Best in Class: Urban Outfitters Drives Sales Without Sales

There are times in life when it pays to be a contrarian -- and the same goes for the life of a company. Such is the case with Urban Outfitters(URBN), a firm out to prove that, even in trying times, bottom-barrel prices are not the sole means to a sale.

Despite today's heated pricing wars, the contemporary apparel chain is sticking to a simple notion: give shoppers a unique product they love, and even the cash-strapped will pay full price.

As the retail world prepares to enter its second-quarter earnings-report frenzy, it's an approach that has netted the company TheStreet's distinction as Best in Class for contemporary clothing.

Don't believe us? Believe the numbers:

Urban Outfitters Comps Outshine Competition

And then there are these numbers: Shares in Urban Outfitters are up 36% in the year-to-date period, closing Monday at $21.81 -- up almost three dollars in the last week alone.

Indeed, while most of its competition like Abercrombie & Fitch (ANF) and American Eagle Outfitters (AEO) have resorted to drastically lowering prices in an effort to lure any warm, sentient body into their stores, Urban Outfitters is going the other way. By managing inventory broad and shallow rather than narrow and deep (meaning it has more styles with fewer items in each style), Urban Outfitters is selling more product at full price.

"We have trained consumers to buy product when they see it rather than wait for it to go on sale," CFO John Kyees said in a recent exclusive interview with TheStreet. "They know the next time they come into the store it might not be there. When you sell commodities you need to compete on price, but we are selling fashion."

This strategy has allowed Urban Outfitters to report record sales and earnings in 2008, even as the rest of the retail sector crumbled.

"We never looked at the recession with any doubt of our survival," Kyees said. "We actually view it as an opportunity."