Urban Outfitters goes from Wall Street zero to hero
Has co-founder Richard Hayne righted the ship?
Shares of the Philadelphia company are on the move Tuesday morning, gaining almost 6% and building on momentum from Monday when it said in an SEC filing that fourth-quarter trends appeared to be positive. It added that comparable sales growth thus far was in the high single digits.
This marks an improvement from the last quarter, when sales at stores opened at least a year fell 1%. It also was better than what analysts had expected. Ironically, the company will no longer report these figures, which many consider to be a key metric for retailers, starting in the next fiscal year.
Co-founder Richard Hayne, who replaced Senk, has begun to bring back shoppers previously turned off by the ugly designs the chain was peddling. During the last quarter, Urban Outfitters even boosted gross profit margins by 222 basis points to 37.6% as all the company's brands reported gains in sales. Hayne seemed optimistic about the holiday season, though he declined to offer a specific forecast during the company's recent earnings conference call.
Urban Outfitters, whose most recent earnings report disappointed Wall Street, is planning to open about 49 new stores in the current fiscal year, including 10 in the current quarter. The company is forecasting capital expenditures of $190 million to $210 million as it adds stores, expands its corporate headquarters and completes a fulfillment center in Reno, Nev. Hayne may have more tricks up his sleeve.
Wall Street may have underestimated the chain. The average 52-week price target on the stock is $38.92, under where it currently trades. Urban Outfitters isn't a cheap stock, trading at a price-to-earnings ratio of 27.85, near its five-year high, according to Reuters. Any investors interested in buying the stock might want to wait for a pullback in the price or a clearer indication of how the company fared during the holiday season.
The turnaround at Urban Outfitters is encouraging, though it remains a work in progress.
--Jonathan Berr does not own shares of the listed companies. Follow him on Twitter @jdberr
More from Money Now
- Presidential election revives gold fever in US
- Why are gun stocks tumbling?
- Wild horses a headache for US government
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market punctuated July with a broad-based retreat that sent the S&P 500 lower by 2.0% with all ten sectors ending in the red. The benchmark index posted a monthly decline of 1.5%, while the Russell 2000 (-2.3%) underperformed to end the month lower by 6.1%.
To get a better feel for what led to today's retreat, we'd like to look back to Wednesday, when the market had ample reason to rally, but did not. Instead, it ended basically flat after a sloppy day of ... More
More Market News
Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'