Women’s clothing chain Anthropologie has built its name on whimsically embroidered sweaters, lace-trimmed maxi dresses, and funky jewelry that looks more like it came from an artisan market in the Andes than from the mall.
But lately, it seems, the retailer is missing the bohemian-chic bulls eye.
Anthropologie’s parent company, Urban Outfitters, has reported that comparable sales — a measure of sales at stores open more than a year and online sales — fell 2 percent in the most recent quarter in the Anthropologie division. That result puts a capstone on a tough year for Anthropologie, which saw flat sales in the previous quarter and only slight growth in the first half of the year. And it marks a clear turn for a brand that had been chugging along with robust sales increases for the previous two years, as it impressively managed to get women shopping without resorting to the “40 percent off your purchase” gimmicks that its chief competitors were dependent on.
The problems are piling up, and they have a familiar ring to them. Last May, executives said Anthropologie’s sales took a hit when it whiffed with its line-up of spring dresses: Not enough casual frocks, they said, and some instances where the team missed the mark on fabrics, silhouettes or prices. And the struggles have only continued, with the retailer saying Monday that it ended up having to resort to promotions to sell unappealing dresses and sweaters in the back half of last year. Foot traffic was also lower at its fleet of 218 stores.
On a conference call with investors, chairman Richard Hayne was blunt about what’s ailing the brand.
“Clearly, the task at hand for the Anthropologie team is to improve the apparel assortment,” Hayne said.
These issues seem uncannily similar to the ones that have bedeviled one of its primary rivals: J. Crew. That chain had been flying high under the creative direction of Jenna Lyons and the executive leadership of Mickey Drexler, the so-called “merchant prince” of retail. But then came a string of fashion misfires: T-shirts that were too boxy, color palettes that didn’t entice, and an infamous cropped sweater known as the “Tilly” that became a symbol of J. Crew’s dire straits; it couldn’t even get right a simple crewneck top.
Just this week, a private equity firm that is invested in J. Crew, TPG Capital, slashed the value of its stake by 86 percent, Bloomberg News reported. That would seem to be a sign that it’s not terribly confident J. Crew’s turnaround efforts are working.
It’s hard not to see the parallels between what’s ailing J. Crew and what’s ailing Anthropologie: Both chains are simply failing to offer shoppers the kind of clothes they are looking for. And while it was easy at first to write off Anthropologie’s stumbles as a temporary blip, a full year of unattractive merchandise in dresses — one of the chain’s most essential categories — raises questions about whether it might be slipping into a rut.
It surely wouldn’t be alone: Banana Republic, like J. Crew, also has seen its sales in a tailspin lately because it tried to take the aesthetic of its clothes in a direction that shoppers weren’t interested in. (And it didn’t help that the retailer has had some fit issues with its clothes, too, such as with a blazer that many women found they could not try on because they couldn’t fit their arm in the arm hole.)
In considering the health of Anthropologie, it’s noteworthy that the reported 2 percent decline in comparable sales is a figure for the entire Anthropologie Group, a division of the company that includes more nascent concepts such as bridal shop Bhldn and home goods seller Terrain. Executives have been touting “very strong” sales growth at those newer properties. So, even though Bhldn and Terrain account for a tiny sliver of the total Anthropologie Group pie, this likely indicates that the sales slowdown at the flagship brand is even worse than the headline number suggests.
Executives chalked up much of the trouble at Anthropologie — and at its Urban Outfitters and Free People chains, too — to external fashion forces. In particular, Hayne talked about how there haven’t been many major style shifts recently to get women excited about updating their wardrobes. Indeed, there are some signs that we are in the last gasp of the decade-long (and perhaps now tiresome) skinny jeans era. And yet the company says it has been adding new procedures to improve its in-house design team, which suggests executives believe there is room for improvement.
It’s not all bad news for Anthropologie: The company said that sales of home products, beauty products, accessories and shoes were strong in the latest quarter. In fact, Haynes told investors he is so bullish Anthropologie’s potential as a home goods retailer that he said he could foresee a future in which clothing accounts for less than 50 percent of the store’s sales. If the store can pull off that change in the mix of the business, it may not matter so much if the apparel category goes through a soft patch.
And the retailer seemed to suggest that it is going to be more focused on building an international growth strategy this year, a move that could provide it with a fresh stream of sales growth.
But those are the kinds of changes that won’t happen overnight. And so, in the meantime, Anthropologie could stand to clean up the business it already has, and that starts with making more covetable clothes.