Urban Outfitters cuts lead times by a month

Dive Brief:

Shorter lead times and tighter inventory control have been a winning combination for Urban Outfitters in 2018, according to the retail group's second quarter earnings conference call last week.
That increased efficiency comes from "not only figuring out what’s the right product mix and items are, but being able to replenish them more quickly," according to CEO Richard Hayne. The company has reduced its lead time by an entire month over the last three years and believes there is still room for improvement.
The company — encompassing Urban Outfitters, Anthropologie and Free People stores, along with Free People's wholesale operations — boosted sales by 14% with only a 3% uptick in retail segment inventory.

Dive Insight:

"We believe there is a shift in fashion that is creating demand for newness and variety," said Hillary Super, president of apparel and accessories at Anthropologie Group on the company's May first quarter earnings call. The fashion group's primary customers, women aged 18 to 28, are cycling through trends so fast the company needed an inventory strategy to match the product turns.

Significantly reducing lead times by shaving down product development time at each link in the chain became the critical step. Super explained back in May that roughly half of Anthropologie's product is now on 12-weeks lead time or less.

"We have better decision-making. We have platformed fabrics and we have had pre-development, which has definitely allowed us to reduce our lead times," said Chief Sourcing Officer Barbara Roszas on last week's call.

Shorter lead times have allowed the company to keep inventory down while still boosting sales. Plus, better inventory management has improved the company's margins by keeping merchandise out of the clearance section.

Despite keeping a tight lid on overall inventory, digital sales are growing based on more choice — about 15% more this year — explained CFO Frank Conforti. More choice, including a wider range of sizes, led to more sessions on the site, he said, noting double-digit digital sales growth online in the second quarter.