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Urban Outfitters (URBN) shares tumble as 2020 holiday sales disappoint

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Shoppers with their Urban Outfitters shopping bags in Soho in New York

Richard Levine | Corbis | Getty Images

Urban Outfitters shares tumbled Tuesday after the apparel retailer reported disappointing holiday sales and announced its current chief executive is set to depart at the end of the month.

Its stock dropped about 11% in after-hours trading, having closed the day up nearly 6%.

Urban Outfitters, which also owns the Anthropologie and Free People brands, said current CEO Trish Donnelly will be leaving, effective Jan. 31, to pursue another career opportunity. It has named Sheila Harrington, current CEO of Free People, as CEO of Urban Outfitters, and she will continue to oversee the Free People banner.

During the two-month period ended Dec. 31, Urban said its total company sales fell 8.4% from a year earlier, while same-store sales fell 9% due to declines in store traffic because of the Covid pandemic. Same-store sales track revenue both online and at stores open for at least 12 months.

Its online sales grew double digits, the company said, but that wasn’t enough to offset the losses in its stores. Urban said sales were up 1% at Free People, down 8% at Urban Outfitters, and down 12% at Anthropologie.

In a virtual presentation at the annual ICR Conference Tuesday afternoon, CFO Frank Conforti explained the company kept its inventories light during the holidays, especially in stores, to avoid having to discount excess merchandise at the season. But this strategy might have backfired and hit store sales, Conforti said. “This may be the first time we experienced the negative impact due to our product model,” he said.

Urban is also in the process of building another warehouse facility in Kansas, he said, to be able to meet the demand spike it is experiencing online, and it will open a temporary warehouse in the interim to help it with digital orders.

The company noted its same-store sales across the portfolio have “rebounded nicely” during January. However, it expects profits to be pressured during the fourth quarter due, in part, to heightened delivery and logistics expenses because of the surge it is experiencing online.

For the eleven-month period ended Dec. 31, Urban said its total net sales fell 14.3%, while same-store sales dropped 12% overall.

Also Tuesday, Urban named Gabrielle Conforti, its current chief merchandising officer, as president for Urban’s North America division. Emma Wisden, current managing director for Urban’s Europe division, will lead Urban’s wholesale business, the company said.

Urban Outfitters shares had climbed almost 15% over the past 12 months, as of Tuesday’s market close.


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Lufthansa, easyjet, airlines sell off as EU steps up travel restrictions

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A KLM flight attendant walks in the Schiphol Airport, the Netherlands.

EVERT ELZINGA | AFP | Getty Images

LONDON — Airline shares dropped on Friday after European governments announced further travel restrictions to fight growing Covid infection rates and highly-infectious variants.

European leaders agreed on Thursday to keep their borders open but to discourage any non-essential travel. This means citizens looking to move from areas where the virus is circulating at a very high level will be asked to have a negative test and undergo quarantine upon arrival at another member state.

France has already said that from Sunday it will require citizens coming from other EU countries to have had a negative PCR test 72 hours before departure.

“We are fully convinced that we must keep borders open in order to keep the internal market functioning, but at the same time we are also convinced that restrictions should be possible to implement for non-essential travels,” European Council President Charles Michel, who chairs meetings among the 27 EU leaders, said on Thursday evening.

These restrictions to travel are a challenge for the EU given its policy of free movement, where citizens, goods and services move freely from one country to the other. However, this approach has been severely hit by the pandemic, which is then reflected on how the traveling sector performs.

IAG, the owner of Iberia and British Airways, sank almost 4% on Friday. Lufthansa also dropped around 3%. Easyjet fell more than 4%.

The entire travel and leisure sector in Europe was down 2.8% during European lunchtime trading hours.

Europe ‘severely impacted’

Speaking to CNBC earlier this week, Mark Manduca, a travel and leisure analyst at Citigroup, said that any roadblocks, including test results, from the moment of leaving the house to arriving at the country of destination are a negative for the sector.

He said that the recovery in the next 12 months would be rather “uneven.” As a result of the travel restrictions, Manduca expects consumers to opt for longer holidays and fewer times per year rather than frequent long-weekends away.

Some European airlines, such as AirFrance and Lufthansa have received government subsidies to cope with the hit from the pandemic. However, there are questions about whether more support will be required in the coming months.

Lufthansa’s CEO Carsten Spohr said on Thursday that the company is currently losing 1 million euros ($1.2 million) every two hours. However, this is actually a “significant improvement,” he said, as the airline at one point in 2020 was losing the same amount of money every hour.

Earlier this month, the International Air Transport Association (IATA) said air passenger numbers stalled at the end of 2020.

Passenger traffic growth dropped by 70.3% year-on-year in November, the IATA said, with Europe being “the most severely impacted region due to strict containment measures.”

Vaccination passports

European leaders have started debating whether vaccination certificates should be used to promote traveling in the coming months.

The idea, pushed by Greece and other tourism-heavy nations, would allow those that have been vaccinated to travel anywhere in the EU.

However, the 27 heads of state decided on Thursday to take a decision on so-called vaccination passports at a later date.

“Rather than easing travel restrictions, the vaccination passport would simply create new borders across people and countries,” Alberto Alemanno, professor of EU law at H.E.C. business school, said via email.

“Given the highly differentiated roll-out of the vaccination campaigns across Member States, certain nationals are more likely to be vaccinated than others, as they are certain categories and age groups over others,” he added.

Lufthansa airplanes at waiting position on the first of a two-day strike at Frankfurt Airport on November 23, 2016 in Frankfurt, Germany.

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Hamburg hoping to repurpose old coal plant to produce green hydrogen 

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Four major firms signed a letter of intent Friday to develop a “mega-electrolyser” in the German city of Hamburg that would produce so-called “green” hydrogen.

An announcement from the city’s press service said the prospective 100 megawatt (MW) facility would be located on the site of the Moorburg coal-fired power plant, which is currently in the process of being shut down.

In December 2020, it was announced that Germany’s Federal Network Agency would compensate Vattenfall, which operates the plant and is one of the companies involved in the new plans, for the phase-out of the Moorburg plant. 

In addition to Vattenfall, the consortium consists of Shell, Mitsubishi Heavy Industries and municipal heat supplier Wärme Hamburg. If all goes to plan, green hydrogen production could start in 2025.

“In the future, green hydrogen will play a very important role in the energy system and therefore also for us,” Fabian Ziegler, who is the managing director of Shell’s operations in Germany, said in a statement.

Hydrogen can be produced in a number of ways. One includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.

If the electricity used in the process comes from a renewable source such as wind then it’s termed “green” or “renewable” hydrogen. The project slated for Hamburg would produce hydrogen using wind and solar.

The four companies involved will now look to apply for EU funding for their project, with their application set to be submitted in the first quarter of 2021. The plan also underlines a shift in policy inside Germany, which has been reliant on coal as a source of energy for many years.

News of the plans for Hamburg comes at the end of a week in which two other European projects focused on green hydrogen production took shape.

On Monday, it was announced that a subsidiary of German industrial giant Thyssenkrupp had been awarded an engineering contract to carry out the installation of an 88 megawatt water electrolysis plant for Hydro-Québec. The electricity for this project will come from hydropower.

A few days later, on Wednesday, Danish energy firm Orsted said it was pushing ahead with plans to develop a demonstration project which will harness offshore wind energy to produce green hydrogen.


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Pfizer CEO joins World Health Organization at press conference on the coronavirus outbreak

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World Health Organization officials are holding a press conference on Friday to update the public on the coronavirus outbreak that has infected more than 97.6 million people across the world.

Albert Bourla, CEO of Pfizer, which manufactures one of the Covid-19 vaccines that’s been authorized in the U.S. and Europe, is scheduled to join WHO officials at the virtual briefing. Dr. Seth Berkley, CEO of the public-private immunization partnership Gavi, and Henrietta Fore, Executive Director of UNICEF, are also scheduled to join the briefing.

Earlier this week, the WHO’s Director-General Tedros Adhanom Ghebreyesus warned that the world is on the brink of a “catastrophic moral failure” if it doesn’t fairly distribute the available doses of the Covid-19 vaccines across the world. He added that the discovery of several more transmissible strains of the virus in different parts of the world increases the urgency of the vaccine rollout.

“It’s not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries,” he said Monday. “There will be enough vaccine for everybody, but right now we must work together as one global family to prioritize [those] most at risk of serious diseases and death in all countries.”

The WHO, in partnership with Gavi and the Coalition for Epidemic Preparedness Innovations, established the COVAX facility last year to ensure equitable vaccine access for every country in the world. It aims deliver 2 billion doses of safe, effective vaccines by the end of 2021.

Read CNBC’s live updates to see the latest news on the Covid-19 outbreak.


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