Urban Outfitters digital sales surge but Indian supplies slump due to COVID-19 — Panjiva
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Urban Outfitters digital sales surge but Indian supplies slump due to COVID-19

China 2393 Cons. Discr. - Apparel 318 Cons. Discr. - Retailing 249 Coronavirus 256 India 385 U.S. 4229 Vietnam 250

Fashion retailer Urban Outfitters has reported a 31.9% year over year fall in sales in the three months to April 30, including a 28% drop in revenues in North America. COVID-19 related closures of stores were cited as being the main reason.

More of the same is likely, with CEO Richard Hayne statingSince the sales ramp-up is slow and most stores will be open for only part of the quarter, total comp store sales in Q2 could be down more than 60%“. There is an offset however from the firm’s digital channel which has led to “a 63% jump in new online customers. This has produced robust double-digit increases in sessions and demand“.

Panjiva’s data shows U.S. seaborne imports associated with Urban Outfitters only fell slowly in calendar Q1 – the period of imports feeding into Urban Outfitters’ fiscal quarter sales – with a 3.7% decline. That included a 3.3% rise in imports of apparel and a 6.8% drop in homewares. 

The slow reduction likely explains the increased inventory to sales ratio for the firm, a factor being faced across the apparel industry as outlined in Panjvia’s research of May 13. 

In April the slowdown is accelerating with a 20.6% slide in total imports led by a 33.1% reversal in apparel and a 13.5% drop in homewares.

IMPORT DOWNTURN LAGS STORE DOWNTURN DUE TO DIGITAL SALES

Chart segments U.S. seaborne imports linked to Urban Outfitters by product. Source: Panjiva

Urban Outfitters’ diversified product mix makes for a complex supply chain which has also had to adapt to a spread of tariffs on imports from China. The latter may become a worry as the coronavirus disruptions pass and the risk of a renewed trade war rises.

So far though UO has not changed its supply chain significantly with imports from China representing 23.8% of imports in 2019 compared to 25.2% in 2018. The firm’s biggest supplier nation is India which represented 33.7% of imports in 2019. That leaves it exposed to the extended shutdown in manufacturing in India.

The impact of the latter can be seen in a 43.6% slide in imports in April compared to a year earlier, which hasn’t been compensated for by a 22.9% surge in imports from Vietnam and a 72.5% rise in shipments from Indonesia.

INDIA PROVING TO BE A BIGGER PROBLEM THAN CHINA IN APRIL

Chart segments U.S. seaborne imports linked to Urban Outfitters by origin. Source: Panjiva

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