How Will Urban Outfitters Perform In 2016?
See our complete analysis for Urban Outfitters
Apparel retailer Urban Outfitters (NASDAQ:URBN) managed to boost its profit and margins in the second quarter of 2016, 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. 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. 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.”
Reduced inventories will also help the company avoid deep discounts, which would have otherwise put pressure on the margins. URBN’s record revenue and profit in the second quarter , topped Wall Street expectations, and bodes well for the future. The company has been ahead of the curve in the ‘retro’ trend, which has set them apart from their competition. The brand has also entered into partnerships with numerous brands, such as Adidas, Calvin Klein, and Tommy Hilfiger, with 90% of the collection exclusive to their brand.
Have more questions about Urban Outfitters? See the links below:
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