Urban Outfitters' Results Miss Expectations
23 November 2016 - 10:10AM
Dow Jones News
Urban Outfitters Inc.'s results including the back-to-school
shopping season missed Wall Street targets, as higher costs lowered
profit and margins and sales remained sluggish at its largest
brand.
Shares, up 71% this year, fell 9% to $35.44 in after-hours
trading.
Comparable sales—a key metric for retailers that Urban
Outfitters defines as online sales and sales at stores open for at
least a year—rose 1% in the latest period, roughly the same as in
the year-ago period but below the 1.9% projected by analysts
surveyed by FactSet.
A 5.2% comparable-sales increase at its namesake brand was
partly offset by a 1.5% decline from the Free People brand and a
2.7% decline from the Anthropologie Group, which includes BHLDN and
Terrain and is its largest brand by sales.
Over all, third-quarter profit narrowed 9% to $47.4 million, or
40 cents a share. The most recent results are based on 5% fewer
shares outstanding.
Sales rose 4.5% to $862.5 million, with Vetri Family restaurants
adding another $5.8 million to revenue.
Gross profit margin, the percentage of sales the retailer makes
after accounting for production costs, narrowed 15 basis points to
34.8%.
Urban Outfitters, which opened its first store in 1970 near the
University of Pennsylvania campus, has expanded into a
multinational clothing company with more than $3 billion in sales a
year. But a sales slowdown weighed on annual profit in the last two
years as inventory built up. To help control inventory, the
retailer fulfills online orders with web-exclusive items that are
returned to stores, shipping them straight from the store. That,
company officials said, has allowed them to speed up delivery and
reduce markdowns, even if it had to ship items from one order
separately.
On Tuesday, company officials said inventory rose 3%, or $12
million, as of Oct. 31.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
November 22, 2016 17:55 ET (22:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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