Retailer Urban Outfitters reported earnings for the three months to July 31 which showed a revenue decline of 16.5% year over year as a result of store closures linked to COVID-19. The firm also experienced a drop in profit margins due to “to an increase in delivery and logistics expense due to penetration of the digital channel“. The downturn is a common thread through the retail sector, as discussed in Panjiva’s research of Aug. 17.

Yet, the firm managed to keep inventories under control with inventory days dropping to 55.9 days from 60.4 days a year earlier, S&P Global Market Intelligence data shows. 

In the quarter to Oct. 31 the firm’s CFO, Francis Conforti, has stated “sales could land mid-single-digit negative” while there will also be increased capital expenditures on “expanded distribution facilities” to support the expansion of digital sales. Notably Conforti also stated that the outlook “could change at a moment’s notice” due to the uncertainties caused by COVID-19.

Panjiva’s data shows that Urban Outfitters’ supply chain activity has likely stabilized at the start of August, with U.S. seaborne imports linked to the firm having increased by 0.1% year over year in the first 15 days of the month. That follows a 12.7% drop in July and a 22.4% slide in Q2. The recovery has largely been driven by an 8.0% increase in apparel shipments in the first half of August while homewares slowed to a 2.2% decline.

Chart segments change in U.S. seaborne imports linked to Urban Outfitters by product. Data for Aug. 2020 based first 15 days of the month versus the same period a year earlier.  Source: Panjiva

The firm has also suffered during the “global pandemic with the supply chain impaired” according to CEO Richard Hayne, which has “just been hideously complex and nearly impossible to manage“. That challenge has been exacerbated by an increase in tariffs on imports from China as well as the ongoing quest to ensure low costs.

The firm has been steadily switching its supplies in favor of importers from Vietnam and Indonesia and away from China and India. Panjiva’s data for U.S. seaborne imports linked to Urban Outfitters shows that while there’s been an 11.7% year over year drop in total imports in 2020 through Aug. 15, shipments from China and India fell by 15.8% and 21.8% respectively. Imports from Vietnam and Indonesia meanwhile increased by 20.9% and 14.2% respectively, repeating a pattern seen in 2019 too.

Chart segments change in U.S. seaborne imports linked to Urban Outfitters by origin. Data for 2020 based on Jan. 1, 2020 to Aug. 15, 2020 versus same period a year earlier.  Source: Panjiva