The holiday shopping season was kind to retailers, and I expected stellar results. Revenue from Target (TGT) and Abercrombie & Fitch (ANF) both grew by double-digits. However, Urban Outfitters’s (URBN) was only up 6% Y/Y. This was not much better than the 4% growth reported in the previous quarter.

Revenue from both retail and wholesale operations was up 6%. At the brand level Urban Outfitters revenue was up 5%, Anthropologie Group was up 5%, and Free People wholesale revenue was up 6%. Within the retail segment the digital channel posted double-digit growth. Direct-to-consumer (“DTC”) is becoming a key strategy of Abercrombie & Fitch and Lululemon (LULU); Urban Outfitters has to exploit this burgeoning channel just to keep pace. Average order values from DTC were flat but conversion rates rose.

Comparable sales through stores were negative due to a fall off in transactions and units per transaction. In the past comparable store sales were problematic for the company. It could portend that DTC volume is cannibalizing sales through stores. It would not be unusual for customers to comparison shop and buy the same apparel online if it’s cheaper than in the stores. The question remains, “If comparable store sales fell during the holiday shopping season then what happens going forward?”

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