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Company Analysis – Urban Outfitters Sample

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Executive SummaryUrban Outfitters Inc. is a pioneering “lifestyle selling company” that operates forte retail shops under the Urban Outfitters.

Anthropologie and Free People trade names. It was founded in 1970. near the University of Pennsylvania. It is a high terminal dress and furniture maker in the extremely disconnected dress industry. Its two chief rivals are Abercrombie and Fitch and J Crew. Urban Outfitters has gained a competitory advantage over its rivals by implementing a scheme focused on merchandise distinction. trade name prestigiousness.

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and client trueness. The parent company has been broken down into three separate trade names to specifically provide to a different mark market. They besides created a competitory advantage by offering eclectic ware and a alone retail experience. Company Overview

Created near the University of Pennsylvania in 1970. URBN has over 37 old ages of experience making and pull offing retail shops. These shops offer unquestionably “differentiated aggregations of manner dress. accoutrements and place goods to a extremely defined market niche. ” Urban Outfitters is a pioneering “lifestyle selling company” that operates forte retail shops under the Urban Outfitters. Anthropologie and Free People trade names. Free People is based chiefly online. All of these trade names are higher terminal merchandises designed for a specific mark market. Although the dress industry is extremely competitory. Urban Outfitters’ extremely defined market niche is best marketed through distinction. instead than be leading. in order to accomplish their competitory advantage.

Examples of such distinction include offering eclectic place trappingss such as “tangerine apostrophe chairs. velvet couch. and spectrum Chandlers. ” Urban Outfitters relies to a great extent on the Pareto rule: 20 % of clients represent 80 % of gross revenues. Based upon this. they strive to set up priceless bonds between their targeted client audience which signifies their dependance to both bettering and keeping trade name trueness. In fact. they place such a important accent on image acknowledgment that they have established a separate subordinate that protects against copyright violation. General Note:

For the balance of this rating. each company will be hereon referred to by its heart symbol. The undermentioned heart symbol will stand for Urban Outfitters: URBN. S. W. O. T. AnalysisStrengthsOne superior strength about urban is that it functions as a one halt shopping experience for all things urban. The ware ranges from dressing to home decor. Though the vesture is reasonably priced. one can happen several things at a great monetary value if go toing a sale. In position of the recession that hit the American economic system in 2008. Urban Outfitters have accomplished an upturn in gross revenues without utmost discounting. They have accomplished this by maintaining its stock lists lean and high merchandise turnover since Urban Outfitters shops receive new stock list every two hebdomads. * Loyal Customer Base.

Having a loyal client base is a great indispensable factor that a company can hold. Having repetition clients and their trueness helps the companies grow. * Twin Company of Urban Outfitters. Urban Outfitter is the sister company of the Anthropologie company. * Strong Brand Name – Urban Outfitters. Urban Outfitters has a strong trade name name worldwide. * Strong Brand Name for Anthropologie. Having a strong trade name name is strength for a company. When a company is recognized throughout the industry. this gives them credibleness and attracts people to come store. Failings

Although urban outfitters is making comparatively good in its Canadian and US shops. it is dawdling behind in the Asiatic market since they do non hold any shops at that place and. hold no programs to set up a presence in Asia. This means the company is losing out on a opportunity to capitalise on a developing market. Although the company is already well-established in America. its deficiency of an Asiatic presence can be a disadvantage. particularly since its rivals such as H & A ; M and Guess. already have a head start. * Limited Target Audience. The company limits at that place audience to merely adult females merchandises and accoutrements. Having a limited mark audience bounds company growing into new market district. * Young Consumers. Young consumers have fickle vesture involvement. so companies must follow tendencies really closely to keep their net incomes. Additionally. immature consumers have the least occupation security and therefore will cut back passing rapidly in instance of a recession. Young consumers are besides more likely to travel unemployed. which limits their ability to buy points and leads to more cyclical disbursement. Opportunities

The best chance right now for Urban Outfitters is for it to spread out into the Asiatic market. Since some of Urban Outfitters rivals are already in the Asiatic market. Urban has to take a elephantine measure in order to acquire in front of the rivals. after they catch up. The company would be more marketable if they opened a figure of shops in Asia at the same clip. * Acquisitions and Mergers. Acquisitions or amalgamations give companies an chance to truly spread out and turn. Anytime a company is able to spread out allows for a company to derive more market portion. * Create Discount Stores. Some retail merchants don’t have price reduction shops or have a low figure of price reduction shops. These types of shops can be good for consumers who want to buy vesture for a lower monetary value. Discount shops can increase the consumer base by aiming consumers who are less good away. It can increase gross revenues from consumers who would non otherwise visit a full priced shop. because they are fearful at the higher monetary values of the ware. Discount shops can assist a company every bit long as the excess gross revenues and net incomes from those shops makes up for any loss of value from bing shops. Menaces

Some menaces to Urban Outfitters include Abercrombie and Fitch. Gap. Guess. and H & A ; M. Abercrombie is one of the lead forte retail merchants and they besides provide dressing to that same age scope. The Gap and Guess besides markets to the same age scope and has several retail shops worldwide and marks that immature hippie. H & A ; M proves to be a large menace to many forte retail merchants because non merely are they low-cost and a world-wide company. but they besides have an unbelievable turn-over rate. * Highly Discretionary Product. Highly discretional merchandise could be affected by economic downswings as people focus on nest eggs money or purchasing cheaper goods or avoid purchasing discretional points all together. * Retail Consumers are Fickle. Fashion trends alteration quickly.

Retailers must alter their merchandise choice frequently in order to fit the consumer’s latest desires. This requires expensive proving. research. development. and selling in order to maintain gait. If consumers change and a retail merchant don’t maintain gait. so the retail could endure trade name and gross impacts that affect it for many old ages. * Economic Slowdown – Anthropologie. Economic lag has a major consequence on the retail industry. Until economic times improve. gross revenues will be affected. * High Gas Prices and Hurting Retailers. The higher gas monetary values go. the less incentive for shoppers to see shops and the less money they have to purchase goods are those shops.

Recommendations and JustificationsRECOMMENDATION # 1: For the financial 2013. Urban Outfitters has planned capital expenditures at $ 190 million to $ 210 million driven chiefly by new shops. the enlargement of place office and the completion of the company’s new fulfilment centre. The company’s financial 2013 one-year effectual revenue enhancement rate is planned to be about 36. 5 % . The company continues to be after for gradual. year-over-year border rate betterment. The company believes margin rate betterment chance is greater in the 4th one-fourth than in the 3rd one-fourth based on last year’s public presentation. RECOMMENDATION # 2: Urban Outfitters should go on to turn internally as planned. The company is be aftering to open about 51 new shops in the balance of financial 2013 with about 11 new shops expected to open in the 3rd one-fourth ; by trade name. the company is be aftering about 18 new Urban Outfitters shops globally. 15 new Free People shops. 16 new Anthropologie shops and 1 new shop each for Terrain and BHLDN. RECOMMENDATION # 3: If Urban Outfitters takes on debt. it will increase the entire sum of capital it has at its disposal to finance whatever it is it wanted to finance in the first topographic point. Unlike equity. debt carries a direct cost called “interest” that eats off at a business’s profitableness.

The job with adding purchase to Urban Outfitters as a manner to hike ROE is that after a certain point. the existent cost of the debt diminishes net income borders and lessenings plus turns. Although there surely are a figure of instances where adding debt makes sense. it is non something that direction wants to force every bit high as possible. unlike net income borders and plus bends. In fact. many perceive net incomes generated from debt funding as higher hazard than net incomes generated from equity funding. peculiarly if the company is tied to the concern rhythm in any manner. form. or signifier. Whereas a company that is wholly equity financed can usually sit out a downswing. a company with a big part of debt funding is unluckily non rather so good equipped. RECOMMENDATION # 4: I believe Urban Outfitters should go forth their selling disbursement at the sum it presently remains. Urban Outfitters has caught the pulsation of the consumer well and is looking to construct on it further.

This company will go on with its growing through a blend of on-line gross revenues and brick and howitzer presence. The market is at that place and the company is pull offing its ware rather good. maintaining stock list degrees thin and turning its concern in the needed countries. Keeping all these factors in head. Urban Outfitters still has room to better and supply better returns to investors. RECOMMENDATION # 5: Urban Outfitters presently does non claim any disbursement under Research & A ; Development ( R & A ; D ) . I believe that they should apportion some type of support to this attempt. By making so. I believe that they will stay up on the latest manner tendencies and economic issues. This will besides assist them to better pull off their image which will supply better selling stableness for the company. RECOMMENDATION # 6: Driving the bottom line through profitable gross growing probably is the aim of virtually every company. The better manner to keep the appropriate cost construction is to command them in a sustained manner. Here are 5 ways to command costs. Renegociate all contracts yearly. Multiple twelvemonth contracts do non ever ensue in lower costs.

A smart company policy is non to hold the life of a contract exceed one twelvemonth. Ask your clients. Annual planning Sessionss with clients have many benefits. By discoursing costs holistically up and down the combined supply ironss. clients frequently can urge ways to cut down costs. Match footings with bends. Each point in your stock list moves at a different rate. And yet providers usually use a one-size-fits-all attack to payment footings. You can cut down your working capital to zero if payment footings were matched with the stock list bends of each point. By negociating this into your contracts it incents the providers merely to sell the best moving points and to work with you to better stock list productiveness. The consequences will liberate up hard currency that can be deployed elsewhere in the concern and better net incomes. Ask sellers to have “their” stock list. Better even than fiting footings with bends is to hold the sellers keep rubric to their stock list until sold. Normally stock list acquired from a seller is held in your warehouse for usage in fabricating transition or resale to your clients. Hold head count invariable. For certain this is a blunt instrument and it won’t ever work.

Technology. thin techniques. procedure technology. etc. all are tools to liberate up clip so employees can go more productive and you don’t have to add new head count to turn. RECOMMENDATION # 7: In recent old ages. Urban Outfitters has opened retail locations in Europe. Many retail merchants have started to set up a presence in Asia in order to gain from new wealth developing in that part. H & A ; M. one of URBN’s rivals. has 13 shops in China and 2 in Japan. Urban Outfitters. nevertheless. has no programs to set up a presence in Asia intending it is losing out on a opportunity to capitalise on a developing market. Although URBN is already well-established in America. its deficiency of an Asiatic presence can be a disadvantage. particularly since its rivals already have a head start. Industry Growth

In most industries. particularly extremely competitory 1s. competition among existing houses is a cardinal determiner on how good houses generate gross. The more intense competitions become the greater opportunity net income borders will diminish. The degree of growing plays a cardinal function in how a house can derive market portion. It is chiefly measured by entire gross and consumer disbursement as a per centum of gross domestic merchandise ( GDP ) . The U. S. has the highest per-capita GDP. nevertheless. spends the lowest on dress compared to other prima states. This creates even steeper competition among bing rivals since it makes it harder for houses to obtain market portion.

Same-store gross revenues are besides used to find industry growing. This is measured by gross revenues from those shops that have been unfastened for at least a twelvemonth and excludes store shuttings and enlargements. Holiday shopping represents 50 % of industry gross revenues. However. the warm December conditions prevented many houses from describing high 4th one-fourth net incomes. This industry is comprised of 52 dress shops harmonizing to Yahoo Finance. In decision. there is and will go on to be a high grade of competition in this industry. However. industry growing based on grosss will be comparatively low since this industry has reached the “long tally stage” of its monopolistically competitory construction where new houses enter and take market portion off from current houses. Rivals

Concentration and balance of rivals determines the sum of competition in an industry. The industry is fragmented since it competes more on merchandise distinction and mixture than monetary value due to high labour costs and deficiency of monopoly presence. Concentration of rivals has grown since section shops and their “affordable fashion” selling runs have lured off current and possible consumers. For case. Kohl’s section shop concatenation announced in August 2006 that they would transport $ 69 frocks and $ 99 pocketbook from manner interior decorator Vera Wang. Wang antecedently catered to a specific market niche that chiefly consisted of famous persons.

In add-on. Isaac Mizrahi. a manner interior decorator for Bergdorf Goodman ( Neiman Marcus subordinate ) . introduced a line of women’s dress at Target shops in 2003 and has since introduced a line of place trappingss in 2005. Kohl’s and Target’s chase to entice dress clients off has proved to be effectual therefore far from recent proclamations from both houses. However. this will be duplicated in the close hereafter by other section shops. Furthermore. the coming of ecommerce has created a turning figure of internet retail merchants who can afford to sell similar manners at lower monetary values due to smaller operating expense and stock list costs. Both of these factors will get down to deflate the consumer footing held by forte dress shops if their consumer shift costs are low and farther increase the already high concentration amongst apparel rivals. Product/Cost Analysis

The degree of merchandise distinction in an industry determines the willingness or ability of the consumer to exchange between houses. It is of import to observe that merchandise distinction lies in the head of the consumer. In fact. two merchandises may be indistinguishable. but are presented in such a manner that one is superior to the other. In order to make such differentiations. houses have created image distinction based on stigmatization. Differentiation schemes allow for merchandises to command trade name trueness and a corresponding decrease in monetary value sensitiveness. Trade names are of increasing worth since they are intangible assets that are hard for rivals to understand and copy. There are 16 registered service and hallmarks for URBN. Urban Outfitters to a great extent relies on merchandise distinction and has established a separate subordinate that entirely maintains and manages hereafter and bing Markss and defends against violation. This is synonymous with URBN’s rivals since their gross revenues are based upon merchandise distinction. name acknowledgment and repute.

There are two signifiers of exchanging costs: consumer shift costs and steadfast shift costs. Consumer exchanging costs refers to all costs and incommodiousnesss incurred in order to exchange between dress suppliers. Firm exchanging costs refers to all costs and incommodiousnesss incurred in order to exchange industries. Apparel shops. on norm. have made consumer shift costs high in order to retain clients. Expanding on grades of concentration from above. when houses have achieved distinction. they have made consumer shift costs high. This is so since consumers are victims of their ain individualism. particularly college pupils. Polo charges high dollar for a homogeneous collared or tee shirt that displays their logo in the upper right corner of most vesture. However. pupils are inclined to pay a monetary value premium since they view Polo as an elect position symbol ; therefore. Polo has achieved high exchanging consumer shift costs due to their quality. name acknowledgment and repute.

In drumhead. the more client keeping. the easier houses can increase monetary values without the hazard of losing them to rivals. Apparel houses have high shift costs since the industry most frequently entered into is consumer goods. Although place trappingss and recreational equipment is both labour and capital intensive. houses have offered an extension to their dress lines since it stimulates a bond between them and consumers. Anthropolgie. subordinate of URBN. sells eclectic place trappings points along with their dress such as tangerine apostrophe chairs. velvet couch. and spectrum Chandlers. High distinction and high consumer and house shift costs provide this industry with client keeping and alleviate current rivals from confronting new entrants and rivals from bordering industries. Ratio of Fixed to Variable Costss

This ratio affects the flexibleness of firms’ pricing constructions. Urban Outfitters shops are financed through off-balance sheet rentals runing from 5-15 old ages. Additionally. there are 10 Urban Outfitters locations where a per centum of gross revenues are paid in stead of a fixed minimal rent. Including Urban Outfitters two subordinates. Anthropolgie and Free Peoples. there are 212 shops with entire selling infinite of over 1. 756. 000 square pess. Urban Outfitters typically carry 30. 000 to 35. 000 merchandises per shop. Anthropolgie 20. 000 to 25. 000. and Free People about 1. 600. They have two primary distribution centres located in Lancaster County. Pennsylvania and Edgefield County. South Carolina with combined square footage of 650. 000. Firms in any industry must turn over big sums of merchandises for fixed cost to cover variable cost or go out the industry. The dress industry has leaner stock lists compared to other industries so their stock list turnover rate is higher. This allows apparel houses to devour more fixed costs at higher rates and finally diminish the bargaining power of consumers. Competitive Advantage Analysis

Urban Outfitters operates in a extremely competitory industry that is really disconnected. to state the least. By nature. the industry possesses a immense potency for distinction. since any company with the necessary equipment can fabricate vesture and accoutrements. Urban Outfitters has adopted several schemes to capitalise on its competences and make value for the house. The three cardinal success factors on which the house succeeds in making competitory advantages for itself are planing labels to provide towards a specific market section. keeping a strong trade name image. and by offering alone and distinguishable merchandises and retail shops. Through these schemes of distinction. URBN has succeeded in hiking their one-year gross revenues at a rate of 33 % over the last five old ages. Urban Outfitters is a parent company that governs Urban Outfitters. Anthropologie. and Free Peoples. Each of these concern sections is designed and marketed to run into the demands of a different client base. Urban Outfitters strives to be “the trade name of pick for knowing. urban-minded immature grownups. ” in the 18 to 30 age group. It offers ware for both work forces and adult females. and besides sells accoutrements. footwear. and place trappingss.

By dividing this section of the house. URBN can plan and market these shops to capture the concern of the most sought after and manner scruples age group in the market. The following section of the parent company is Anthropologie. which “tailors its ware and ask foring shop environment to sophisticated and modern-day adult females aged 30 to 45. ” This section of the house is geared towards the older and more mature female crowd and distinguishes itself from the URBN section by concentrating on the middle-aged adult females. They offer dressing and dresss but focus largely on place trappingss. By distinguishing the 30 to 45 age group from the younger. more hep 18 to 30 group. Anthropologie successfully meets the demands of the client “focused on household. place. and calling. ” They can custom-make the ware and shop ambiance to capture the market that has more money to potentially pass and doesn’t respond to the same ware as the 18 to 30 group.

The 3rd section is the Free People subdivision. which is a sweeping goods distributer that does concern with forte and section shops. This section merely sells ware for adult females and operates several dress shops throughout the state. The Free People trade name URBN is the lone section that does the majority of its concern through online and catalog shopping. Another scheme that grants URBN a competitory advantage is its strong trade name image and loyal client base. All of the firm’s labels are synonymous with hip. trendy. and interior decorator merchandises with a monetary value ticket to fit. The typical URBN client is willing to pay more for ware than they would at a non-specialty shop in order to stand out in a crowd. Offering eclectic merchandises and a alone retail experience is the 3rd scheme employed by the house. On their web site. URBN claims that they “design advanced shops that resonate with the mark audience. ” and “construct alone merchandise shows that incorporate found objects into originative merchandising sketchs. ” For this experience. the loyal clients of URBN are more inclined to pay the premium monetary value tickets. The house focuses on creativeness and individuality “offering a merchandise mixture and an environment so compelling and typical that the client feels an empathic connexion to the trade name and is persuaded to purchase. ” Decision

Urban Outfitters has found their market niche in the dress industry and are more of a merchandise differentiated than cost leading house. Urban Outfitters has farther differentiated itself from rivals by offering place trappingss and accoutrements every bit good as their alone lines of dress. They intend to set up priceless bonds between them and their client footing that chiefly consist of broad. individualistic adolescents and college aged pupils who lovingly value manner. Urban Outfitters operates with two subordinates. Anthropologie and Free Peoples. with Anthropologie aiming middle-aged adult females. They have invested to a great extent in the Pareto rule which implies 20 % of clients represent 80 % of gross revenues. Urban Outfitters seeks to make “a differential shopping experience. which creates an emotional bond with the 18 to 30 twelvemonth old mark client we serve. ”


UBRN. ( n. d. ) . Company Profile |Urban Outfitters. Retrieved February 17. 2013. from Urban Outfitters:hypertext transfer protocol: //www. urbn. com/profile/hypertext transfer protocol: //www. urbanoutfitters. com/urban/index. jspWikipedia. ( n. d. ) . History of Urban Outfitters |Urban Outfitters. Retrieved February 17. 2013. fromWikipedia: hypertext transfer protocol: //en. wikipedia. org/wiki/Urban_OutfittersForbes. ( n. d. ) . Company Profile |Urban Outfitters. Retrieved February 17. 2013. from Forbes: hypertext transfer protocol: //www. forbes. com/sites/steveodland/2012/02/15/5-ways-to-control-costs/ Libby. R. . Libby. P. . & A ; Short. D. ( 2011 ) . Fiscal Accounting. New York. New york: McGraw-Hill Irwin Capella University ( 2011 ) . An Overview of Financial Statement Analysis: The Mechanics. New York. New york: McGraw-Hill Irwin ANF. ( n. d. ) . Company Profile |Abercrombie & A ; Fitch. Retrieved February 17. 2013. from Abercrombie & A ; Polecat:

hypertext transfer protocol: //www. abercrombieandfitch. comEdgar Scan. PricewaterhouseCoopers. Retrieved February 17. 2013. from:hypertext transfer protocol: //www. Edgarscan. pwcglobal. comJCREW. ( n. d. ) . Company Profile | J CREW. Retrieved February 17. 2013. from J CREW:hypertext transfer protocol: //www. jcrew. comMicrosoft Corp. ( MSFT ) ( 2013 ) . URBN. Yokel! Finance. Retrieved from: hypertext transfer protocol: //finance. yokel. com/q/pr? s=MSFT.

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Company Analysis – Urban Outfitters Sample. (2017, Jul 19). Retrieved from https://graduateway.com/company-analysis-urban-outfitters-essay-sample-3969/

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