Can Urban Outfitters Catch a Break?

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When Urban Outfitters Inc. (NASDAQ: URBN) reported its fiscal fourth-quarter financial results late on Tuesday, the retailer said that it had $0.69 in earnings per share (EPS) on $1.09 billion in revenue. That compared with consensus estimates of $0.63 in EPS and revenue of $1.08 billion. The same period of last year reportedly had EPS of $0.55 and $1.03 billion in revenue.

During the quarter, comparable Retail segment net sales increased 4%, driven by strong, double-digit growth in the digital channel, partially offset by negative retail store sales. By brand, comparable Retail segment net sales increased 8% at Free People, 5% at the Anthropologie Group and 2% at Urban Outfitters. Wholesale segment net sales increased 6.3%.

Taking credit this quarter, the deleverage in delivery and logistics expenses was primarily due to increased penetration of the digital channel, increased expedited shipments around the holidays in order to hit guaranteed delivery dates, and penetration of international and furniture shipments. These decreases were partially offset by lower merchandise markdowns as a result of improved sales performance and well-controlled inventory.

In terms of its segments, the firm reported as follows:

  • Urban Outfitters had $433.9 million in revenue, up from $413.8 million in the same period of last year.
  • Anthropologie Group had $447.2 million in revenue, up from $424.0 million.
  • Free People had $201.7 million in revenue, up from $186.3 million last year.

The company did not issue any guidance. but consensus estimates call for $0.19 in EPS on $796.38 million in revenue for the first quarter.

CEO Richard A. Hayne commented:

I am pleased to announce that URBN produced record Q4 sales primarily driven by positive ‘comps’ at all three brands. We are particularly pleased with how well the brands transitioned in January. Positive customer reaction to the new spring fashion offerings at all our brands has been strong and makes us optimistic regarding the first half of the year.

Shares of Urban Outfitters closed Tuesday at $36.98, with a consensus analyst price target of $34.62 and a 52-week range of $16.19 to $38.06. Following the announcement, the stock was down 2.7% at $36.00 in early trading indications Wednesday.