Urban Update: Urban Outfitters Leads Recovery, High Anthropologie Promotions Worrisome

Teen apparel retailer Urban Outfitters (NASDAQ:URBN) continues to impress holiday shoppers with its Urban Outfitters brand, however the company is still relying on high promotions when it comes to Anthropologie. According to a recent survey from StoreIntel, Urban Outfitters looks good on its course of recovery after dismal results in the last two quarters. ^[1] Thursday morning, December retails sales figures painted a mixed picture for apparel retailers characterized by mostly better sales on the back of heavy promotions. 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).

Check out our complete analysis of Urban Outfitters

Urban Outfitters has performed well during the holidays

Contrary to last two quarters, when lack of diversity in its merchandise lead to an inventory buildup issue, Urban Outfitters has been impressive during the holidays with a telling flow of new products on its shelves. Earlier, the company reported an increase in its comps, which echoed through an increase in stock price of the company.

See our article: Urban Gains on Holiday Sales, Stock Good for $29.50

However the continuing high promotions in Anthropologie may weigh down on the gains made in Urban Outfitters. According to Trefis estimates, Anthropologie contributes 28% to Urban’s stock price. We expect the heavy promotions in Anthropologie may take a toll on company’s margins going ahead.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Urban Outfitters survey by StoreIntel, Source: RetailSails [↩]