For the first time in its history, hipster clothing haven Urban Outfitters plans to seek out companies to buy, Chief Executive Officer Richard Hayne said on a conference call today.
Hayne said the retailer is "aggressively" pursuing several companies to expand through an acquisition, partnership, or joint venture.
"The partnerships and acquisitions we believe present the most potential are those that have a similar customer profile to one of our existing brands, have a management team that will augment or complement our existing expertise, and those that offer strong growth opportunities," Hayne said. "We are in discussions with a couple folks, and that's moving along nicely."
Hayne's comments mark the first time Urban Outfitters has looked outside of its own house for growth. Typically, the company has organically expanded its product offerings, such as adding petite sizes at Anthropologie and intimates at Free People or creating new lines such as BHLDN and Terrain.
Urban Outfitters is remarkably specific in how they view their customers — the namesake brand tends to attract the "upscale homeless," while Anthropologie shoppers seek "respectability" in their communities. The Free People shopper, on the other hand, travels to music festivals, especially Coachella and Wanderlust, and is "sweet, cool, and boho."
Hayne seemed keenly aware that such precise customer definitions might make it difficult for an acquired company to fit into Urban Outfitters' culture, saying any purchase would become part of one of its existing brands, and identifying the "perfect candidate" for an acquisition as "slightly smaller than larger" to reduce risk.
"We also would like to have a management team that is capable of growth and understands that we have some, I think, pretty strong attributes to offer some of these folks in terms of helping them achieve their growth," he said.
Urban Outfitters, headquartered in Philadelphia, has just under $300 million of cash and equivalents on its balance sheet. The company, with about $2.8 billion in annual sales, posted record second-quarter profit today of $76 million and a net sales increase of 12%, better than many other retailers, which have been reporting sluggish results for the period. The company's shares were up 6.2% to $42.40 in after-hours trading Monday.
Sapna Maheshwari is a business reporter for BuzzFeed News and is based in New York. Maheshwari reports on retail and e-commerce.
Contact Sapna Maheshwari at email@example.com.
Got a confidential tip? Submit it here.