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Urban Outfitters Holiday Comps Fail to Lift Investor Mood

Zacks

Urban Outfitters, Inc. URBN disclosed holiday sales numbers, wherein comparable retail segment net sales, including the comparable direct-to-consumer channel, gained 2%. Despite reporting year-over-year increase in holiday sales, its shares declined 6% in after-hour trading session yesterday, primarily due to lower-than-expected comps. However, the stock has gained 45.5% in the past three months, outperforming the industry’s growth of 20%.

In early December, the company in a filing stated that “Thus far during the fourth quarter of fiscal 2018, comparable Retail segment net sales are mid single-digit positive”. However, comps for the November and December increased by low-single digit, which gives an indication that the company failed to carry its initial momentum in the latter part of holiday season.

For the month of November and December comparable retail segment net sales rose 1% at Urban Outfitters, 5% at Free People and 2% at the Anthropologie Group. Gain in comparable retail sales were driven by double-digit growth in the direct-to-consumer channel.

Furthermore, net sales for the November and December jumped 3.6% year over year. Moreover, wholesale segment net sales rose 6.8%. For the 11 months ended Dec 31, 2017, total net sales gained 1.2%. While comparable retail segment net sales were down 1%, wholesale segment net sales rose 9.9%.


During 11-month period ended Dec 31, 2017, the company opened 18 new outlets — eight Free People stores, four Anthropologie Group stores, five Urban Outfitters stores as well as and one Food and Beverage restaurant. The company shuttered six stores — three Free People store, one Anthropologie Group store, one Urban Outfitters store and one Food and Beverage restaurant — in the same time frame.

Apart from Urban Outfitters, Macy's, Inc. M, J. C. Penney Company, Inc. JCP and Kohl's Corporation KSS came out with their holiday sales numbers. Macy’s comps, on an owned plus licensed basis, increased 1.1% during the combined period of November and December; while on an owned basis, comparable sales rose 1%. We noted that J. C. Penney comps were up 3.4%, while Kohl's comps rose 6.9% during the holiday season.

Urban Outfitters currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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