Dive Brief:
- Clothing retailer URBN is moving forward with the second phase of its logistics investments into its rental brand Nuuly.
- The investments are taking place at Nuuly's facility in Kansas City, Missouri area, which began operations in February 2024. URBN had previously announced a $60 million, five-year plan to build out the facility.
- With revenue growth driven by an increase in subscribers, the logistics investments will help expand capacity, Francis Conforti, COO and co-president, said during a Q4 earnings call.
Dive Insight:
With URBN building out the second phase of its automation at its Kansas City-area facility, it expects to see benefits in delivery and logistics, Conforti said during the Feb. 28 call.
The Nuuly brand saw revenue grow by 43%,driven by a 40% increase in average active subscribers in Q4 compared to the year prior, Conforti told analysts. It also saw operating margin improvement, which was fueled by efficiencies in logistics and the "natural leverage of our operating expenses against strong revenue growth,” he said.
With its fiscal year 2027 capital expenditures of approximately $385 million, 40% of that sum will go toward logistics investments, CFO Melanie Marein-Efron said in the call.
"The logistics investments are to expand our capacity and automation in both the subscription and Retail segment businesses," Marein-Efron said.
Although the company did not specify what the automation would focus on, Senior Director of Fulfillment Tony Coccerino told Supply Chain Dive it was planning to add sortation technology in 2025, per a 2024 email.
Other retailers are also leaning on automation in their supply chains. For Walmart’s capital investment strategy, the retail giant's spending includes retrofitting some of its distribution centers with automation, President and CEO John Furner said in a recent earnings call last month. But even small businesses are increasingly finding ways to deploy technology, thanks to solutions such as subscription service models and artificial intelligence, experts have noted.
