Urban Outfitters quarterly profit drops due to increased expenses and markdowns that relate to its marketing and technology strategies. The apparel retailer reports a lower quarterly profit than expected, while its shares drop 4.9% in the extended market.

The company thrived in reversing the declining sales in its Urban Outfitters brand through the revamp of its stores, the refinement of merchandise assortment, and the improvement of marketing so as to concentrate on its 18-28 years old target market.

But, the reversal is taking a toll because fewer consumers visit malls, while competition intensifies as rivals offer steep discounts to shoppers at the same time. Comparable retail sales drop 1% during the quarter ending October 31, whiles Urban Outfitters, its biggest brand’s comparable retail segment sales drop 7% during the same quarter.

The company Chief Executive Officer (CEO) Richard Hayne expressed his disappointment over the results at the company’s largest brand, saying that many improvements are necessary when it comes to the store performance and merchandise margins.

Gross margins, including Free People and Anthropologie brands drop 34.81% of sales within the quarter, slashing prices so as to boost more sales. General, administrative, and selling expenses jumped 11% during the third quarter, considering the increased expenses in marketing and technology as it continued its online presence expansion. The company gets more customers through its mall stores against rivals like Aeropostale, Inc and Abercrombie & Fitch Co.

The company net income drops 47.1 million dollars or 35 cents per share during the third quarter. Net sales jumped 5.2% to 814.5 million dollars.

On the other hand, the average forecast of analysts was at 41 cents for every share on 812.7 million dollars in revenue. Overall, the Urban Outfitters quarterly profit drops and on Monday, company shares closed at 30.83 dollars on the NASDAQ.