Urban Gains on Holiday Sales, Stock Good for $29.50

-18.92%
Downside
43.42
Market
35.20
Trefis
URBN: Urban Outfitters logo
URBN
Urban Outfitters

Specialty retailer Urban Outfitters‘ (NASDAQ:URBN) shares gained nearly 10% after the company reported in a regulatory filing that retail segment comp sales were up in the mid-single digits so far in the fourth quarter. This came as welcomed news and indicates that the holiday season is off to a good start for Urban, which is looking to get its strategy back on track after a dismal performance last quarter. Urban Outfitters competes with other specialty retailers such as Ann Taylor (NYSE:ANN), Aeropostale (NYSE:ARO) as well as Gap (NYSE:GPS) and Abercrombie & Fitch (NYSE:ANF).

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Check out our complete analysis of Urban Outfitters

Increase in Same Store Sales look Promising

Urban Outfitters has suffered from a decline in its women’s business over the last three quarter, which had resulted in company posting sequential declines in comp sales. For instance, during the last quarter the ailing women’s business was the major reason behind the company posting negative comps for both of its major brands Anthropologie and Urban Outfitters.

However this time around, Urban seems to have improved its offerings, which was its top priority after the Q2 results. According to RetailSales, The Urban Outfitters brand appeared to be the best in its class for the Holiday season and it expects the potential rebound for the Anthropologie brand going forward. [1]

We expect the trend of increase in comps to continue forward as the company looks good with its preps for Christmas too. However we still remain a bit skeptical about the margins as apparel market, especially the teen apparel market, continues to be highly promotional in nature.

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Notes:
  1. RetailSales survey of Urban Outfitters, Source: RetailSales []