Higher Comparable Sales Helps Urban Outfitters Beat Consensus Estimates
Urban Outfitters (NASDAQ:URBN) announced its second quarter results on August 16, 2016, comfortably beating the estimated EPS and revenue for the company.
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Urban Outfitters managed to boost its profit and margins in the quarter, on account of strong sales, improved merchandise margins, and an increased focus on expense management. The company’s sales growth was driven by impressive growth in its women’s apparel and accessories segment to a great extent, and further through its emerging categories such as intimate, home, and beauty. Unseasonably cold weather in May, usually its strongest month of the quarter, resulted in negative retail comparable sales for the month. However, this rebounded in June, and were further spurred on in July. A 1% rise in comparable sales for the company was principally due to a 5% rise in its Urban Outfitters brand, with flat comparable sales reported at Free People, and a 3% decline at Anthropologie. The company expects further gross margin improvement in the third quarter, though at a more moderate rate than in the first half of the year, primarily due to higher margins at Anthropologie and Urban Outfitters, partially offset by higher markdowns at Free People to clear inventory.
The company continues to pursue long-term growth internationally, as it opened one store in the Netherlands, taking the total number of stores in Europe to 44. Another area where the company is prolific is its social media management, with its Instagram followers exceeding the five million mark in the quarter, a growth of 65% over the previous year or about 200,000 followers a month, and its Snapchat account witnessing a 25% month on month rise in its viewership.
URBN will continue to reduce inventory further in the next quarter as they head into the back-to-school season. However, this should not affect the sales negatively, as they attempt to restock faster the items that are selling well, to be able to “have the right product, in the right place, at the right time.” The company’s shares, which have risen over a third this year, jumped 12% in after-hours trading since the results were announced.
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Have more questions about Urban Outfitters? See the links below:
- How Will Urban Outfitters Perform In The Second Quarter Of Its FY 2017?
- How Has Urban Outfitters Revenue Composition Changed Over The Last Three Years?
- What Are The Changes Urban Outfitters Is Implementing To Differentiate Itself?
- Why Is Urban Outfitters Increasing Its Store Count While Its Peers Are Cutting Down?
- Earnings Review: Why Were Urban Outfitters’ Results Impressive?
- What Is Urban Outfitters’ Revenue & Net Income Breakdown In Terms of Different Operating Segments?
- How Has Urban Outfitters’ Revenue Composition Changed In The Last Five Years?
- What Is Urban Outfitters’ Fundamental Value Based On Expected 2016 Results?
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