Urban Outfitters Falls on Weak Comps

Urban Outfitters Inc. (NASDAQ: URBN) reported its fiscal third-quarter financial results after markets closed on Monday. The company had $0.42 in earnings per share (EPS) on $825.26 million in revenue, which compares to consensus estimates from Thomson Reuters of $0.42 in EPS on $872.00 million in revenue. The same period from the previous year had $0.35 in EPS on $814.47 million in revenue.

Total net sales for the fiscal third quarter increased 1% over the same quarter last year and comparable retail segment net sales, which includes the comparable direct-to-consumer channel, increased 1%. Comparable retail segment net sales increased 3% at Free People and 1% at Urban Outfitters, while the Anthropologie Group was flat. Wholesale segment net sales declined 5% due to shipment delays from the distribution facility in Gap, Pa.

During the nine months ended in October, 2015, Urban Outfitters opened a total of 23 new stores including: 11 Free People stores, eight Anthropologie Group stores and four Urban Outfitters stores. The company closed three stores during the nine months ended in October, two Urban Outfitters stores and one Free People store.

Under the current authorization to repurchase 20 million common shares from February, Urban Outfitters has repurchased and subsequently retired a total of 8.4 million common shares valued at approximately $282.7 million during the nine months ended in October, 2015.

Richard A. Hayne, CEO of Urban Outfitters, commented on earnings:

I am pleased we delivered sales, margin and profit growth in the third quarter despite weaker customer traffic. I believe the strong customer response to expanded category offerings at each brand bodes well for our future growth.

On the books the company has cash, equivalents and marketable securities totaling $219.1 million, compared to $258.8 million at the end of the same period from the previous year.

Shares of Urban Outfitters closed Monday down 7.5% at $22.66, with a consensus analyst price target of $37.32 and a 52-week trading range of $22.04 to $47.25. Following the release of the earnings report, shares were down 7.3% at $21.00 in the after-hours trading session.

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