Fewer shoppers visited its Anthropologie and Free People stores despite higher discounting.
Urban Outfitters’s quarterly comparable sales missed analysts’ estimate as fewer shoppers visited its Anthropologie and Free People stores despite higher discounting.
Shares of the company, which surprised Wall Street with same-store sales increases in the preceding two quarters, fell 9.4% to $35.35 in after-market trading.
The apparel retailer’s comparable sales rose 1% in the third quarter ended Oct. 31, falling short of the average analysts’ estimate of 1.9%, according to research firm Consensus Metrix.
Comparable sales dropped 2.7% at Anthropologie Group and 1.5% at Free People. Analysts had expected a fall of 1% at both brands.
Urban Outfitters urbn has been adding bars, restaurants and hair salons to its stores, as well as lowering prices, as it looks to attract shoppers who have shifted online and to fast-fashion brands such as H&M hmrzf and Inditex’s ztstf Zara.
Overall traffic to the company’s stores fell by mid single-digits in the third quarter, Chief Executive Richard Hayne said on a call with analysts
“Despite well-controlled inventory, Anthropologie was not able to hold their markdowns flat this quarter due to their challenging women’s apparel performance,” Chief Financial Officer Frank Conforti said on the call.
Anthropologie, wedding dress retailer BHLDN and outdoor lifestyle brand Terrain make up the Anthropologie Group.
Conforti also warned that gross margins during the holiday quarter could take a hit due to increased discounts at its Anthropologie and Urban Outfitters brands.
The company’s comments come a few days after apparel chains Abercrombie & Fitch anf and Gap gps provided bleak fourth-quarter sales forecasts, raising fresh concerns that apparel retailers were in for another tough holiday season.
Urban Outfitters’ net sales rose 4.5% to $862.5 million, but missed analysts’ estimate of $868.8 million, according to Thomson Reuters I/B/E/S.
The company’s net income fell to $47.4 million, or 40 cents per share, from $52 million, or 42 cents per share, a year earlier.
Analysts on average had expected a profit of 44 cents per share.
Up to Tuesday’s close of $39.01, the Philadelphia-based company’s shares had risen 71.5% this year.