Urban Posts Solid Holiday Sales Marking Potential Turnaround

Teen apparel retailer Urban Outfitters (NASDAQ:URBN) reported record holiday sales this Thursday, with an increase of 11% in its net sales. ^[1] The company also recorded increase in comp sales across all its brands with an increase of 3% at Urban Outfitters and Anthropologie and 9% at Free People. We believe the results are impressive given the fact that Urban was struggling in its core women apparel business till Q3 and reflects a potential turnaround. 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 is The Recovery Story of This Holiday Season

In contrary to the last two quarters when a lack of diversity in its merchandise led to an inventory issue, Urban has remained impressive throughout the holidays with new products on its shelves. We had earlier covered in our articles that Urban’s holiday sales have been growing solid:

• Urban Update: Urban Outfitters Leads Recovery, High Anthropologie Promotions Worrisome
• Urban Gains on Holiday Sales, Stock Good for $29.50

Another major highlight of holiday sales release was an increase of 17% direct-to-consumer comparable net sales. Since direct sales carry higher margins than retail store sales, we expect the increase in direct sales to ameliorate Urban’s margins this quarter.

Trefis price estimate for Urban Outfitters stands at $29.56, implying an upside of 5% to the current market price.

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1. Urban Outfitters report holiday sales results, Source: Urban’s IR [↩]