New York City Urban Outfitters said profit dropped 24% during the three months ended Jan. 31, as the company used clearance sales and markdowns to move excess inventory.
Same-store sales rose 1% overall, including a 3% increase at Urban Outfitters. But they fell 6% at Anthropologie and 13% at Free People.
After doing better than expected in the first three quarters, the company's sales trend "shifted abruptly" in October, when it hit a "precipitous decline," CEO Glen Senk said in a conference call.
The company's clearance sales, markdowns and increased wholesale closeout sales kept inventory desirably low, but hurt gross margins.
Earnings fell to $40.5 million, compared with $53.6 million a year ago. Meanwhile, sales grew 9% to $508.1 million, from $465.4 million for the period ended Jan. 31.
Accessories were the standout during the quarter, the company said.
For the year, net income increased 25% to $199.4 million from $160.2 million. Annual revenue improved to $1.83 billion from $1.51 billion.
For its current fiscal year, Urban Outfitters plans to open 42 to 45 stores.