Categories Analysis, Consumer, Earnings

Earnings preview: Urban Outfitters (URBN) might win holiday season with digital push

There has been speculation that the quarterly results of specialty retailers would be affected by the relatively weak holiday season. Initial reports indicate that apparel retailer Urban Outfitters (URBN) managed to remain resilient to the muted public response last season, though the dismal performance of its stock continued.

Urban Outfitters Q3 earnings beat
Urban Outfitters Q3 2019 earnings

The company is slated to unveil its fourth-quarter results on March 5 after the closing bell. It is estimated that earnings will grow 15% to $0.79 per share, benefitting from the stable comparable sales performance. Meanwhile, the consistency with which the company beat Wall Street estimates in the recent quarters points to yet another beat this time.

Earlier this month, an official report said net sales rose 3.7% to $1.13 billion in the January-quarter, with all the business segments registering gains. Comparable sales in the retail segment grew 3% aided by a double-digit growth in online sales, which was partially offset by a dip in store sales. The company has posted positive comparable sales across the board for the sixth consecutive quarter.

It is estimated that earnings will grow 15% to $0.79 per share, benefitting from the stable comparable sales performance

In the third quarter, total sales climbed 9% to $973.5 million, benefitting from broad-based same-store sales growth. The company’s revamped digital channel contributed significantly to the robust top-line performance and the resultant surge in earnings to $0.70 per share.

While most of its peers are taking to store-closure to streamline operations, Urban Outfitters has laid down an effective strategy to retain traffic, including store-expansion, technological innovation, and initiatives to ramp up the wholesale operation. Besides redesigning the outlets, efforts are also being made to add value to the brands and make the assortments more appealing.

American Eagle Outfitters (AEO) is set to publish its fourth-quarter numbers on March 6 after the closing bell. Among others, Gap (GSP) posted a sharp increase in earnings to $0.52 per share, which however missed the Street view even as sales dropped 3% to $4.62 billion.

After picking up moderately following the September-quarter earnings report, Urban Outfitters’ shares entered a downward spiral, losing 17% since then. The stock, which plunged about 36% since reaching a peak in August last year, traded close to the $30-mark on Friday.

 

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