Urban Outfitters, Inc. (URBN) up on Higher Than Expected Earnings

Shares of Philadelphia, Pennsylvania, based Urban Outfitters, Inc. (URBN) rose on Tuesday, against the backrop of a lower day in stocks overall. Urban Outfitter's stock was up 16.09%, rising $4.53 per share, to close at $32.69, on volume of 11,468,303 shares. The company's fourth quarter earnings exceeded analysts expectations, despite less than expected sales revenues.

Founded in 1970, Urban Outfitters, Inc. engages in the operation of retail clothing stores.

It operates through the Retail and Wholesale segments, making its product line available in the US, Canada, and Europe. The Retail segment offers merchandise directly through stores, catalogues, call centers, and websites, and consists of the brands Urban Outfitters, Anthropologie, Free People, Terrain, and Bhldn. The Wholesale segment designs, develops, and distributes women's casual wear under the Free People brand, which sells its product to about 1,800 specialty stores and department stores. The company's stock trades on the NASDAQ.

The company announced its quarterly results after the market close on Monday. It announced that for the fiscal fourth quarter ended January 31, 2016, that net income for the quarter came in at $72.9 million, or $0.61 per diluted share. This exceeded analysts expectations of $0.56 per share, sending the stock soaring on Tuesday. The increase in stock price came despite the fact that earnings came in below the $80.2 million reported for the fourth quarter of 2015, and only slightly better than the $0.60 per diluted share for the same period.

For all of fiscal 2016, net income was reported at $224 million, or $1.78 per diluted share based on 118,606,002 shares outstanding, compared with $232 million, or $1.68 per diluted share based on 132,980,947 shares outstanding for all of fiscal 2015. Revenues for the fourth quarter were reported at $1.01 billion, virtually unchanged from the fourth quarter 2015. For the entire fiscal year, total revenues were $3.44 billion, 4% higher than the $3.23 billion for fiscal 2015. Growth of 4% of for the entire fiscal year revealed that the retail segment increased sales by 2%, while the wholesale segment increased sales by 15%.

Despite the disappointing news on revenues, several analysts raised their price targets for the stock following the earnings report. Guggenheim Securities raised the stock price target to $38, while BB&T Capital Markets increased to $36 per share. The company also increased the number of stores that it has under its various labels by 31, increasing it to 572 as of January 31.

"While apparel sales underperformed during the fourth quarter, I am pleased with the merchandise margin improvement delivered by the brands," said Richard A. Hayne, Chief Executive Officer. "Additionally, our expansion categories performed above our expectations and continue to give us confidence in our future growth opportunities."

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Published on Mar 9, 2016
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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