based operator of Urban Outfitters and Anthropologie stores confirmed that David McCreight will leave his role April 27. He will be replaced by Anthropologie group president’s Hillary Super and Andrew Carnie.

In a statement, Urban Outfitters described Super and Carnie as ideal candidates to lead the brand. “Both Hillary and Andrew are strong leaders and excellent merchants with a solid understanding of the Anthropologie customer,” said Richard Hayne, CEO of Urban Outfitters. “Anthropologie Group’s current business is particularly robust, and we are excited about both the near and longer-term opportunities for growth under their leadership.” 

Hayne didn’t provide a reason for McCreight’s departure, but applauded him for his good work.

McCreight was appointed CEO of Anthropologie in November 2011, tasked with developing the retailer’s presence in North America and Europe. During his tenure, Anthropologie, which specializes in women’s apparel and accessories, intimates, home furniture and décor, beauty and gifts, opened 60 new stores and grew revenue by over 35%.

In 2016, McCreight, who previously served as president at Under Armour Inc. (UA) from 2008 to 2010, was also appointed president of Urban Outfitters.

Urban Outfitters’s shares rose 23% in 2017 after increasing comparable sales in the second half of the year. That success came despite CEO Hayne warning in April that retailers were in danger of imploding.

“Our industry, not unlike the housing industry, saw too much square footage capacity added in the 1990s and early 2000s,” he said. “Thousands of new doors opened and rents soared. This created a bubble, and like housing, that bubble has now burst.”

Urban Outfitters continued its strong momentum into 2018, delivering record sales in the fiscal fourth quarter ending Jan. 31, 2018 as double-digit digital revenues offset negative retail store turnover. Net sales increased 8% at Free People, 5% at the Anthropologie and 2% at Urban Outfitters. 

Hayne also issued a positive outlook, claiming that there had been a positive customer reaction to the company’s new spring fashion offerings. However, fourth quarter results were overshadowed by disappointing earnings. Net income plunged to $1.3 million from $64.3 million as the company’s income tax expense nearly tripled to $89.8 million.

Urban Outfitters blamed the huge increase in its tax liability on a one-time charge on its foreign earnings, together with a write-down of deferred tax assets under the new U.S. tax legislation. (See also: Hedge Fund Billionaires Bullish on FANG and Retail Stocks: 13F.)

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