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Urban Outfitters (URBN) Stock Surges on Robust Q4 Sales


Shares of Urban Outfitters, Inc. URBN jumped nearly 6% on Feb 9 after the company delivered robust fourth-quarter fiscal 2018 net sales. During the quarter, the company witnessed double-digit growth in the direct-to-consumer channel.

Sales in Detail

We observe that net sales of $1,089.1 million surpassed the Zacks Consensus Estimate of $1,077 million and were up 5.7% year over year. The increase in the top line can primarily be attributed to robust performance of Urban Outfitters, Anthropologie Group and Free People.

Net sales by brands gained 4.9% to $433.9 million at Urban Outfitters, 5.5% to $447.2 million at Anthropologie Group and 8.2% to $201.7 million at Free People. For Food and Beverage net sales came in at $6.3 million compared with $6 million in the prior-year quarter.

The company’s net sales were up 5.7% to $1,010.2 million at the Retail Segment and 6.3% to $78.9 million at the Wholesale Segment.

Comparable retail segment net sales, including the comparable direct-to-consumer channel, were up 4% year over year. Moreover, comparable retail segment net sales inched up 2% at Urban Outfitters, 5% at Anthropologie Group and 8% at the Free People. The company registered double-digit growth in direct-to-consumer channel. Meanwhile, Wholesale segment net sales jumped 6.3%. Comparable sales were driven by robust apparel sales performance.

Store Update

During the fiscal 2018, the Zacks Rank #3 (Hold) company opened 18 new outlets — eight Free People stores, five Urban Outfitters store, four Anthropologie Group store and one Beverage restaurant. The company shuttered 11 stores — Three Anthropologie Group store, two Urban Outfitters stores, three Food and Beverage restaurant and three Free People stores — in the same time frame.

Stock Performance

Impressively, this Philadelphia, PA-based company has displayed a solid bull run on the bourses soaring 93.1% in a six-month time frame. The stock has outpaced the Retail-Apparel and Shoes industry’s growth of 18.9% and the S&P 500’s gain of 6.5%. Currently, the industry ranks among the top 18% of all Zacks industries.

Being a multi-brand and multi-channel retailer, Urban Outfitters offer flexible merchandising strategy. Additionally, the company’s significant global presence with rapidly expanding e-commerce activities remains impressive. We believe better product execution and effective inventory management will help augment performance. Meanwhile, it is strategically investing in shop-in-shops.

Stocks to Consider

Better-ranked stocks worth considering in the retail sector include G-III Apparel Group GIII, Delta Apparel DLA and Lululemon Athletica LULU. All three of them carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

G-III Apparel Group has delivered a positive earnings surprise in the last three quarters. The company projects long-term earnings per share growth of 15%.

Delta Apparel forecasts long-term earnings growth of 15%.

Lululemon Athletica delivered an average positive earnings surprise of 8.1% in the preceding four quarters. The company estimates long-term earnings growth of 12.9%.

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